Internal Revenue Bulletin 1998-32 (PDF rendition): IRS Revenue Rulings

Preserve advance releases and the authoritative Internal Revenue Bulletin rendition; directory timestamps are file-publication metadata, not legal effective dates. HTML bulletins begin June 2003; earlier available issues require full PDF parsing. Whole bulletin rendition: numbered items are identified below; other legal material and publisher context remain included. This is not a new standalone advance release.

INCOME TAX
Rev. Rul. 98–37, page 5.
Rulings; obsolete.A list is given of rulings under the juris-
diction of the Associate Chief Counsel (Domestic) that have
been identified as no longer determinative.
Rev. Rul. 98–38, page 4.
Mutual life insurance companies; differential earnings
rate.The differential earnings rate for 1997 and the recom-
puted differential earnings rate for 1996 are set forth for
use by mutual life insurance companies to compute their in-
come tax liabilities for 1997.
EMPLOYEE PLANS
Rev. Proc. 98–40, page 6.
Section 457 ruling program. This procedure describes
the conditions under which the sponsor of an eligible de-
ferred compensation plan under section 457 of the Code
may obtain a ruling from the Service that takes into account
changes made by the Small Business Job Protection Act of
1996 and the Taxpayer Relief Act of 1997. Rev. Proc. 98–3
modified and amplified.
Rev. Proc. 98–41, page 7.
Section 457 model amendments. This procedure pro-
vides model amendments that an eligible employer may use
to amend its section 457(b) eligible deferred compensation
plan to reflect the revisions made to section 457 of the
Code by the Small Business Job Protection Act of 1996 and
the Taxpayer Relief Act of 1997.
EXEMPT ORGANIZATIONS
Announcement 98–76, page 64.
A list is given of organizations now classified as private foun-
dations.
ADMINISTRATIVE
Rev. Proc. 98–44, page 11.
This procedure provides specifications for filing Form
1042–S, Foreign Person’s U.S. Source Income Subject to
Withholding, Magnetically or Electronically.
Internal Revenue
bbuulllleettiinn
Bulletin No. 1998–32
August 10, 1998
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
Department of the Treasury
Internal Revenue Service
Finding Lists begin on page 66.
IRB 1998-32 8/6/98 5:26 PM Page 1

Mission of the Service
The purpose of the Internal Revenue Service is to collect
the proper amount of tax revenue at the least cost; serve
the public by continually improving the quality of our prod-
ucts and services; and perform in a manner warranting
the highest degree of public confidence in our integrity, effi-
ciency, and fairness.
2
Statement of Principles
of Internal Revenue
Tax Administration
The function of the Internal Revenue Service is to adminis-
ter the Internal Revenue Code. Tax policy for raising revenue
is determined by Congress.
With this in mind, it is the duty of the Service to carry out that
policy by correctly applying the laws enacted by Congress;
to determine the reasonable meaning of various Code provi-
sions in light of the Congressional purpose in enacting them;
and to perform this work in a fair and impartial manner, with
neither a government nor a taxpayer point of view.
At the heart of administration is interpretation of the Code. It
is the responsibility of each person in the Service, charged
with the duty of interpreting the law, to try to find the true
meaning of the statutory provision and not to adopt a
strained construction in the belief that he or she is “protect-
ing the revenue.” The revenue is properly protected only
when we ascertain and apply the true meaning of the statute.
The Service also has the responsibility of applying and
administering the law in a reasonable, practical manner.
Issues should only be raised by examining officers when
they have merit, never arbitrarily or for trading purposes.
At the same time, the examining officer should never hesi-
tate to raise a meritorious issue. It is also important that
care be exercised not to raise an issue or to ask a court to
adopt a position inconsistent with an established Service
position.
Administration should be both reasonable and vigorous. It
should be conducted with as little delay as possible and
with great courtesy and considerateness. It should never
try to overreach, and should be reasonable within the
bounds of law and sound administration. It should, howev-
er, be vigorous in requiring compliance with law and it
should be relentless in its attack on unreal tax devices and
fraud.
IRB 1998-32 8/6/98 5:26 PM Page 2

The Internal Revenue Bulletin is the authoritative instrument
of the Commissioner of Internal Revenue for announcing offi-
cial rulings and procedures of the Internal Revenue Service
and for publishing Treasury Decisions, Executive Orders, Tax
Conventions, legislation, court decisions, and other items of
general interest. It is published weekly and may be obtained
from the Superintendent of Documents on a subscription
basis. Bulletin contents of a permanent nature are consoli-
dated semiannually into Cumulative Bulletins, which are sold
on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless other-
wise indicated. Procedures relating solely to matters of in-
ternal management are not published; however, statements
of internal practices and procedures that affect the rights
and duties of taxpayers are published.
Revenue rulings represent the conclusions of the Service on
the application of the law to the pivotal facts stated in the
revenue ruling. In those based on positions taken in rulings
to taxpayers or technical advice to Service field offices,
identifying details and information of a confidential nature
are deleted to prevent unwarranted invasions of privacy and
to comply with statutory requirements.
Rulings and procedures reported in the Bulletin do not have
the force and effect of Treasury Department Regulations,
but they may be used as precedents. Unpublished rulings
will not be relied on, used, or cited as precedents by Service
personnel in the disposition of other cases. In applying pub-
lished rulings and procedures, the effect of subsequent leg-
islation, regulations, court decisions, rulings, and proce-
dures must be considered, and Service personnel and oth-
ers concerned are cautioned against reaching the same con-
clusions in other cases unless the facts and circumstances
are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions
of the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions, and Subpart B, Legislation and Related
Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to
these subjects are contained in the other Parts and Sub-
parts. Also included in this part are Bank Secrecy Act Admin-
istrative Rulings. Bank Secrecy Act Administrative Rulings
are issued by the Department of the Treasury’s Office of the
Assistant Secretary (Enforcement).
Part IV.—Items of General Interest.
With the exception of the Notice of Proposed Rulemaking
and the disbarment and suspension list included in this part,
none of these announcements are consolidated in the Cumu-
lative Bulletins.
The first Bulletin for each month includes a cumulative index
for the matters published during the preceding months.
These monthly indexes are cumulated on a semiannual basis
and are published in the first Bulletin of the succeeding semi-
annual period, respectively.
3
Introduction
The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402.
IRB 1998-32 8/6/98 5:26 PM Page 3

August 10, 199841998–32 I.R.B.
Section 809.—Reduction in
Certain Deductions of Mutual
Life Insurance Companies
26 CFR 1.809–9: Computation of the differential
earnings rate and the recomputed differential
earnings rate.
Mutual life insurance companies;
differential earnings rate.The differen-
tial earnings rate for 1997 and the recom-
puted differential earnings rate for 1996
are set forth for use by mutual life insur-
ance companies to compute their income
tax liabilities for 1997.
Rev. Rul. 98–38
This revenue ruling contains the differ-
ential earnings rate for 1997 and the re-
computed differential earnings rate for
1996. Under § 809 of the Internal Rev-
enue Code, mutual life insurance compa-
nies use these rates in computing their
Federal income tax liability for taxable
years beginning in 1997. This revenue
ruling also contains the figures on which
the determinations of these rates are
based. Notice 98–19, 1998–13 I.R.B. 24,
contained tentative determinations of
these rates.
Section 809(a) provides that, in the
case of any mutual life insurance com-
pany, the amount of the deduction allow-
able under § 808 for policyholder divi-
dends is reduced (but not below zero) by
the “differential earnings amount.” Any
excess of the differential earnings amount
over the amount of the deduction allow-
able under § 808 is taken into account as a
reduction in the closing balance of re-
serves under subsections (a) and (b) of
§ 807. The “differential earnings
amount” for any taxable year is the
amount equal to the product of (a) the life
insurance company’s average equity base
for the taxable year multiplied by (b) the
“differential earnings rate” for that tax-
able year. The “differential earnings rate”
for the taxable year is the excess of (a) the
“imputed earnings rate” for the taxable
year over (b) the “average mutual earn-
ings rate” for the second calendar year
preceding the calendar year in which the
taxable year begins. The “imputed earn-
ings rate” for any taxable year is the
amount that bears the same ratio to 16.5
percent as the “current stock earnings
rate” for the taxable year bears to the
“base period stock earnings rate.”
Section 809(f) provides that, in the case
of any mutual life insurance company, if
the “recomputed differential earnings
amount” for any taxable year exceeds the
differential earnings amount for that tax-
able year, the excess is included in life in-
surance gross income for the succeeding
taxable year. If the differential earnings
amount for any taxable year exceeds the
recomputed differential earnings amount
for that taxable year, the excess is allowed
as a life insurance deduction for the suc-
ceeding taxable year. The “recomputed
differential earnings amount” for any tax-
able year is an amount calculated in the
same manner as the differential earnings
amount for that taxable year, except that
the average mutual earnings rate for the
calendar year in which the taxable year
begins is substituted for the average mu-
tual earnings rate for the second calendar
year preceding the calendar year in which
the taxable year begins.
The stock earnings rates and mutual
earnings rates taken into account under
§ 809 generally are determined by divid-
ing statement gain from operations by the
average equity base. For this purpose, the
term “statement gain from operations”
means “the net gain or loss from opera-
tions required to be set forth in the annual
statement, determined without regard to
Federal income taxes, and . . . properly
adjusted for realized capital gains and
losses. . . .” See§ 809(g)(1). The term
“equity base” is defined as an amount de-
termined in the manner prescribed by reg-
ulations equal to surplus and capital in-
creased by the amount of nonadmitted
financial assets, the excess of statutory re-
serves over the amount of tax reserves,
the sum of certain other reserves, and 50
percent of any policyholder dividends (or
other similar liability) payable in the fol-
lowing taxable year. See§ 809(b)(2), (3),
(4), (5) and (6). Section 1.809–10 of the
Income Tax Regulations provides that the
equity base includes both the asset valua-
tion reserve and the interest maintenance
reserve for taxable years ending after De-
cember 31, 1991.
Section 1.809–9(a) of the regulations
provides that neither the differential earn-
ings rate under § 809(c) nor the recom-
puted differential earnings rate that is
used in computing the recomputed differ-
ential earnings amount under § 809(f)(3)
may be less than zero.
For purposes of § 809, the differential
earnings rate for 1997 and the rate used to
calculate the recomputed differential
earnings amount for 1996 (the recom-
puted differential earnings rate for 1996),
and the figures on which these two rates
are based are set forth in Table 1.
Part I. Rulings and Decisions Under the Internal Revenue Code of 1986
Rev. Rul. 98–38 Table 1
Determination of Rates To Be Used For Taxable Years
Beginning in 1997
Differential earnings rate for 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Recomputed differential earnings rate for 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Imputed earnings rate for 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.669
Imputed earnings rate for 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.813
Base period stock earnings rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.221
Current stock earnings rate for 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.254
Stock earnings rate for 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.437
Stock earnings rate for 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.087
Stock earnings rate for 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.238
Average mutual earnings rate for 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.477
Average mutual earnings rate for 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.112
IRB 1998-32 8/6/98 5:26 PM Page 4

DRAFTING INFORMATION
The principal author of this revenue
ruling is Katherine A. Hossofsky of the
Assistant Chief Counsel (Financial Insti-
tutions and Products). For further infor-
mation regarding this revenue ruling con-
tact Ms. Hossofsky on (202) 622-3477
(not a toll-free number).
Section 7805.—Rules and
Regulations
26 CFR 301.7805–1: Rules and regulations.
Rulings; obsolete.A list is given of
rulings under the jurisdiction of the Asso-
ciate Chief Counsel (Domestic) that have
been identified as no longer determina-
tive.
Rev. Rul. 98–37
The Internal Revenue Service is contin-
uing its program of reviewing rulings (in-
cluding revenue rulings and revenue pro-
cedures) published in the Internal
Revenue Bulletin to identify and publish
lists of those rulings that, although not
specifically revoked or superseded, are no
longer considered determinative because:
(1) the applicable statutory provisions or
regulations have been changed or re-
pealed; (2) the ruling position is specifi-
cally covered by a statute, regulation, or
subsequent published position; or (3) the
facts set forth no longer exist or are not
sufficiently described to permit clear ap-
plication of the current statute and regula-
tions.
This revenue ruling publishes a list of
rulings under the jurisdiction of the Asso-
ciate Chief Counsel (Domestic) that have
been identified under the Service’s review
program as no longer being determina-
tive. The rulings are categorized by sub-
ject matter.
Accordingly, the rulings listed below
are hereby declared obsolete.
ENTITY CLASSIFICATION
Rev. Rul. No.C.B. Citation
71–2771971–1 C.B. 422
71–4341971–2 C.B. 430
71–5741971–2 C.B. 432
72–751972–1 C.B. 401
72–120 1972–1 C.B. 402
72–121 1972–1 C.B. 403
72–1221972–1 C.B. 405
75–191975–1 C.B. 382
77–2141977–1 C.B. 408
79–1061979–1 C.B. 448
88–81988–1 C.B. 403
88–761988–2 C.B. 360
88–791988–2 C.B. 361
93-41993–1 C.B. 225
93–51993–1 C.B. 227
93–61993–1 C.B. 229
93–301993–1 C.B. 231
93–381993–1 C.B. 233
93–491993–2 C.B. 308
93–501993–2 C.B. 310
93–531993–2 C.B. 312
93–811993–2 C.B. 314
93–911993–2 C.B. 316
93–921993–2 C.B. 318
93–931993–2 C.B. 321
94–51994–1 C.B. 312
94–61994–1 C.B. 314
94–30 1994–1 C.B. 316
94–511994–2 C.B. 407
Rev. Rul. No.C.B. Citation
94–791994–2 C.B. 409
95–21995–1 C.B. 220
95–91995–1 C.B. 222
OTHER GUIDANCE
Rev. Rul. No.C.B. Citation
57–2711957–1 C.B. 453
74–771974–1 C.B. 33
76–5621976–2 C.B. 430
83–113 1983–2 C.B. 251
85-1431985–2 C.B. 55
Rev. Proc. No.C.B. Citation
83–581983–2 C.B. 575
The Service will continue to review
other rulings to identify those that, for the
reasons stated above, are inapplicable to
future transactions. Therefore, failure to
include any particular ruling in the above
list should not be construed as an indica-
tion that the ruling necessarily is determi-
native with respect to future transactions.
DRAFTING INFORMATION
The principal author of this revenue
ruling is David A. Schneider of the Office
of Assistant Chief Counsel (Income Tax
and Accounting). For further information
regarding the rulings identified under
OTHER GUIDANCE, contact Mr.
Schneider on (202) 622-4890. For further
information regarding the rulings identi-
fied under ENTITY CLASSIFICATION,
contact Mark D. Harris of the Office of
Assistant Chief Counsel (Passthroughs
and Special Industries) on (202) 622-
3050. These are not toll-free calls.
1998–32 I.R.B.5August 10, 1998
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August 10, 199861998–32 I.R.B.
26 CFR 601.201: Rulings and determination letters.
Rev. Proc. 98–40
SECTION 1. PURPOSE
This Revenue Procedure describes the
conditions under which the sponsor of an
eligible deferred compensation plan under
§ 457(b) of the Internal Revenue Code
may obtain a ruling from the Service that
takes into account changes made by the
Small Business Job Protection Act of
1996, Pub. L. No. 104–188 (“SBJPA”)
and the Taxpayer Relief Act of 1997, Pub.
L. No. 105–34 (“TRA ’97”).
SECTION 2. BACKGROUND AND
GENERAL INFORMATION
.01 Section 457 applies to nonqualified
deferred compensation plans established
by state and local government and tax-
exempt employers. These plans may be
either eligible plans that meet the require-
ments of § 457(b) or ineligible § 457(f)
plans. Under § 457(a), compensation de-
ferred pursuant to eligible plans that meet
the requirements of § 457(b) and the in-
come attributable to such deferred com-
pensation are not includible in gross in-
come until the taxable year in which the
deferred amounts are actually paid or
made available to the plan participant or
beneficiary.
.02 Significant revisions were made to
§ 457 by the SBJPA and by TRA ’97, in-
cluding a new trust requirement for com-
pensation deferred under governmental
§ 457(b) plans and provision for limited
in-service distribution of certain small
§ 457(b) plan amounts. In response to
these SBJPA amendments, Revenue Pro-
cedure 96–56, 1996–2 C.B. 389, an-
nounced that, due to study of these
changes, the Service would suspend is-
suance of rulings regarding the tax effects
of provisions under the SBJPA affecting
§ 457(b) plans until further notice. Notice
96–63, 1996–2 C.B. 228, invited com-
ments on whether the Service should pub-
lish model language to provide § 457(b)
plan sponsors with a streamlined method
for amending their plans to comply with
the new SBJPA provisions relating to
§ 457(b) plans.
.03 Guidance regarding the SBJPA
statutory amendments was provided in
Notice 98–8, 1998–4 I.R.B. 6. In addi-
tion, the Service is publishing Revenue
Procedure 98–41 in this issue of the Inter-
nal Revenue Bulletin to provide model
plan amendments for § 457(b) plans.
SECTION 3. SECTION 457(b)
RULING PROCEDURAL
REQUIREMENTS
.01 Section 5.19 of Revenue Proce-
dure 98–3, 1998–1 I.R.B. 100, 110, cur-
rently provides that the Service will not
issue rulings regarding the tax effects of
provisions under the SBJPA affecting §
457(b) plans. Effective on August 10,
1998, except as provided in Section 4
below, the Service will consider all re-
quests for rulings for § 457(b) plans
made in accordance with Revenue Pro-
cedure 98–1, 1998–1 I.R.B. 7 (including
payment of the required user’s fee), the
additional requirements of this Section 3,
and any other rule adopted by the Ser-
vice from time to time. SeeSection 5
below regarding the impact of this rev-
enue procedure on Revenue Procedure
98–3.
.02 If a ruling is requested for a
§ 457(b) plan that has previously received
a private letter ruling, the ruling request
must include a copy of the previous ruling
letter. Private letter ruling requests for
§ 457(b) plans that have been amended
more than twice since the plan was estab-
lished must contain a restated plan docu-
ment incorporating all amendments and
proposed amendments. In the case of a re-
stated plan, the ruling request must clearly
identify the changes made to the plan
since any prior private letter ruling was is-
sued (for example, by underscoring the lo-
cation of all changes in the restated plan
document). In the case of a plan intended
to be a § 457(b) plan maintained by a state
or local government entity, a copy of the
trust agreement, custodial account agree-
ment, or annuity contract must be included
with the private letter ruling request. (If
there are more than 3 trust agreements,
custodial account agreements, or annuity
contracts, representative samples of these
documents may be provided.)
SECTION 4. LIMITATIONS ON
ISSUANCE OF § 457(b) RULINGS
.01 The Service will not issue a new
private letter ruling concerning a § 457(b)
plan that has previously received a private
letter ruling if that plan is amended solely
to conform it to the SBJPA changes by
adding one or more of the model amend-
ments contained in Revenue Procedure
98–41 (and to replace obsolete terms or
delete provisions inconsistent with the
model amendments so adopted). How-
ever, the Service will consider a private
letter ruling request for a pre-existing
§ 457(b) plan even though the employer
had previously received a favorable pri-
vate letter ruling, if the employer has
made amendments to its § 457(b) plan
after it had received that ruling (other than
adoption of model amendments and con-
forming changes). For example, the Ser-
vice will consider a private letter ruling
request from a plan sponsor that had re-
ceived a favorable ruling in 1984 regard-
ing its § 457(b) plan, and that has since
amended that plan to conform with
changes in the law, such as amendments
made to conform with the Tax Reform
Act of 1986.
.02 The Service will issue a private let-
ter ruling concerning a § 457(b) plan
maintained by a state or local government
employer only if the plan includes provi-
sions reflecting § 457(g), including the
guidance provided in Sections VI, VII, or
VIII of Notice 98–8. Model Amendment
4 of Revenue Procedure 98–41 may be
used for this purpose.
.03 The Service will not issue a private
letter ruling for a § 457 plan if the plan
provides that a loan may be made from
assets held by the plan to any participants
or beneficiaries under the plan.
SECTION 5. EFFECT ON REVENUE
PROCEDURE 98–3
.01 The first sentence of Section 5.19
of Revenue Procedure 98–3 (barring rul-
ings regarding the tax effects of the
SBJPA affecting § 457(b) plans) is modi-
fied to read as follows: The tax effect of
provisions under the Small Business Job
Protection Act affecting plans described
in § 457(b) if such provisions do not com-
Part III. Administrative, Procedural, and Miscellaneous
IRB 1998-32 8/6/98 5:26 PM Page 6

1998–32 I.R.B.7August 10, 1998
ply with Section 4 of Revenue Procedure
98–40.
.02 The second sentence of Section
5.19 of Revenue Procedure 98–3 (autho-
rizing advance rulings on § 457(b) plans
based on the law in effect prior to enact-
ment of the SBJPA) is deleted.
.03 Revenue Procedure 98–3 is ampli-
fied by adding to Section 5 the follow-
ing: Section 457. Deferred Compensa-
tion Plans of State and Local
Governments and Tax-Exempt Organiza-
tions. The tax treatment of any § 457
plan that provides that a loan may be
made from assets held by such plan to
any participants or beneficiaries under
the plan.
SECTION 6. EFFECTIVE DATE
This revenue procedure applies to all
ruling requests, including any pending in
the National Office before August 10,
1998.
DRAFTING INFORMATION
The principal author of this revenue
procedure is John Tolleris of the Office of
Associate Chief Counsel (Employee Ben-
efits/ Exempt Organizations). However,
other personnel from the Internal Rev-
enue Service and Treasury participated in
its development. For further information
regarding this revenue procedure, contact
John Tolleris at (202) 622-6030 (not a
toll-free number).
26 CFR 601.201: Rulings and determination letters.
Rev. Proc. 98–41
SECTION 1. PURPOSE
This Revenue Procedure provides
model amendments that may be used by
an eligible employer (as defined in
457(e)(1) of the Internal Revenue Code)
to amend its § 457(b) plan to reflect the
revisions made to § 457 of the Internal
Revenue Code by the Small Business Job
Protection Act of 1996, Pub. L. No. 104–
188 (“SBJPA”) and by the Taxpayer Re-
lief Act of 1997, Pub. L. No. 105–34
(“TRA ’97”).
SECTION 2. BACKGROUND AND
GENERAL INFORMATION
.01 Section 457 of the Internal Rev-
enue Code applies to nonqualified de-
ferred compensation plans established by
state and local government and tax-ex-
empt employers. These plans may be ei-
ther eligible plans that meet the require-
ments of § 457(b) or ineligible § 457(f)
plans. Under § 457(a), compensation de-
ferred pursuant to eligible plans that meet
the requirements of § 457(b) and the in-
come attributable to such deferred com-
pensation are not includible in gross in-
come until the taxable year in which the
deferred amounts are actually paid or
made available to the plan participant or
beneficiary.
.02 Section 1447(a) of the SBJPA and
section 1071 of TRA ’97 amended
§ 457(e)(9) of the Code, generally effec-
tive for years beginning after December
31, 1996, to permit in-service distribu-
tions of amounts of $5,000 or less payable
under a § 457(b) plan under certain condi-
tions, and to permit an additional election
by a participant to further defer com-
mencement of distributions under a
§ 457(b) plan after the first permissible
payout date. Section 1447(b) of the
SBJPA added new paragraph (15) to
§ 457(e) of the Code, also effective for
years beginning after December 31, 1996,
under which the $7,500 maximum defer-
ral limitation under §§ 457(b) (2) and
457(c)(1) is indexed (in $500 increments)
for cost of living adjustments. (The max-
imum deferral limitation for 1998 is
$8,000.)
.03 Section 1448 of the SBJPA added
new subsection (g) to § 457 of the Code to
provide that all assets and income under a
§ 457(b) plan that is maintained by a state
or local government employer must be
held in trust for the exclusive benefit of
plan participants and their beneficiaries.
Before the enactment of the SBJPA,
§ 457(b)(6) mandated that all § 457(b)
plans be unfunded (so that plan assets
could not be set aside for the exclusive
benefit of participants and beneficiaries).
Section 457(g) generally applies to assets
and income held by a governmental
§ 457(b) plan on and after August 20,
1996. However, in the case of a § 457(b)
plan in existence on August 20, 1996,
maintained by a state or local government
employer, a trust is not required to be es-
tablished pursuant to § 457(g) before Jan-
uary 1, 1999.
.04 In response to these significant re-
visions made to § 457 by the SBJPA and
by TRA ’97, the Service published Rev-
enue Procedure 96–56, 1996–2 C.B. 389,
which announced that, due to study of
these changes, the Service would suspend
issuance of rulings regarding the tax ef-
fects of provisions under the SBJPA af-
fecting § 457(b) plans until further notice.
Notice 96–63, 1996–2 C.B. 228, invited
comments on whether the Service should
publish model language to provide
§ 457(b) plan sponsors with a streamlined
method for amending their plans to com-
ply with the new SBJPA provisions relat-
ing to § 457(b) plans.
.05 In addition, the Service has re-
cently issued Notice 98–8, 1998–4 I.R.B.
6, which provides substantive guidance
concerning the revisions to § 457 made by
the SBJPA and TRA ’97. The Service is
issuing this revenue procedure providing
model amendments based on the guidance
provided in Notice 98–8.
SECTION 3. USE OF THE MODEL
AMENDMENTS
.01 Any eligible employer may amend
a § 457(b) plan to utilize one or more of
the optional changes made to § 457(e) of
the Internal Revenue Code by section
1447 of the SBJPA and section 1017 of
TRA ’97 and described in Section 2.02 of
this revenue procedure by adopting one or
more of Model Amendments 1, 2 or 3
contained in the appendix to this revenue
procedure.
.02 An eligible employer that is a state
or local government employer must
amend its § 457(b) plan to comply with
the mandatory trust requirement of
§ 457(g) described in Section 2.03. An el-
igible government employer may adopt
Model Amendment 4 in the appendix to
this revenue procedure in order to modify
the plan to reflect the funding arrange-
ment established under the plan in confor-
mity with § 457(g). In addition, in order
to rely on Model Amendment 4, the eligi-
ble government employer must adopt a
trust, one or more custodial accounts, or
one or more annuity contracts that hold all
assets and income described in Model
Amendment 4. The trust, custodial ac-
count or accounts, or annuity contract or
contracts must be valid instruments under
state law, must otherwise comply with the
requirements provided in Notice 98–8,
and may contain no language inconsistent
with Model Amendment 4. SeeSection 4
IRB 1998-32 8/6/98 5:26 PM Page 7

August 10, 199881998–32 I.R.B.
below for more information regarding a
government entity’s right to rely upon a
prior private letter ruling concerning its
§ 457(b) plan if it adopts Model Amend-
ment 4 on a word-for-word basis.
SECTION 4. RELIANCE BY
EMPLOYERS WITH PRIOR § 457(b)
RULING
.01 Reliance—An employer entitled to
rely on a private letter ruling issued to it
prior to August 10, 1998, regarding the el-
igibility of a plan under § 457(b) that is a
defined contribution plan as defined in §
414(i) will not lose its right to rely on its
letter ruling merely because it adopts one
or more of the amendments set forth in
this revenue procedure on a word-for-
word basis. Such an employer may adopt
the applicable model amendments pro-
vided under this revenue procedure on a
word-for-word basis and continue to rely
on the previously issued private letter rul-
ing regarding its § 457(b) plan without fil-
ing another request with the Service for a
new private letter ruling.
.02 Superseding obsolete prior provi-
sions—An employer that satisfies the
conditions of Section 4.01 above and that
amends its § 457(b) plan to include one or
more of the model amendments set forth
in this revenue procedure on a word-for-
word basis will also not lose its right to
rely on its prior letter ruling merely be-
cause it replaces obsolete terms (such as
replacing “bookkeeping accounts” or “hy-
pothetical accounts” with “accounts”), or
deletes prior provisions that are inconsis-
tent with the model amendment so
adopted.
SECTION 5. EFFECTIVE DATE
This revenue procedure is effective Au-
gust 10, 1998.
DRAFTING INFORMATION
The principal author of this revenue
procedure is John Tolleris of the Office of
Associate Chief Counsel (Employee Ben-
efits/ Exempt Organizations). However,
other personnel from the Internal Rev-
enue Service and Treasury participated in
its development. For further information
regarding this revenue procedure, contact
John Tolleris at (202) 622-6030 (not a
toll-free number).
APPENDIX FOR REVENUE PROCEDURE 98–41
MODEL AMENDMENTS
(Note to sponsors: In this appendix presenting the model amendment language, the portions printed in italics are explanatory
notes for the benefit of the § 457(b) plan sponsor and are not to be included in the amendments. The portions not printed in italics
are the model amendment language for use by the plan sponsor in amending its § 457(b) plan in accordance with this revenue pro-
cedure.)
OPTIONAL AMENDMENTS THAT MAY BE ADOPTED BY ANY ELIGIBLE 457 PLAN
AMENDMENT 1 IN-SERVICE DISTRIBUTION OF $5,000 OR LESS
Any one of the following model amendments may be adopted for any § 457(b) plan to provide for the in-service de minimis distri-
bution option permitted under § 457(e)(9)(A) of the Internal Revenue Code and described in Section 2.02 above. These amend-
ments are in addition to any plan provision requiring distribution of small account balances following the general distribution com-
mencement date set by the plan. If it wishes, the plan sponsor may also substitute in the following model amendments a consistent
figure lower than $5,000 in place of “$5,000 (or the dollar limit under section 411(a)(11) of the Internal Revenue Code, if greater)”.
The plan may adopt only one of Option A, Option B, or Option C.
OPTION A: INVOLUNTARY DISTRIBUTIONS
The following amendment may be adopted by an eligible employer that wishes to provide for the mandatory in-service distribution
to participants with aggregate account balances under the § 457(b) plan that total $5,000 or less:
“Involuntary In-Service Distribution: The Plan shall distribute the total amount payable under the Plan to a participant who is an
active employee of an eligible employer if the following requirements are met:
(i) the total amount payable to the participant under the Plan does not exceed $5,000 (or the dollar limit under section
411(a)(11) of the Internal Revenue Code, if greater),
(ii) the participant has not previously received an in-service distribution of the total amount payable to the participant under
the Plan; and
(iii) no amount has been deferred under the Plan with respect to the participant during the two-year period ending on the date
of the in-service distribution.”
OPTION B: VOLUNTARY DISTRIBUTIONS
The following amendment may be adopted by an eligible employer that wishes to provide for the voluntary in-service distribution
to participants with aggregate account balances under the § 457(b) plan that total $5,000 or less:
IRB 1998-32 8/6/98 5:26 PM Page 8

1998–32 I.R.B.9August 10, 1998
“Voluntary In-Service Distribution: A participant who is an active employee of an eligible employer shall receive a distribution of
the total amount payable to the participant under the Plan if the following requirements are met:
(i) the total amount payable to the participant under the Plan does not exceed $5,000 (or the dollar limit under section
411(a)(11) of the Internal Revenue Code, if greater),
(ii) the participant has not previously received an in-service distribution of the total amount payable to the participant under
the Plan,
(iii) no amount has been deferred under the Plan with respect to the participant during the two-year period ending on the date
of the in-service distribution; and
(iv) the participant elects to receive the distribution.”
OPTION C: COMBINATION VOLUNTARY AND INVOLUNTARY DISTRIBUTIONS
The following amendment may be adopted by an eligible employer that wishes to provide for both a mandatory in-service distrib-
ution of small account balances (such as $500) and a voluntary in-service distribution election to participants with higher aggregate
account balances under the § 457(b) plan that total $5,000 or less:
“Involuntary In-Service Distribution: The Plan shall distribute the total amount payable under the Plan to a participant who is an
active employee of an eligible employer if the following requirements are met:
(i) the total amount payable to the participant under the Plan does not exceed [enter a dollar amount that is less than $5,000],
(ii) the participant has not previously received an in-service distribution of the total amount payable to the participant under
the Plan; and
(iii) no amount has been deferred under the Plan with respect to the participant during the two-year period ending on the date
of the in-service distribution.
Voluntary In-Service Distribution: A participant who is an active employee of an eligible employer shall receive a distribution of
the total amount payable to the participant under the Plan if the following requirements are met:
(i) the total amount payable to the participant under the Plan does not exceed $5,000 (or the dollar limit under section
411(a)(11) of the Internal Revenue Code, if greater),
(ii) the participant has not previously received an in-service distribution of the total amount payable to the participant under
the Plan,
(iii) no amount has been deferred under the Plan with respect to the participant during the two-year period ending on the date
of the in-service distribution; and
(iv) the participant elects to receive the distribution.”
AMENDMENT 2 ADDITIONAL DEFERRAL ELECTION
The following model amendment may be used to provide for the one“additional” distribution election authorized by §
457(e)(9)(B) of the Internal Revenue Code and described in section 2.03 above.
“If a participant has elected, in accordance with the Plan, to defer the commencement of distributions beyond the first permissible
payout date, then the participant may make an additional election to further defer the commencement of distributions, provided that
the election is filed before distributions actually begin and the later commencement date meets the required distribution commence-
ment date provisions of sections 401(a)(9) and 457(d)(2) of the Internal Revenue Code. A participant may not make more than one
such additional deferral election after the first permissible payout date.
For purposes of the preceding paragraph, the “first permissible payout date” is the earliest date on which the Plan permits pay-
ments to begin after separation from service, disregarding payments to a participant who has an unforeseeable emergency or attains
age 70
1
⁄
2
, or under the in-service distribution provisions of the Plan.” (Any of the provisions mentioned in the preceding sentence may
be omitted if the plan does not include such a provision.)
AMENDMENT 3 COST-OF-LIVING-ADJUSTMENTS
Any § 457(b) plan may be amended to provide for implementing cost of living adjustments to the “$7,500” maximum deferral
amount pursuant to § 457(e)(15) by substituting the following for “$7,500” wherever it appears as a limitation on the maximum de-
ferral amount under the plan:
“$7,500, adjusted for the calendar year to reflect increases in cost-of-living in accordance with sections 457(e)(15) and 415(d) of the
Internal Revenue Code.”
MODEL AMENDMENT TO REFLECT MANDATORY § 457(g) REQUIREMENTS FOR GOVERNMENTAL § 457(b)
PLANS
AMENDMENT 4 § 457(g) TRUST REQUIREMENTS FOR GOVERNMENTAL § 457(b) PLANS
Any one of the following three model amendments may be used to reflect the mandatory trust requirement applicable to eligible
plans of state and local government entities under § 457(g) of the Code. None of these amendments are applicable to § 457(b) plans
IRB 1998-32 8/6/98 5:26 PM Page 9

August 10, 1998101998–32 I.R.B.
sponsored by tax-exempt organizations that are not state or local government entities, and they may not be adopted by such organi-
zations. The last sentence of each of the following model amendments (requiring amounts to be transferred within a 15-day period)
is optional.
OPTION A: TRUST
“Notwithstanding any contrary provision of the Plan, in accordance with section 457(g) of the Internal Revenue Code, all amounts
of compensation deferred pursuant to the Plan, all property and rights purchased with such amounts, and all income attributable to
such amounts, property, or rights shall be held in trust for the exclusive benefit of participants and beneficiaries under the Plan. Any
trust under the Plan shall be established pursuant to a written agreement that constitutes a valid trust under the law of [insert name of
applicable state].
All amounts of compensation deferred under the Plan shall be transferred to a trust established under the Plan within a period that
is not longer than is reasonable for the proper administration of the accounts of participants. To comply with this requirement, all
amounts of compensation deferred under the Plan shall be transferred to a trust established under the Plan not later than 15 business
days after the end of the month in which the compensation would otherwise have been paid to the employee.”
OPTION B: ANNUITY CONTRACT
“Notwithstanding any contrary provision of the Plan, including any annuity contract issued under the plan, in accordance with
section 457(g) of the Internal Revenue Code, all amounts of compensation deferred pursuant to the Plan, all property and rights pur-
chased with such amounts, and all income attributable to such amounts, property, or rights shall be held in one or more annuity con-
tracts, as defined in section 401(g) of such Code, issued by an insurance company qualified to do business in the state where the con-
tract was issued, for the exclusive benefit of participants and beneficiaries under the Plan. For this purpose, the term “annuity
contract” does not include a life, health or accident, property, casualty, or liability insurance contract.
All amounts of compensation deferred under the Plan shall be transferred to an annuity contract described in section 401(f) of the
Internal Revenue Code within a period that is not longer than is reasonable for the proper administration of the accounts of partici-
pants. To comply with this requirement, all amounts of compensation deferred under the Plan shall be transferred to a contract de-
scribed in section 401(f) of such Code not later than 15 business days after the end of the month in which the compensation would
otherwise have been paid to the employee.”
OPTION C: CUSTODIAL ACCOUNT
“Notwithstanding any contrary provision of the Plan, in accordance with section 457(g) of the Internal Revenue Code, all amounts
of compensation deferred pursuant to the Plan, all property and rights purchased with such amounts, and all income attributable to
such amounts, property, or rights shall be held in one or more custodial accounts for the exclusive benefit of participants and benefi-
ciaries under the Plan. For purposes of this paragraph, the custodian of any custodial account created pursuant to the Plan must be a
bank, as described in section 408(n) of the Internal Revenue Code, or a person who meets the nonbank trustee requirements of para-
graphs (2)–(6) of section 1.408–2(e) of the Income Tax Regulations relating to the use of non-bank trustees.
All amounts of compensation deferred under the Plan shall be transferred to a custodial account described in section 401(f) of the
Internal Revenue Code within a period that is not longer than is reasonable for the proper administration of the accounts of partici-
pants. To comply with this requirement, all amounts of compensation deferred under the Plan shall be transferred to a custodial ac-
count described in section 401(f) of such Code not later than 15 business days after the end of the month in which the compensation
would otherwise have been paid to the employee.”
IRB 1998-32 8/6/98 5:26 PM Page 10

NOTE:
Following is a list of related instructions and forms for filing Information Returns Magnetically/Electronically. A copy of
these instructions and forms will be included in the printed copy of Publication 1187:
c1998 Instructions for Form 1042–S
cForm 4419—Application for Filing Information Returns Magnetically/Electronically
cForm 4804—Transmittal of Information Returns Reported Magnetically/Electronically
cForm 4802—Transmittal of Information Returns Reported Magnetically/Electronically (Continuation of Form 4804)
cForm 8508—Request for Waiver From Filing Information Returns on Magnetic Media (For Forms W–2, W–2G,
1042–S, 1098, 1099 Series, 5498, 5498–MSA and 8027)
cForm 8809—Request for Extension of Time to File Information Returns (For Forms W–2, W–2G, 1042–S, 1098, 1099,
5498, 8027)
cNotice 210—Preparation Instructions for Media Label
The Internal Revenue Service, Martinsburg Computing Center, encourages filers to make copies of blank forms for future use.
Rev. Proc. 98–44
Use this revenue procedure to prepare Tax Year 1998 Forms 1042–S for submission to Internal Revenue Service (IRS) using any of
the following:
– Tape Cartridge
– Magnetic Tape
– 8mm, 4mm, and Quarter Inch Cartridges
– 5
1
⁄
4
-inch Diskette
– 3
1
⁄
2
-inch Diskette
– Electronic Filing
– (Bisynchronous)
– (Asynchronous)
Caution to filers
Format changes to accommodate Year 2000 are included in this publication for TY98, calendar year 1999.
To be in compliance with Year 2000 changes, the current bisynchronous electronic filing communications package will
change in the future.
Please read this publication carefully. Persons or businesses required to file information returns magnetically or electron-
ically may be subject to penalties for failure to file or include correct information if they do not follow the instructions in this
revenue procedure.
1998–32 I.R.B.11August 10, 1998
IRB 1998-32 8/6/98 5:26 PM Page 11

Contents
Part A. General
Section 1. Purpose
Section 2. Nature of Changes - Current year (Tax Year 1998)
Section 3. Where to File and How to Contact the IRS Martinsburg Computing Center (IRS/MCC)
Section 4. Filing Requirements
Section 5. Form 8508, Request for Waiver from Filing Information Returns on Magnetic Media
Section 6. Vendor List
Section 7. Form 4419, Application for Filing Information Returns Magnetically/Electronically
Section 8. Test Files
Section 9. Filing of Forms 1042–S Magnetically/Electronically and Retention Requirements
Section 10. Due Dates
Section 11. Extensions of Time to File
Section 12. Processing of Information Returns Magnetically/Electronically
Section 13.Corrected Returns
Section 14. U.S. Taxpayer Identification Numbers (TIN) and Individual Taxpayer Identification Numbers (ITIN)
Section 15. Effect on Paper Returns and Statements to Recipients
Section 16. Definition of Terms
Section 17. Major Problems Encountered
Part B. Magnetic Media Specifications
Section 1. General
Section 2. Tape Cartridge Specifications
Section 3. Magnetic Tape Specifications
Section 4. 8mm, 4mm, and Quarter Inch Cartridge Specifications
Section 5. 5
1
⁄
4
- and 3
1
⁄
2
-Inch Diskette Specifications
Section 6. Data Sequence Specifications
Section 7. Transmitter “T” Record
Section 8. Recipient “Q” Record
Section 9. Withholding Agent “W” Record
Section 10. End of Transmission “Y” Record
Part C. Bisynchronous (Mainframe) Electronic Filing Specifications
Section 1. General
Section 2. Electronic Filing Approval Procedure
Section 3. Test Files
Section 4. Electronic Submissions
Section 5. Transmittal Requirements
Section 6. IBM 3780 Bisynchronous Communication Specifications
Section 7. Bisynchronous Electronic Filing Record Specifications
Part D. Asynchronous (IRP-BBS) Electronic Filing Specifications
Section 1. General
Section 2. Electronic Filing Approval Procedure
Section 3. Test Files
Section 4. Electronic Submissions
Section 5. Transmittal Requirements
Section 6. Information Reporting Program Bulletin Board System (IRP-BBS) Specifications
Section 7. IRP-BBS First Logon Procedures
Part E. Magnetic/Electronic Specifications for Extension Of Time
Section 1. General Information
Section 2. Magnetic Tape, Tape Cartridge, 8mm, 4mm, and QIC (Quarter Inch Cartridge), 5
1
⁄
4
- and 3
1
⁄
2
-inch Diskette, and
IRP-BBS Specifications
Section 3. Record Layout
August 10, 1998121998–32 I.R.B.
IRB 1998-32 8/6/98 5:26 PM Page 12

Part F. Miscellaneous Information
Section 1. Addresses for Martinsburg Computing Center
Section 2. Telephone Numbers for Contacting IRS/MCC
1998–32 I.R.B.13August 10, 1998
IRB 1998-32 8/6/98 5:26 PM Page 13

Part A. General
Revenue procedures are generally revised annually to reflect legislative and form changes. Comments concerning this revenue
procedure, or suggestions for making it more helpful, can be addressed to:
Internal Revenue Service
Martinsburg Computing Center
Attn: IRB, Information Support Section
P.O. Box 1359
Martinsburg, WV 25402
Sec. 1. Purpose
.01 The purpose of this revenue procedure is to provide the specifications under which withholding agents may file Form 1042–S,
Foreign Person’s U.S. Source Income Subject to Withholding, magnetically or electronically, which includes
1
⁄
2
-inch magnetic tape,
IBM 3480, 3490, or AS400 compatible tape cartridges (including 8mm, 4mm, and Quarter Inch); or 5
1
⁄
4
- or 3
1
⁄
2
-inch diskettes with
IRS.
.02This revenue procedure supersedes the following: Rev. Proc. 96–11, published as Pub. 1187(01–96), Specifications for Fil-
ing Form 1042–S, Foreign Person’s U.S. Source Income Subject to Withholding, Magnetically/Electronically.
.03Specifications for filing the Form 1042-S are contained in this revenue procedure. This revenue procedure must be used for
the preparation of current Tax Year 1998 Forms 1042-S filed between January 1, 1999, and December 31, 1999,and those filed for
years prior to 1998.
.04The following revenue procedures and publications provide more detailed filing procedures for certain other information re-
turns.
(a)1998 “Instructions for Form 1042–S.”
(b)1998 “Instructions for Forms 1099, 1098, 5498, and W–2G” provides specific instructions on completing and submit-
ting information returns to IRS.
(c)Rev. Proc. 84–33, 1984–1 C.B. 502, regarding the optional method for agents to report and deposit backup withholding.
(d)Publication 1179, Rules and Specifications for Private Printing of Substitute Forms 1096, 1098, 1099 Series, 5498, and
W–2G.
(e)Publication 1239, Specifications for Filing Form 8027, Employer’s Annual Information Return of Tip Income and Allo-
cated Tips Magnetically or Electronically.
(f)Publication 1220, Specifications for Filing Forms 1098, 1099, 5498, and W-2G Magnetically or Electronically.
(g)Publication 1245, Specifications for Filing Form W–4, Employee’s Withholding Allowance Certificate, Magnetically
or Electronically.
(h)Publication 1167, Substitute Printed, Computer Prepared, and Computer Generated Tax Forms and Schedules (Use this
publication for preparing substitute Forms 1042–S).
(i)Rev. Proc. 98–25, specifications set forth for the magnetic or electronic filing of 1998 Form 8851, Summary of Medical
Savings Accounts.
.05It is unlawful to intentionally transmit a computer virus to the Internal Revenue Service. Violators may be subject to a fine
and/or imprisonment.
.06 Refer to Part A, Sec. 16, for definitions of terms used in this publication.
Sec. 2. Nature of Changes – Current Year (Tax Year 1998)
.01 Legislative changes for Tax Year 1998 necessitated major changes in the record format for Form 1042–S filed magnet-
ically/electronically. Format changes to accommodate Year 2000 are contained in this publication. Treasury has mandated
that all electronic year dates exchanged with non-IRS organizations, both government and private, both input and output,
shall adhere to the following:
– All Gregorian date formats will be in the format ‘YYYYMMDD’.
– All other year date formats (e.g., Julian, Tax Period, Cycle Dates) will expand representations from 2-digit year to 4-digit
year: ‘YYYY’.
Other format changes were made to the records as well. The record changes make it imperative for filers to read this publi-
cation in its entirety. Failure to comply with the new record formats will result in the media being returned to the filer.
.02 In previous years, new or revised information in the publication has been highlighted by the use of italics. Due to the
various changes in record formats, italics will not be used in this publication. Filers are encouraged to read the entire publi-
cation.
August 10, 1998141998–32 I.R.B.
IRB 1998-32 8/6/98 5:26 PM Page 14

.03 Within the next few years, IRS/MCC will discontinue processing 5
1
⁄
4
-inch diskettes as an acceptable form of media.
Filers are encouraged to explore optional types of media or methods for submitting information returns to IRS/MCC. The
Information Reporting Program-Bulletin Board System (IRP-BBS) is a highly recommended alternative to diskette filing.
.04 Editorial Changes – General
Numerous editorial and format changes have been made to the publication. Following are some of the changes that have been
made to the revenue procedure:
a)A ZIP code change has occurred for the Martinsburg Computing Center. For all Martinsburg Computing Center addresses
containing a post office box, the ZIP code has been changed from 25401 to 25402. The ZIP code for the street address (Route
9 and Needy Road) of the Martinsburg Computing Center remains 25401.
b)In Part A, Sec. 6, filers are advised that the Vendor List will be printed every other year. The most current version will always
be available for reading or downloading from the Information Reporting Program- Bulletin Board System (IRP-BBS).
c)Part A, Sec. 7.01, a chart has been added to clarify the guidelines for applications for a Transmitter Control Code (TCC).
d)In Part A, Sec. 7.11, information has been added to advise filers that multiple Transmitter Control Codes (TCCs) will only be
issued to a filer with multiple TINs, one TCC per TIN.
e)In Part A, Sec. 8.02, added the word “Test” as an indicator to be used for testing purposes.
f)In Part A, Sec. 9.09, filers are advised to create a self-adhesive label with the required information to attach to each tape, car-
tridge, or diskette.
g)Part A, Sec. 9.10, filers are advised to attach a label that states “IRB, Box ___of___” to the outside of the shipping container.
h)In Part A, Sec. 10.03, filers are advised that the timely mailing rule now applies to designated private delivery services.
i)Part A, Sec. 12.03, information has been added regarding the Media Tracking Slip (Form 9267) which accompanies media re-
turned to filers due to processing problems.
j)Part A, Sec. 14, has been added relating to U.S. Taxpayer Identification Numbers (TIN) and the Individual Taxpayer Identifi-
cation Number (ITIN).
k)Part A, Sec. 17, Problem 11, Math Computation Discrepancy was added as one of the major problems encountered. Sug-
gested formulas were added to help eliminate this problem.
l)Added 8mm, 4mm and QIC (Quarter Inch Cartridge) as acceptable forms of magnetic media.
m)Added Part F, Miscellaneous Information. Information in this part has been provided as a quick reference point for addresses
and telephone numbers for IRS/MCC.
n)Date field positions were increased to accommodate Year 2000.
o)Numerous record format changes occurred throughout Part B.
*Note: Filers are encouraged to read the publication in its entirety to ensure accuracy in filing their information mag-
netically/electronically.
Sec. 3. Where to File And How to Contact The IRS Martinsburg Computing Center (IRS/MCC)
*Note: The Code has changedfrom 25401-1359 to 25402-1359 forthe IRS P.O. Box addresses for Martinsburg, WV.
.01All Forms 1042-S filed magnetically or electronically are processed at IRS/MCC. Files containing Forms 1042-S, requests
for IRS magnetic media and electronic filing information, undue hardship waivers, and requests for extensions of time to file returns,
or to furnish the statements to recipients, are to be sent to the following addresses:
)
(
If by Postal Service:orIf by truck or air freight:
IRS-Martinsburg Computing CenterIRS-Martinsburg Computing Center
Information Reporting ProgramInformation Reporting Program
P. O. Box 1359Route 9 and Needy Road
Martinsburg, WV25402-1359Martinsburg, WV 25401
.02 Send a magnetically filed extension of time request to one of the following addresses:
If by Postal Service:
)
IRS-Martinsburg Computing Center
Information Reporting Program
Attn: Extension of Time Coordinator
P. O. Box 879
Kearneysville, WV 25430
1998–32 I.R.B.15August 10, 1998
IRB 1998-32 8/6/98 5:26 PM Page 15

If by truck or air freight: (
IRS-Martinsburg Computing Center
Information Reporting Program
Attn: Extension of Time Coordinator
Route 9 and Needy Road
Martinsburg, WV 25401
.03Telephone inquiries for the Information Reporting Program Call Site may be made between 8:30 a.m. and 4:30 p.m. Eastern
time, Monday through Friday. The telephone numbers for magnetic media inquiries or electronic submission are:
%
304-263-8700 - Call Site - Part A, Sec 3.06
Asynchronous filing
304-264-7070 - IRP–BBS (Information Reporting Program- Bulletin Board System) - Part D
Bisynchronous filing
(Mainframe filing)
304-264-7080 - 4.8 Modems - Part C
304-264-7040 - 9.6 Modems - Part C
304-264-7045 - 14.4 Modems - Part C
304-267-3367 - TDD (Telecommunication Device for the Deaf)
304-264-5602 - Fax Machine
(These are not toll-free telephone numbers.)
TO OBTAIN FORMS:
1-800-TAX-FORM (1-800-829-3676)
IRP-BBS ACCESS TO FORMS
304-264-7070
INTERNET ACCESS TO FORMS
http://www.irs.ustreas.gov
.04 Requests for paper returns, publications and forms related to magnetic media processing MUSTbe made by calling the
“Forms Only Number” listed in your local telephone directory or by calling the IRS toll free number: 1-800-TAX-FORM (1-800-
829-3676)
.05The 1998 “Instructions for Form 1042–S” have been included in Publication 1187 for transmitter convenience. The Form
1042 is used to transmit Copy A of paper Forms 1042–S. If filing paper returns, follow the mailing instructions on the Form 1042
and submit the paper returns to the Internal Revenue Service Center, Philadelphia PA 19255.
.06The Internal Revenue Service Centralized Call Site is located at IRS/MCC and operates in conjunction with the Information
Reporting Program. The Call Site provides service to the payer community (financial institutions, employers, and other transmitters
of information returns).
.07The Call Site accepts calls from all areas of the country. Hours of operation for the Call Site are Monday through Friday, 8:30
a.m. to 4:30 p.m. Eastern Time. The Call Site is in operation throughout the year to handle the questions of payers, transmitters, and
employers. Due to the high demand for assistance at the end of January and February, it is advisable to call as soon as possible to
avoid these peak filing seasons.
.08 The IRS Centralized Call Site answers both magnetic media and tax law questions relating to the filing of Forms 1042–S, all
information returns, and backup withholding due to missing and incorrect taxpayer identification numbers.
.09For assistance with regard to the reporting of Forms 1042-S, nonresident alien withholding, magnetic media filing, and pro-
cessing requirements, contact:
Martinsburg Computing Center
Information Reporting Program Call Site
%
TEL: 304-263-8700
TDD: 304-267-3367
FAX: 304-264-5602
.10 If you need help with regard to nonresident alien withholding requirements, contact:
August 10, 1998161998–32 I.R.B.
IRB 1998-32 8/6/98 5:26 PM Page 16

Office of the Assistant Commissioner (International)
ATTN: Taxpayer Service Division
950 L’Enfant Plaza South, SW
Washington, DC 20024
%
TEL: 202-874-1460
FAX: 202-874-5440
Sec. 4. Filing Requirements
.01The regulations under section 6011(e)(2)(A) of the Internal Revenue Code, provide that any person, including a corporation,
partnership, individual, estate, and trust, who is required to file 250 or more information returns must file such returns magneti-
cally/electronically. Withholding agents who meet the threshold of 250* or more Forms 1042–S are required to submit their infor-
mation electronically or magnetically.
*Even though as many as 249 Forms 1042–S may be submitted on paper to the Internal Revenue Service, IRS encour-
ages filers to transmit the forms magnetically or electronically.
.02 The filing requirement applies individually to each reporting entity as defined by its separate Taxpayer Identification Number
(TIN), (Social Security Number (SSN), or Employer Identification Number (EIN)). For example, if filing for a corporation with
several branches or locations and each uses the same name and EIN, the filer must aggregate the total volume of returns to be filed
for that EIN and apply the filing requirement accordingly.
.03This requirement applies separately to original and corrected documents. For example, 300 original documents are filed mag-
netically or electronically. If 200 of those documents were filed with erroneous information, corrections may be submitted on paper
forms; however, 250 or more corrections must be submitted magnetically/electronically.
* Note: If filers meet the filing requirements and engage a service bureau to prepare media on their behalf, the filers
should ensure not to report duplicate data which may cause penalty notices to be generated.
.04 Filers who are required to submit their Forms 1042–S on magnetic media may choose to submit their documents electroni-
cally instead. Filers who transmit their information electronically are considered to have satisfied the magnetic media filing require-
ments.
.05IRS/MCC has two methods by which payers may submit their files electronically. Bisynchronous (mainframe) electronic fil-
ing, which can be found in Part C of this publication, or Asynchronous (Information Reporting Program-Bulletin Board System),
which is in Part D. An overview of some features provided on the IRP-BBS are as follows:
• Electronic filing of information returns to the IRS using dial-up modems
• Return notification of the acceptability of the data transmitted within 10 days for Forms 1042–S
• Electronic communication with IRS and SSA bulletin board systems
• Access to shareware
• Access to forms and publications relating to the Information Reporting Program
• News about the latest changes and updates that affect the Information Reporting Program at IRS
• Answers to messages and questions left on the bulletin board
• Available for public use and can be reached by dialing 304-264-7070
• IRP-BBS is accessible 24 hours a day, 7 days a week. Routine maintenance is performed daily, at approximately 7:00 a.m.
Eastern Time
• Questions, comments, or suggestions can be directed to the Systems Operator (SYSOP) through IRP-BBS.
.06The above requirements do not apply if the withholding agent submits an application for and is granted an undue hardship
waiver. (See Part A. Sec. 5.)
.07 For additional information on filing requirements, please refer to the 1998 “Instructions for Form 1042-S.”
Sec. 5. Form 8508, Request For Waiver From Filing Information Returns on Magnetic Media
.01If a payer is required to file on magnetic media but fails to do so (or fails to file electronically, in lieu of magnetic media fil-
ing) and does not have an approved waiver on record, the filer will be subject to a penalty of $50 per return in excess of 250. The
penalty applies separately to original and corrected returns. (For penalty information, refer to the Penalty section of the 1998 “In-
structions for Forms 1042–S”).
.02 Payers required to file Form 1042–S magnetically or electronically may receive a waiver if the requirement would create an
undue hardship. The payer may request a waiver by submitting Form 8508, Request for Waiver From Filing Information Returns on
Magnetic Media, to IRS/MCC.
1998–32 I.R.B.17August 10, 1998
IRB 1998-32 8/6/98 5:26 PM Page 17

.03Generally, only the payer may sign the Form 8508. A transmitter may sign if given power of attorney; however, a letter
signed by the payer stating this fact must be attached to the Form 8508.
.04 A separate Form 8508 must be submitted by each payer. Do not submit a list of payers.
.05Filers are encouraged to submit Form 8508 at least 45 days before the due date of the return.
.06If a waiver for original documents is approved, any corrections for the same type of returns will be covered under this waiver.
If a payer submits the original Forms 1042-S on magnetic media, less than 250 corrections may be submitted on paper. However, if
you can submit your original returns on magnetic media but not your corrections, you must request a waiver for those exceeding the
250.
.07Waivers are evaluated on a case-by-case basis and are approved or denied based on regulation criteria set forth under section
6011(e) of the Internal Revenue Code. The transmitter must allow a minimum of 30 days for IRS/MCC to respond to a waiver re-
quest.
.08All information requested on the Form 8508 must be provided to IRS for the request to be processed. Failure to provide all of
the information requested on the Form 8508 and/or the cost estimates, if applicable, will result in an automatic denial of the waiver
request.
.09 An approved waiver will only provide exemption from magnetic or electronic filing for one tax year. A waiver may not be
requested for more than one tax year at a time.If needed, the withholding agent must apply each year for a waiver.
.10 A copy of Form 8508 may be obtained by calling 1-800-829-3676. Form 8508 may be photocopied or computer-generated as
long as it contains all the information requested on the original form. A copy of the Form 8508 is located in the back of this publica-
tion.
.11If a waiver request is approved, the transmitter should keep the approval letter on file.
.12An approved waiver from filing information returns magnetically or electronically does not provide exemption from filing;
the withholding agent must still file information returns on acceptable paper forms with the Philadelphia Service Center. Do not in-
clude a copy of the approved waiver with the paper forms.
Sec. 6. Vendor List
.01IRS/MCC prepares a list of vendors who support magnetic media or electronic filing. The Vendor List (Publication 1582)
contains the names of service bureaus that will produce files on the prescribed types of magnetic media or via electronic filing. It
also contains the names of vendors who provide software packages for payers who wish to produce magnetic media or electronic
files on their own computer systems. This list is compiled as a courtesy and in no way implies IRS/MCC approval or endorsement.
.02 If filers meet the filing requirements and engage a service bureau to prepare media on their behalf, the filers should
ensure not to report duplicate data, which may cause penalty notices to be generated.
.03The Vendor List may be updated in print every other year. The most recently printed copy will be available by contacting
IRS/MCC at 304-263-8700 or by way of letter (See Part A. Sec. 3). The copy of the Vendor List on the Information Reporting Pro-
gram-Bulletin Board System is updated whenever changes or new information is received. (Refer to Part D).
.04A vendor, who offers a software package, has the ability to produce magnetic media for customers, or has the capability to
electronically file information returns, and would like to be included on the list, must submit a written request to IRS/MCC. The re-
quest should include:
(a)Company name
(b)Address (include city, state, and ZIP code)
(c)Telephone number (include area code)
(d)Contact person
(e)Type(s) of service provided (e.g., service bureau and/or software)
(f)Type(s) of media offered (e.g., magnetic tape or tape cartridge, 5
1
⁄
4
- or 3
1
⁄
2
-inch diskettes or electronic filing)
(g)Type of return
Sec. 7. Form 4419, Application For Filing Information Returns Magnetically/Electronically
.01Withholding agents or their agents are required to submit Form 4419, Application for Filing Information Returns Magneti-
cally/Electronically, to request authorization to file Forms 1042–S with IRS/MCC. A single Form 4419 should be filed. A separate
Transmitter Control Code (TCC) will be assigned for each form identified in Block 6. A TCC for filing Forms 1042–S begins with
the numbers “22”. Please make sure you submit your magnetic media files using the correct TCC. See the chart below:
August 10, 1998181998–32 I.R.B.
IRB 1998-32 8/6/98 5:26 PM Page 18

A separate Transmitter Control Code (TCC) is required for filing each of the following types of returns: Forms 1098, 1099,
5498; 8027; 8596; Questionable W–4; and W–2G.
FORM AND TCC
NUMBERING SERIESTITLEEXPLANATION
1098, 1099-SeriesVarious types of Information Returns using Pub 1220 for filing require-
5498, 8596, and W–2Greturnsments and record layout
(Various TCC numbers
excluding those beginning
with numbers 21, 22, and 70–79)
8027Employer’s Annual Information Returns using Pub 1239 for filing require-
(TCC beginsReturn of Tip Income andments and record layout
with numbers “21”)Allocated Tips
Questionable W–4Employee’s WithholdingReturns using Pub 1245 for filing require-
(See Note)Allowance Certificatements and record layout
(TCC begins with numbers “70”
through “79”)
*Note: Employers are not required to send other Forms W–4 unless notified to do so by the IRS.
.02 Form 4419 can be submitted any time during the year; however, it mustbe submitted to IRS/MCC at least 30 days before the
due date of the return(s) for current year processing. This will allow IRS/MCC the minimum amount of time necessary to process
and respond to applications. In the event that computer equipment or software is not compatible with IRS/MCC, a waiver may be
requested to file returns on paper documents.
.03 For documents to be filed electronically using IBM 3780 bisynchronous protocols, Form 4419 must be submitted at
least 45 days prior to the due date of the returns (See Part C, Sec. 2).
.04If a filer has been assigned a TCC to file magnetically and later chooses to file electronically, it is not necessary to apply for
another TCC as long as the TCC begins with the digits “22”.
.05Filers must have a TCC to transmit data electronically. When initial contact is made with the IRP-BBS, filers will be in-
structed to assign their own password and do not need prior approval, other than a valid TCC.
.06 A Form 4419 is included in the Publication 1187 for the filer’s use. This form may be photocopied. Additional forms may be
obtained by calling 1-800-TAX-FORM (1-800-829-3676). The form is also available on IRP-BBS at 304-264-7070or on Internet
at http://www.irs.ustreas.gov.
.07The filer will receive an approval letter that will contain a five-character alpha/numeric TCC (beginning with the digits
“22”). Do not submit Forms 1042-S using a TCC assigned for the purpose of filing other information returns. Forms 1042-S
may not be filed electronically or magnetically until an application has been approved and a TCC assigned. The TCC must be coded
in the Transmitter “T” Record.
A magnetic media reporting package containing the current revenue procedure, forms, and instructions will be sent annually to the
attention of the contact person indicated on Form 4419.
.08Once a TCC has been assigned for filing magnetically or electronically, it is not necessary to reapply each year unless:
(a) The withholding agent/transmitter has discontinued filing magnetically or electronically for two years; the filer’s TCC
may have been reassigned by IRS/MCC. Filers, who are aware that the TCC assigned will no longer be used, are re-
quested to notify IRS/MCC so these numbers may be reassigned.
(b) The filer’s magnetic media files were transmitted in the past by a service bureau using the service bureau’s TCC, but
now the filer has computer equipment compatible with that of IRS/MCC and wishes to prepare his or her own files.
The filer must request a TCC by filing Form 4419.
If any of the information (name, TIN or address) on the Form 4419 changes, please notify IRS/MCC in writing so the IRS/MCC
database can be updated. However, a change in the method by which information returns are being submitted is not information
which needs to be updated (i.e., tape to disk, disk to BBS). The transmitter should include the TCC in allcorrespondence.
.09If a withholding agent’s files are prepared by a service bureau, it may not be necessary to submit an application to obtain a
TCC. Some service bureaus will produce files, code their own TCC on the media, and send it to IRS/MCC for the withholding
agent. Other service bureaus will prepare magnetic media and return the media to the withholding agent for submission to
IRS/MCC. However, even if the service bureau prepares and transmits the media, the withholding agent is responsible for the accu-
racy of the filing and the returns being filed. The withholding agent will be liable for penalties for failure to comply with filing re-
quirements. These service bureaus may require the withholding agent to obtain a TCC to be coded in the “T” Record. Withholding
agents should contact their service bureaus for further information.
1998–32 I.R.B.19August 10, 1998
IRB 1998-32 8/6/98 5:26 PM Page 19

.10 IRS/MCC encourages transmitters who file for multiple payers to submit one application and to use the assigned TCC for all
withholding agents.
.11One Form 4419 may be submitted regardless of how many types of media or methods are used to file the return. Multiple
TCC’s will only be issued to withholding agents with multiple TINS. Only one TCC will be issued per TIN unless the filer
has checked other forms listed in Block 6 of Form 4419 in addition to Forms 1042–S.
.12Approval to file does not imply endorsement by IRS/MCC of any computer software or of the quality of tax preparation ser-
vices provided.
Sec. 8. Test Files
.01IRS/MCC does not require test files, but encourages first-time magnetic media or electronic filers to submit a test for review
prior to the filing season. For current filers, sending a test file will provide the opportunity to ensure their software reflects any pro-
gramming changes. IRS/MCC will check the file to ensure it meets the specifications of this revenue procedure. The test file must
not consist of fictitious data. The test file mustconsist of a sample of each type of record:
(a) Transmitter “T” Record
(b) Multiple Recipient “Q” Records (at least 20)
(c) Withholding Agent “W” Record
(d) End of Transmission “Y” Record
See Part B for the record formats.
.02Use the Test Indicator “TEST”in Field Positions 133-136 of the “T” Record to show this is a test file.
.03Form 4419 must be filed with IRS/MCC and a TCC must be assigned before test files are submitted.
.04 Tests should be sent to IRS/MCC between December 1 and February 15. The test mustbe received at MCC by February
15 in order to be processed.
.05For tests filed electronically, the transmitter must send the signed Form 4804, Transmittal of Information Returns Reported
Magnetically/Electronically, the same day the transmission is made. For tests filed on magnetic tape, tape cartridge, 8mm, 4mm,
and quarter inch cartridge, 5
1
⁄
4
- and 3
1
⁄
2
-inch diskettes, the transmitter must include the signed Form 4804 in the same package with
the corresponding magnetic media. Mark the “TEST” box in Block 1 on the form, and in Block 9 provide the total number of recip-
ient “Q” records. Also, indicate “TEST” on the external media label.
.06 IRS/MCC will send an acknowledgment to indicate the test results. Unacceptable magnetic media files, along with docu-
mentation identifying the errors, will be returned to the filer for replacement. Resubmission of test files must be received by
IRS/MCC no later than February 15.
.07IRS/MCC does not return media once it has been successfully processed.
Sec. 9. Filing of Forms 1042-S Magnetically/Electronically and Retention Requirements
.01Form 4804, Transmittal of Information Returns Reported Magnetically/Electronically, Form 4802, Transmittal of Information
Returns Reported Magnetically/Electronically (Continuation), or computer-generated substitute, mustaccompany allmagnetic
media shipments. For electronic transmissions, the Form 4804 and Form 4802, if applicable, must be sent the same day as the elec-
tronic transmission. Form 4802 is a continuation of Form 4804 and should only be used if the filer is reporting for multiple with-
holding agents. Form 4802 is not a stand-alone form; it can only accompany Form 4804.
.02 IRS/MCC encourages the use of computer-generated substitutes for Form 4804/4802. The substitutes must contain all infor-
mation requested on the original forms including the affidavit and signature line. Photocopies are acceptable but an original signa-
ture is required. When using computer generated forms, be sure to mark very clearly which tax year is being reported. This
will eliminate a call from IRS/MCC to question the tax year.
.03Multiple types of media may be submitted in a shipment. However, submit a separate Form 4804 for each type of media.
.04Current and prior year data may be submitted in the same shipment; however, each tax year must be on separate media,
and a separate Form 4804 must be prepared to clearly indicate each tax year.
.05Filers who have prepared their information returns in advance of the due date are encouraged to submit this information to
IRS/MCC no earlier than January 1 of the year the return is due.
.06 Do not report duplicate information. If a filer submits returns magnetically/electronically, identical paper documents
must not be filed. This may result in erroneous penalty notices.
.07Form 4804 may be signed by the withholding agent or the transmitter, service bureau, paying agent, or disbursing agent (all
hereafter referred to as agent), on behalf of the payer. An agent may sign the Form 4804 if the agent has the authority to sign the af-
fidavit under an agency agreement (either oral, written, or implied) that is valid under state law and adds the caption “FOR: (name of
withholding agent/payer)”. Failure to sign the affidavit on Form 4804 may delay processing or could result in the files being re-
turned unprocessed.
.08Although an authorized agent may sign the affidavit, the withholding agent is responsible for the accuracy of the Form 4804
and the returns filed. The withholding agent will be liable for penalties for failure to comply with the filing requirements.
August 10, 1998201998–32 I.R.B.
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.09 A self-adhesive external media label, created by the filer, must be affixed to each tape and diskette. (IRS no longer pro-
vides self-adhesive labels for this purpose.)For instructions on how to prepare an external media label, refer to Notice 210 in the
forms section of this publication. If diskettes are used, and the operating system is not MS-DOS compatible, the operating system and
hardware information mustbe provided. Failure to provide this information may result in the diskettes being returned to the filer.
.10 On the outside of the shipping container, affix or attach a label which reads IRB Box ___of___reflecting the number of con-
tainers in the shipment. (Filers can create a label with this information or cut out one of the labels on the special label page provided
in this publication). If there is only one container, mark the outside as Box 1of 1. For multiple containers, include the sequence (for
example, Box 1 of 3, 2 of 3, 3 of 3).
.11When submitting files include the following:
(a) AsignedForm 4804;
(b) Form 4802, if applicable;
(c) External Media Label (created by the filer) affixed to the magnetic media;
(d) IRBBox ___ of ___ outside label.
* Note: See Parts C and D for electronic submission requirements.
.12IRS/MCC will not pay for or accept “Cash-on-Delivery” or “Charge to IRS” shipments of tax information that an individual
or organization is legally required to submit.
.13Withholding agents should retain a copy of the information returns filed with IRS or have the ability to reconstruct the data for
at least 3 years from the reporting due date.
Sec. 10. Due Dates
.01 The due dates for filing paper returns with IRS also apply to magnetic media or electronic filing. Filing of Form 1042–S is on
a calendar year basis. Files must be submitted to IRS/MCC postmarked no later than March 15 of the calendar year.
.02 If the due date of March 15 falls on a Saturday, Sunday, or a legal holiday, the return to IRS and the statement to recipient is
considered timely if filed with IRS and furnished to the recipient on the next business day.
.03Returns postmarked by the United States Postal Service (USPS) on or before March 15, 1999, and delivered by United States
mail to the IRS/MCC after the due date, are treated as timely under the “timely mailing as timely filing” rule. A similar rule applies
to items delivered by private delivery services (PDSs) designated by the IRS. A PDS must be designated by the IRS before it will
qualify for the timely mailing rule. Designation is determined with respect to each type of delivery service offered by a PDS (e.g.,
next day delivery, two day delivery, etc.). Notices 97–26, 1997–1 C.B. 413 and 97–50, 1997–37 I.R.B.21, provide the list of desig-
nated PDSs and the types of delivery services designated. Designation is effective until the IRS issues a revised list of designated
PDSs. Notice 97–26 also provides rules for determining the date that is treated as the postmark date. For items delivered by a non-
designated PDS, the actual date of receipt by IRS/MCC will be used as the filing date. For items delivered by a designated PDS, but
through a type of service not designated in Notices 97–26 or 97–50, the actual date of receipt by IRS/MCC will be used as the filing
date. The timely mailing rule also applies to furnishing statements to recipients.
.04 Statements to recipients must be furnished to the income recipient on or before March 15, 1999, for TY98.
.05Late filed media could result in a penalty for failure to file correct information returns by the due dates. (For information on
penalties, refer to the Penalty Section of the 1998 “Instructions for Form 1042–S”.
.06 Use this revenue procedure to prepare Forms 1042–S filed magnetically or electronically beginning January 1, 1999 and re-
ceived by IRS/MCC no later than December 31, 1999.
Sec. 11. Extensions of Time to File
.01 An extension of time to file may be requested for Form 1042–S.
.02 Form 8809, Request for Extension of Time to File Information Returns, should be submitted to IRS/MCC. This form may be
used to request an extension of time to file information returns submitted on paper, magnetically or electronically.
.03 Requesting an extension of time for multiple withholding agents (50 or less) may be done by submitting Form 8809 and at-
taching a list of the withholding agent’s names and their TINs (EIN or SSN). The listing must be attached to ensure the extension
is recorded for all withholding agents. Form 8809 may be computer-generated or photocopied. Be sure all the pertinent informa-
tion is included.
.04Requests for an extension of time to file for more than 50withholding agents are required to be submitted magnetically or
electronically (See Note). Requests for an extension of time for 10 to 50 withholding agents are encouraged to be filed magnetically
or electronically. (See Part E, Sec. 3, for the record format.) The request may be filed on tape, tape cartridge, 5
1
⁄
4
- and 3
1
⁄
2
-inch
diskette, or electronically through the IRP-BBS or mainframe.
*Note: If a filer does not have an IRS/MCC assigned TCC, a Form 4419, Application for Filing Information Returns
Magnetically/Electronically, must be submitted to obtain a TCC. This number must be used to submit an exten-
sion request magnetically/electronically.
1998–32 I.R.B.21August 10, 1998
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.05All magnetically filed requests for an extension of time should be sent using the following addresses:
If by Postal Service:
)
IRS-Martinsburg Computing Center
Information Reporting Program
ATTN: Extension of Time Coordinator
P. O. Box 879
Kearneysville, WV 25430
If by truck or air freight: (
IRS-Martinsburg Computing Center
Information Reporting Program
ATTN: Extension of Time Coordinator
Route 9 and Needy Road
Martinsburg, WV 25401
.06 Requests for extensions of time for multiple withholding agents will be responded to with one approval letter, accompanied
by a list of withholding agents covered under that approval.
.07 Withholding agents may request an extension of time to file for 30days as soon as they are awarethat an extension is nec-
essary; but no later than the due date of the return (March 15, 1999 (TY98) for Forms 1042–S). It will take a minimum of 30 days
for IRS/MCC to respond to an extension request. Under certain circumstances, a request for an extension of time could be denied.
When a denial letter is received, any additional or necessary information may be resubmitted within 20 days.
.08If an additional extension of time is needed, a second Form 8809 must be submitted before the end of the initial extension pe-
riod. Line 7 on the form indicates an additional extension is being requested. A second 30-day extension will be approved only in
cases of extreme hardship or catastrophic event. When requesting an extension of time, submit the information return files as
soon as prepared. Do not wait for MCC’s response to your extension request.
.09 Form 8809 must be postmarked no later than the due date of the return for which an extension is requested. If requesting an
extension of time to file several types of forms, use one Form 8809, but the Form 8809 must be postmarked no later than the
earliest due date.For example, if requesting an extension of time to file both Forms 1099–INT and 1042–S, submit Form 8809
postmarked on or before March 1, 1999. Complete more than one Form 8809 to avoid this problem.
.10If an extension request is approved, the approval letter should be kept on file. The approval letter or copy of the approval let-
ter for an extension of time should not be sent to IRS/MCC with the magnetic media file or to Philadelphia Service Center with the
paper returns.
.11Request an extension for only one tax year.
.12The extension request must be signed by the withholding agent or a person who is duly authorized to sign a return, statement
or other document for the agent.
.13Failure to properly complete and sign the Form 8809 may cause delays in processing the request or result in a denial. Please,
read and follow the instructions on the back of the Form 8809 carefully.
.14 Form 8809 may be obtained by calling 1-800-TAX-FORM (1-800-829-3676). The form is also available on IRP-BBS at
304-264-7070 or on Internet at http://www.irs.ustreas.gov.A copy of the Form 8809 is also provided in the back of the Publica-
tion 1187.
.15 Request an extension of time to furnish the statements to recipients of Form 1042–S by submitting a letter to IRS/MCC con-
taining the following information:
(a)Withholding Agent’s Name
(b)TIN
(c)Address
(d)Type of Return
(e)Specify that the extension request is to provide statements to recipients.
(f)Reason for Delay
(g)Signature of Withholding Agent or Person Duly Authorized
Requests for an extension of time to furnish the statements to recipients of Form 1042–S are not automatically approved; how-
ever, if approved, generally an extension will allow a maximum of 30 additionaldays from the due date to furnish the statements to
the recipients. The request must be postmarked by the date on which the statements are due to the recipients.
.16 An approved extension grants additional time to file the Forms 1042–S with IRS/MCC only. This does not include Form
1042 which is an actual tax return. Any tax due must still be paid timely.
.17To request an extension of time to file Form 1042, submit Form 2758 with the IRS at the following address:
August 10, 1998221998–32 I.R.B.
IRB 1998-32 8/6/98 5:26 PM Page 22

)
Internal Revenue Service Center
Philadelphia, PA 19255
Sec. 12. Processing of Information Returns Magnetically/Electronically
.01All data received at IRS/MCC for processing will be given the same protection as individual income tax returns (Form 1040).
IRS/MCC will process the data and determine if the records are formatted and coded according to this revenue procedure.
.02If media is returned, it is because IRS/MCC encountered errors, (not limited to format) and was unable to process the media,
therefore, requiring a replacement. Open all packages immediately.
.03When the magnetic media is returned to the transmitter for replacement, it will be accompanied with a Media Tracking Slip
(Form 9267),and sample records identifying the type of errors. It is the responsibility of the transmitter to check the entire file for
similar errors.
.04 Files must be corrected and returned with the Media Tracking Slip (Form 9267) to IRS/MCC within 45 days from the date of
the letter IRS/MCC included with the returned files. If the payee record count (number of “Q” Records ) has changed from the orig-
inal filing, include a Form 4804 stating the new record count; mark the word replacement in Box Number 1; and return the form with
your replacement media. A penalty for failure to file correct information returns by the due date will be assessed if the files are not
corrected and returned within 45 days,or if the incorrect files are returned by IRS/MCC for replacement more than two times.
A penalty for intentional disregard of the filing requirements will be assessed if a replacement file is not received. (For penalty in-
formation refer to the Penalty Section of the 1998 “Instructions for Form 1042–S”).
.05 Some conditions may not require corrective actions. For example, certain recipients should have had tax withheld at a
particular rate, but the withholding agent withheld at a different tax rate. A letter from the filer must accompany the origi-
nal and/or replacement files verifying the amount reported on the Form 1042–S was actually withheld by the agent, and the
tax rate being used is the correct one from Publications 515 or 901. This letter will permit the incorrect data to be accepted
for processing, but does not relieve the withholding agent of the responsibility to withhold at the prescribed tax rates, or to
remit the correct amount of tax with Form 1042 (See Part B, Sec. 8, “Q” Record layout, positions 372-373, tax rate NOTES).
.06 The following definitions have been provided to help distinguish between a replacement and a correction:
• A correctionis an information return submitted by the transmitter to correct a return that was successfully processed by
IRS/MCC, but contained erroneous information (See Sec. 13, Corrected Returns).
• A replacementis an information return file that IRS/MCC has returned to the transmitter due to format or coding errors
encountered during processing. After necessary changes have been made, the file must be returned for processing along
with the Media Tracking Slip (Form 9267) which was included in the shipment from IRS/MCC.
* Note: Filers should never send anything to IRS/MCC marked “REPLACEMENT” UNLESS IRS/MCC returned
media to them.
.07 IRS/MCC will not return media after successful processing. Therefore, if the transmitter wants proof that IRS/MCC received
a shipment, the transmitter should select a service with tracing capabilities or one that will provide proof of delivery.
.08 IRS/MCC will work with filers as much as possible to assist with processing problems. If the filer is contacted by
IRS/MCC, a prompt response is important. IRS/MCC may have information the filer needs to correct his or her file.
.09IRS/MCC contacts withholding agents who have submitted recipient data with missing TINs in an attempt to prevent errors
that could result in penalties. Agents who submit data with missing TINs and have taken the necessary steps to obtain this information
are required to attach a letter of explanation to the Form 4804. This will prevent unnecessary contact from IRS/MCC. (See Part B,
Sec. 8, “Q” Record Layout, Positions 113–121). However, corrections are required to be filed as soon as the TIN has been received.
.10 Do not use special shipping containers for transmitting data to IRS/MCC. Shipping containers will not be returned.
Sec. 13. Corrected Returns
.01The magnetic media and electronic filing requirements of 250 or more Forms 1042–S applies separately to both original and
corrected returns.
.02If Forms 1042–S are filed magnetically or electronically, and later the filer determines that corrections are necessary, the cor-
rections may be filed on paper if the 250 documents threshold has not been met.
.03If the withholding agent has 250 or more corrections, they mustbe submitted to IRS/MCC magnetically or electronically un-
less a waiver has been granted. If a waiver was granted for original Forms 1042–S, this waiver applies to the corrections as well.
.04 Corrections should be filed as soon as possible. Corrections filed after August 1 may be subject to the maximum penalty of
$50 per return. Corrections filed prior to August 1 may be subject to a lesser penalty. (For information on penalties, refer to the
Penalty Section of the 1998 “Instructions for Forms 1042–S”.) However, if withholding agents discover errors after August 1, they
may still be required to file corrections so they will not be subject to a penalty for intentional disregard of the filing requirements.
Failure to correct information returns may result in penalties for failure to provide correct information. All fields must be com-
1998–32 I.R.B.23August 10, 1998
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pleted with the correct information, not just the data fields needing correction.Submit corrections only for the returns filed in
error, not the entire file. Furnish corrected statements to recipients as soon as possible.
.05 Prior year data, original and corrected, must be filed according to the requirements of this revenue procedure. Be sure to use
the actual year designation of the correction in field positions 2–5 of the “T” record. If filing electronically, a separate transmission
must be made for each tax year, and magnetically filed prior year data must be on separate media.
.06In general, filers should submit corrections for returns filed within the last three calendar years.
.07The “Q” record provides a 15-position field (positions 122–136) for the recipient’s account number assigned by the withhold-
ing agent. Do NOTenter a TIN as an account number. This number will help identify the appropriate incorrect return if more than
one return is filed for a particular recipient.
.08 Corrected returns MUST NOTbe included on the same media or sent in the same electronic transmission with original returns.
*Note: If filers discover that certain information returns were omitted on their original file, they must NOT submit these
documents as corrections. They must submit them as original returns and on separate media from corrections.
.09 Form 4804 and Form 4802 must be submitted with corrected files submitted magnetically/electronically. Mark “Correction”
in Block 1. Indicate type of filing as “C” on the media label.
.10 To provide clarification of the correction process for Forms 1042–S, the following definitions have been provided:
(a) A voidrecord is an information return (Form 1042–S) submitted by the transmitter to delete a previously filed incorrect
original return. A void record must be a duplicate of the original successfully processed return with the exception of a
“V” in field position 371 of the “Q” record. This record can be filed with or without a corresponding “C” record.
For example, a Form 1042–S was submitted, and it should have been prepared as a Form 1099. A “Q” record with the
original Form 1042–S information would be filed with a “V” in position 371. In this instance, a corresponding “C”
coded “Q” record would NOTbe necessary.
(b) A correctionis an information return (Form 1042–S) submitted by the transmitter to correct a return that was success-
fully processed by IRS/MCC, but contained erroneous information. A “C” in field position 371 of the “Q” record iden-
tifies a correction record. This record must always have a corresponding “V” record.
.11 Following is a chart showing the steps to be taken for correcting Forms 1042–S:
Guidelines for Filing Corrected Returns
Magnetically/Electronically
Transaction 1: Identify incorrect returns (void process)
The record sequence for filing corrections is the same as for original returns. Create the file in the following order exactly the
same as the original transmission:
(a)Transmitter “T” Record
(b)Recipient “Q” Record with the exact information as submitted originally; however,
(c)Place a “V” (See Note) in field position 371 of the “Q” Record
(d)Prepare a Withholding Agent “W” Record summarizing the preceding “V” Coded “Q” Records. (See sample format below.)
*Note: A “V” coded “Q” Record may or may not have a corresponding “C” Coded “Q” Record. (See Sec. 13.10)
Transaction 2: Report the correct information (correction process)
On the same media or electronic submission prepare:
(a)Recipient “Q” Record with the correct information
(b)Place a “C” (See Note) in Field Position 371 of the “Q” Record
(c)Prepare a Withholding Agent “W” Record summarizing the preceding “C” coded “Q” records
(d)Prepare an End of Transmission “Y” record
(e)“V” and “C” Coded Corrected returns submitted to IRS/MCC must be in the same submission.
*Note: Each “C” Coded “Q” Record MUST have a corresponding “V” Record.
.12Sample data sequence for void/correction records:
T
Q with V
Q with V
Q with V
Q with V
Q with V
August 10, 1998241998–32 I.R.B.
IRB 1998-32 8/6/98 5:26 PM Page 24

Q with V
W
Q with C
Q with C
Q with C
Q with C
W
Y
.13For information on when an amended Form 1042 is required, refer to Pub. 515, “Withholding of Tax on Nonresident Aliens
and Foreign Corporations”.
.14All paper returns, whether original or corrected, must be filed with the Philadelphia Service Center. See the 1998 Paper In-
structions for Forms 1042–S for information on filing paper corrections.
Sec. 14. U.S. Taxpayer Identification Numbers (TIN) and Individual Taxpayer Identification Number
(ITIN)
.01Any recipient whose income is effectively connected with a U.S. trade or business must obtain and furnish the withholding
agent with a U.S. taxpayer identification number. The U.S. taxpayer identification number is a Social Security Number (SSN) or an
Individual Taxpayer Identification Number (ITIN) in the case of an individual and an Employer Identification Number (EIN) in all
other cases. These identification numbers are required on the Forms 1042–S filed with the IRS.
.02As of January 1, 1997, the IRS will no longer accept tax returns without a Taxpayer Identification Number (TIN) for the per-
son filing a return, the spouse on a joint return, or for dependents claimed on a return.
.03An ITIN is a nine digit number that the IRS assigns in the following format: 900-00-0000. This number will always begin
with “9” and “0” may be any other number. The IRS uses the number to identify taxpayers, dependents or spouses (resident or non-
resident alien individuals) who are required to or wish to file a U.S. tax return, but are unable to obtain a Social Security Number
(SSN). The ITIN is for tax purposes only.It does not entitle the recipient to Social Security benefits, and creates no inference re-
garding immigration status or the right to work in the United States.
.04 Use IRS Form W–7, Application for IRS Individual Taxpayer Identification Number, to apply for an ITIN by mail or in per-
son at most IRS offices. You may obtain the Form W–7 from the IRS by calling 1-800-TAX-FORM (1-800-829-3676).
*Note: Taxpayers who have a previously assigned Internal Revenue Service Taxpayer Identification Number (IRSN) may
also use Form W–7 to request a valid ITIN.
Sec. 15. Effect on Paper Returns and Statements to Recipients
.01Magnetic or electronic reporting eliminates the need to submit paper Forms 1042–S to IRS. CAUTION! Do not send Copy
A of the paper forms to IRS/MCC in addition to magnetic media and electronic filing or to the Philadelphia Service Center.
This will result in duplicate filing; therefore, erroneous notices could be generated.
.02 Withholding Agents are responsible for providing statements to the recipients as outlined in the 1998 Paper Instructions for
Form 1042–S. Refer to these instructions for filing information returns on paper with the IRS and furnishing statements to recipi-
ents.
.03 Statements to recipients should be clear and legible. If the official IRS form is not used, the filer must adhere to the specifi-
cations and guidelines in Publication 1167, Substitute Printed, Computer Prepared, and Computer Generated Tax Forms and
Schedules (Rev. 10–97).
.04The address for filing paper Forms 1042–S and 1042 is:
)
Internal Revenue Service Center
Philadelphia, PA 19255
Do NOT send paper Forms 1042–S or 1042 to IRS/MCC.
1998–32 I.R.B.25August 10, 1998
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Sec. 16. Definition of Terms
ElementDescription
Asynchronous ProtocolsThis type of data transmission is most often used by micro- computers, PCs
and some mini-computers. Asynchronous transmissions transfer data at
arbitrary time intervals using start-stop method. Each character trans-
mitted has its own start bit and stop bit.
/bDenotes a blank position. Enter blank(s) when this symbol is used (do not
enter the letter “b”). This appears in numerous areas throughout the record
descriptions.
Bisynchronous ProtocolsFor purposes of this publication, these are electronic transmissions made using
IBM 3780 protocols. These transmissions must be in EBCDIC character code
and use the Bell 208B (4800bps), AT&T 2296A (9600bps) or Hayes OPTIMA
288 V.FC Smart modem (14400bps) modems. Standard IBM 3780 space com-
pression is acceptable.
Blocked recordsTwo or more records grouped together between interrecord gaps.
CorrectionA correction is an information return (Form 1042–S) submitted by the trans-
mitter to correct a return that was previously submitted to and processed by
IRS/MCC, but contained erroneous information.
*Note: A correctionshould not be confused with a replacement.Only mediareturned to the filer by IRS/MCC due to
processing problems should be marked replacement.
Employer Identification Number (EIN)A nine-digit number assigned by IRS for Federal tax reporting purposes.
Electronic FilingSubmission of information returns using switched telecommunications net-
work circuits. These transmissions use modems, dial-up phone lines, and
asynchronous or bisynchronous protocols. (See Parts A, C and D of this pub-
lication for specific information on electronic filing).
FileFor purposes of this revenue procedure, a file consists of a Transmitter “T”
record at the beginning of the file, Recipient “Q” records, followed by a cor-
responding Withholding Agent “W” Record, then additional “Q” and “W”
Record sequences for other Withholding Agents, as needed, and an End of
Transmission “Y” Record.
FilerPerson (may be withholding agent and/or transmitter) submitting information
returns to IRS.
Filing YearThe actual year in which the information returns are being submitted to
IRS/MCC (if magnetically/electronically), or to Philadelphia Service Center
(if paper)
Individual TaxpayerA nine digit number issued by the IRS to a resident or nonresident alien
Identification Number (ITIN)individual required to have a U.S. taxpayer identification number but who
does not have and cannot obtain an SSN.
Information ReturnThe vehicle for submitting required information about another person to IRS.
For this revenue procedure, it is information about a foreign person’s U.S.
source income subject to Withholding, and the information return is Form
1042–S.
Magnetic MediaFor this revenue procedure, the term “magnetic media” refers to
1
⁄
2
-inch mag-
netic tape; IBM 3480/3490/3490E or AS400 compatible tape cartridge; 8mm,
4mm, and QIC (Quarter Inch cartridges) cartridge or 5
1
⁄
4
- and 3
1
⁄
2
-inch diskettes.
August 10, 1998261998–32 I.R.B.
IRB 1998-32 8/6/98 5:26 PM Page 26

ElementDescription
Media Tracking SlipForm 9267 accompanies media that IRS/MCC has returned to the filer for
replacement due to incorrect format or errors encountered when trying to
process media. THIS FORM MUST BE RETURNED WITH THE
REPLACEMENT FILE.
Multi-reel/diskette fileA group of tape reels or diskettes submitted under one TCC where all media
either ends with a Recipient “Q” Record or Withholding Agent “W” Record,
exceptfor the last media of the file, which ends with an End of Transmission
“Y” Record. (Refer to Part B. Sec. 6 for data sequence specifications)
PayerPerson or organization who is the originator of income and enters into a con-
tractual agreement with the withholding agent for the purpose of disbursing
income for the payer. For example, Corporation X is about to declare a divi-
dend. Corporation X contracts Bank Y to calculate and distribute such divi-
dends to recipients, and be responsible for withholding. Corporation X is con-
sidered the Payer and Bank Y is considered the Withholding Agent.
RecipientPerson or organization receiving payments from a withholding agent.
ReplacementA replacement is an information return file that IRS/MCC has returned to the
transmitter due to errors encountered during processing.
*Note: Filers should never submit media to IRS/MCC marked “Replacement” unless IRS/MCC returned media to the filers. When
sending “Replacement” media be sure to include the Media Tracking Slip (Form 9267) which will accompany media
returned by IRS/MCC. Media that has been incorrectly marked as replacement may result in duplicate filing.
Service BureauPerson or organization with whom the filer has a contract to prepare and/or
submit information return files to IRS/MCC. A parent company submitting
data for a subsidiary is not considered a service bureau.
Social Security Number (SSN)A nine-digit number assigned by the Social Security Administration (SSA) to
an individual for tax and wage reporting purposes.
Special CharacterAny character that is not a numeric, an alpha, or a blank.
SSASocial Security Administration
Taxpayer Identification Refers to either a Social Security Number (SSN), an Employer Identification
Number (TIN)Number (EIN), or an Individual Taxpayer Identification Number (ITIN)
Tax YearThe year in which payments were made by a withholding agent to a recipient.
TransmitterPerson or organization who prepares and submits file(s) magnetically/elec-
tronically. May be the withholding agent or their agent.
Transmitter Control Code (TCC)A five-character alpha/numeric number assigned by IRS/MCC to the trans-
mitter prior to the filing of magnetic or electronic information. This number
is inserted in the “T” Record of the file and mustbe present before the file can
be processed. An application Form 4419 must be filed with IRS/MCC to
receive this number. Transmitter control codes assigned to 1042–S filers will
always begin with “22”. Do not use the TCC number assigned for Form 1099
filing.
VendorVendors include service bureaus that produce information return files on the
prescribed types of magnetic media or via electronic filing for withholding
agents. Vendors also include companies who provide software for those who
wish to produce their own media or electronic files.
1998–32 I.R.B.27August 10, 1998
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ElementDescription
VoidA void record is used in the correction process of Form 1042–S. For purposes
of this revenue procedure, a void record is an information return (Form 1042–S)
submitted by the transmitter to delete a previously filed incorrect original return.
A void record must be a duplicate of the original successfully processed return
with the exception of a “V” in field position 371 of the “Q” record.
Withholding AgentA person or entity, U.S. or foreign, required to withhold U.S. tax on payments
of income subject to withholding from U.S. sources. A withholding agent may
be an individual, partnership, corporation, trust, estate, government agency
(Federal, State or local), association, or a tax-exempt foundation (whether
domestic or foreign), tenant, manager, broker, agent, fiduciary, or spouse.
Withholding agents include U. S. citizens and residents, and foreign nominees
and fiduciary residents of treaty countries who must withhold additional U.S.
tax under tax treaty provisions. The withholding agent is responsible for the
completeness, accuracy, and timely submission of files.
Sec. 17. Major Problems Encountered
IRS/MCC encourages filers to verify the format and content of each type of record to ensure the accuracy of the data. This may
eliminate the need for IRS/MCC to return files for replacement. This may be important for those filers who have either had their
files prepared by a service bureau or who have purchased preprogrammed software packages (see Note). If a filer purchased a soft-
ware package for a previous tax year, it will not be valid for reporting TY98 information returns due to tax law and record format
changes.
*Note:If filers meet the filing requirements and engage a service bureau to prepare media on their behalf, the filer
remains responsible for the accuracy of the data submitted to IRS.
The Major Problems Encountered lists some of the most frequently encountered problems with magnetic/electronic files submit-
ted to IRS/MCC. These problems may result in media being returned for replacement.
1. Records formatted incorrectly.
Use the record format as prescribed in this revenue procedure. Failure to format records correctly will result in files being returned
for replacement.
2. Incorrect or missing Transmitter Control Code.
Filers MUST use the unique Transmitter Control Code (TCC) assigned for Form 1042–S reporting. This TCC must begin with the
numbers “22.”Application procedures are provided in Part A., Sec. 7, of this revenue procedure.
3. Incorrect format of the Recipient Name Line.
The recipient’s surname should be reported first, followed by given names. However, if the recipient’s surname is not entered be-
ginning in position 139 of the “Q” Record, the filer mustenter an asterisk that immediately precedes the recipient’s surname. If the
surname is reported first, the asterisk mustbe omitted, since an asterisk is not valid in the first position of Recipient Name Line One.
4. Incorrect record sequence.
To be acceptable, records must be in a specific sequence. If this sequence is not followed, the file will be returned for replacement.
(Refer to Part B., Sec. 6)
5. Incorrect block size.
Some of the files received at IRS/MCC are blocked incorrectly causing media to be returned. Refer to Part B., Sec. 2., for the cor-
rect block size for submitting Forms 1042–S magnetically/ electronically. A block may not exceed 15,000 characters, although,
shorter blocks may be used.
6. Incorrect use of Country Code in positions 137–138 of the Recipient “Q” Record.
If the letters OC(which should be used ONLY when absolutely necessary) are used, rather than a specific country code, the rate of
tax withheld MUST be 30 percent.
August 10, 1998281998–32 I.R.B.
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7. Incorrect use of Country Name in positions 335–354 of the Recipient “Q” Record.
This is a Required field for foreign addresses. Please read the Description and Remarks portion carefully. This may or may not be
the same country as indicated in the Country Code, field positions 137–138. DO NOT use Other Country; USA; US; Outside of
USA; United States.
8. Incorrect use of Tax Rate, Field position 372–373 of the Recipient “Q” Record.
This is a Required field with very specific acceptable codes. Please ensure the accuracy of the correct tax rate depending on the
proper country code and/or exemption code. See Part A, Sec. 12.05 and Part B, Sec. 8 for additional information.
9. Incorrect use of Exemption Code in field position 370 of the Recipient “Q” Record.
This is a Required field which causes many processing errors. Please read carefully the description and remarks portion, along with
the notes at the bottom to eliminate the possibility of errors.
10. Incorrect usage of Recipient Address Fields of the “Q” Record.
Be sure to use the specific breakdown of the address in the following positions:
U.S. Address FieldsForeign Address Fields
(229 – 283) Street Address(229 – 283) Street Address
(284 – 308) City(284 – 308) City
(324 – 332) Zip Code(309 – 323) Province Name
(333 – 334) U. S. State Code(324 – 332) Postal Code
(335 – 354) Country Name
11. Math Computation Discrepancy
To avoid this error, apply the following formula to determine U.S. Federal Tax Withheld (field positions 374-384 of the “Q” Record).
All field positions described in the formula below are also in the “Q” Record:
Income Codes 15 and/or 16All Other Income Codes
Gross Income Paid (359–369)Gross Income Paid (359–369)
–Withholding Allowance (430–439)3Tax Rate (372–373)
=Net Income Amount (440–449) =U.S. Federal Tax Withheld (374-384)
3Tax Rate(372-373)
=U.S. Federal Tax Withheld (374–384)
Part B. Magnetic Media Specifications
Sec. 1. General
.01The specifications contained in this part of the revenue procedure define the requiredformat and content of the records to be
included in the magnetic media/electronic file. Do not deviate from this format.
.02Transmitters must be consistent in the use of recording modes and density on files. If the media does not meet these specifi-
cations, it will be returned to the transmitter for replacement. Filers are encouraged to submit a test prior to submitting the actual
file. Contact IRS/MCC for further information at 304-263-8700.
.03Regardless of the type of media used or if returns are filed electronically, the record length must be 500 positions.
Sec. 2. Tape Cartridge Specifications
*Note: Due to modernization efforts, cartridges created in ASCII format are the preferred type of media.
.01Although IRS/MCC can process most compatible tape cartridge files, ASCII (American Standard Coded Information
Interchange) format is preferred. The following specifications will help alleviate processing problems:
(a) Standard acceptable format for 1042–S processing:
(1) ASCII Format (American Standard Coded Information Interchange)
(2) 18 Track (37, 871 CPI) or
(3) 36 Track (75,742 CPI) tape cartridge
(4) Labeled (preferred)
(b)If unable to create and submit tape cartridges in the requested ASCII format, they may be submitted in this EBCDIC format:
1998–32 I.R.B.29August 10, 1998
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(1)Must be IBM 3480, 3490, or AS400 compatible
(2)Standard label format
(3)Record size – 500 characters
(4)Blocking – multiple of 500; only the last block may be short
(5)Block size – 500 – 15,000 characters
.02Transmitters should be consistent in the use of recording modes and density on files.
(1)Tape cartridges will be
1
⁄
2
-inch tape contained in plastic cartridges which are approximately 4-inches by 5-inches by
1-inch in dimension.
(2)Magnetic tape will be chromium dioxide particle based
1
⁄
2
-inch tape.
(3)Cartridges must be 18-track or 36-track parallel. (See Note.)
(4)Cartridges will contain 37,871 CPI or 75,742 CPI (characters per inch).
(5)Mode will be full function.
.03 The tape cartridge records defined in this revenue procedure may be blocked subject to the following:
(a)A block must not exceed 15,000 tape positions.
(b)If the use of blocked records would result in a short block, all remaining positions of the block must be filled with 9’s;
however, the last block of the file may be filled with 9’s or truncated. Do not pad a block with blanks.
(c)All records, except the header and trailer labels, may be blocked or unblocked. A record may not contain any control
fields or block descriptor fields which describe the length of the block or the logical records within the block. The num-
ber of logical records within a block (the blocking factor) must be constant in every block with the exception of the last
block which may be shorter (see item b above). The block length must be evenly divisible by 500.
(d)Records may not span blocks.
.04Although labeled tape cartridges are preferred, tape cartridges may be labeled or unlabeled.
.05For the purposes of this revenue procedure, the following must be used:
Tape Mark:
(a)Used to signify the physical end of the recording on tape.
(b)May follow the header label and precede and/or follow the trailer label.
.06 Tape header and trailer labels, record marks, and tape marks (other than the tape mark signifying the end of tape) are all
optional.If used, they must conform to the following ANSI standards:
(a)Header labels must begin with VOL1, HDR1, HDR2, or 1HDR. They must be the first record(s) on the reel immedi-
ately before the Transmitter “T” Record. Header labels may not exceed 80 characters in length.
(b)Trailer labels must begin 1EOR, 1EOF, EOF1, or EOV1, EOV2, EOF2. They must be the last record(s) on the reel, after
the “Y” record and tape mark (if a tape mark is used). Labels must be 80 characters in length. Any data beyond the
trailer label cannot be read by IRS programs.
* Note: Filers should indicate on the external media label and transmittal Form 4804 whether the cartridge is 36- or 18-
track, and if data is created in ASCII or EBCDIC format.
Sec. 3. Magnetic Tape Specifications
.01IRS/MCC can process most compatible magnetic tape files. If transmitters are unable to submit data on cartridge, ASCII for-
matted magnetic tape is the next preferred type of media. The following specifications will help alleviate processing problems:
(a)9-track ASCII (American Standard Coded Information Interchange) with:
(1)Labeled (preferred)
(2)Odd Parity
(3)A density of 6250 CPI
.02 ASCII is the preferred format. If unable to create tapes in the requested ASCII format, EBCDIC format is acceptable.
(a)9-track EBCDIC (Extended Binary Coded Decimal Interchange Code) with:
(1)Labeled (preferred)
(2)Odd parity
(3)A density of 6250 CPI
(4)If using UNISYS Series 2200, an interchange tape must be submitted.
Transmitters should be consistent in the use of recording codes and density on files.
.03All compatible tape files must have the following characteristics: Type of tape -
1
⁄
2
-inch (12.7 mm) wide, computer-grade
magnetic tape on reels of up to 2,400 feet (731.52 m) within the following specifications:
(a)Tape thickness: 1.0 or 1.5 mils, and
(b)Reel diameter: 10
1
⁄
2
-inch (26.67 cm), 8
1
⁄
2
-inch (21.59 cm), 7-inch (17.78 cm), or 6-inch.
.04The tape records defined in this revenue procedure may be blocked subject to the following:
(a)A block may not exceed 15,000 tape positions.
(b)If the use of blocked records would result in a short block, all remaining positions of the block must be filled with 9’s;
however, the last block of the file may be filled with 9’s or truncated. Do not pad a block with blanks.
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(c)All records, except the header and trailer labels, may be blocked or unblocked. A record may not contain any control
fields or block descriptor fields which describe the length of the block or the logical records within the block. The num-
ber of logical records within a block (the blocking factor) must be constant in every block with the exception of the last
block which may be shorter (see item b above). The block length must be evenly divisible by 500.
(d)Records may not span blocks.
.05Although labeled tapes are preferred, labeled or unlabeled tapes may be submitted.
.06Tape header and trailer labels, record marks, and tape marks (other than the tape mark signifying the end of tape) are all
optional. If used, they must conform to the following ANSI standards:
(a)Header labels must begin with VOL1, HDR1, HDR2, or 1HDR. They must be the first record(s) on the reel immedi-
ately before the Transmitter “T” Record. Header labels may not exceed 80 characters in length.
(b)Trailer labels must begin 1EOR, 1EOF, EOF1, or EOV1, EOV2, EOF2. They must be the last record(s) on the reel, after
the “Y” record and tape mark (if a tape mark is used). Labels must be 80 characters in length. Any data beyond the
trailer label cannot be read by IRS programs.
Sec. 4. 8mm, 4mm, and Quarter Inch Cartridge Specifications
.01In most instances, IRS/MCC can process 8mm tape cartridges that meet the following specifications:
(a)Must meet American National Standard Institute (ANSI) standards, and have the following characteristics:
(1)Created from an AS400 operating systems only.
(2)8mm (.315-inch) tape cartridges will be 2
1
⁄
2
-inch by 3
3
⁄
4
-inch.
(3)The 8mm tape cartridges must meet the following specifications:
TracksDensityCapacity
120 (43245 BPI)2.5 Gb (10Gb)
121 (45434 BPI) 5 Gb (20 Gb)
(4)Mode will be full function.
(5)Compressed data is not acceptable.
(6)Either EBCDIC (Extended Binary Coded Decimal Interchange Code) or ASCII (American Standard Coded
Information Interchange) may be used. However, IRS/MCC encourages the use of EBCDIC. This information must
appear on the external media label affixed to the cartridge.
(7) A file may consist of more than one cartridge, however, no more than 250,000 documents may be transmitted per file
or per cartridge. The filename, for example: 1042TAX, will contain a three digit extension. The extension will indicate
the sequence of the cartridge within the file (e.g., 1 of 3, 2 of 3, and 3 of 3 and would appear in the header label
1042TAX.001, 1042TAX.002, and 1042TAX.003 on each cartridge of the file). The end of transmission “Y” Record
should be placed on the last cartridge only for files containing multiple cartridges.
.02The 8mm (.315-inch) tape cartridge records defined in this revenue procedure may be blocked subject to the following:
(a)A block must notexceed 15,000 tape positions.
(b)If the use of blocked records would result in a short block, all remaining positions of the block must be filled with 9’s;
however, the last block of the file may be filled with 9’s or truncated. Do not pad a block with blanks.
(c)All records, except the header and trailer labels, may be blocked or unblocked. A record may not contain any control
fields or block descriptor fields which describe the length of the block or the logical records within the block. The num-
ber of logical records within a block (the blocking factor) must be constant in every block with the exception of the last
block which may be shorter (see item (b) above). The block length must be evenly divisible by 500.
(d)Various COPY commands have been successful, however, the SAVE OBJECT COMMAND is not acceptable.
(e)Extraneous data following the “Y” record will result in media being returned for replacement.
(f)Records may not span blocks.
(g)No more than 250,000 documents per cartridge and per file.
.03For faster processing, IRS/MCC encourages transmitters to use header labeled cartridges. 1042TAX may be used as a sug-
gested filename.
.04For the purposes of this revenue procedure, the following must be used:
Tape Mark:
(a)Used to signify the physical end of the recording on tape.
(b)For even parity, use BCD configuration 001111 (8421).
(c)May follow the header label and precede and/or follow the trailer label.
.05If extraneous data follows the End of Transmission “Y” Record, the file must be returned for replacement. Therefore,
IRS/MCC encourages transmitters to use blank tape cartridges, rather than cartridges previously used, in the preparation of data
when submitting information returns.
.06IRS/MCC can only read one data file on a tape. A data file is a group of records which may or may not begin with a tape-
mark, but must end with a trailer label. Any data beyond the trailer label cannot be read by IRS programs.
1998–32 I.R.B.31August 10, 1998
IRB 1998-32 8/6/98 5:26 PM Page 31

.074mm (.157-inch) cassettes are now acceptable with the following specifications:
(a)4 mm cassettes will be 2
1
⁄
4
-inch by 3-inch.
(b)The tracks are 1 (one).
(c)The density is 19 (61000 BPI).
(d)The typical capacity is DDS (DAT data storage) at 1.3 Gb or 2 Gb, or DDS–2 at 4Gb.
(e)The general specifications for 8mm cartridges will also apply to the 4mm cassettes.
.08Various Quarter Inch Cartridges (QIC) (
1
⁄
4
-inch) are also acceptable.
(a)QIC cartridges will be 4” by 6”.
(b)QIC cartridges must meet the following specifications:
SizeTracksDensity Capacity
QIC–114/54 (8000 BPI) 22Mb or 30Mb
QIC–248/95 (8000 BPI) 45Mb or 60Mb
QIC–1201515 (10000 BRI) 120Mb or 200Mb
QIC–1501816 (10000 BRI) 150Mb or 250Mb
QIC–3202617 (16000 BPI) 320Mb
QIC–5252617 (16000 BPI) 525Mb
QIC–10003021 (36000 BRI) 1Gb
QIC–13503018 (51667 BPI) 1.3Gb
QIC–2Gb4234 (40640 BPI) 2Gb
(c)The general specifications that apply to 8mm cartridges will also apply to QIC cartridges.
Sec. 5. 5
1
⁄
4
-inch And 3
1
⁄
2
-inch Diskette Specifications
.01To be compatible, a diskette file must meet the following specifications:
(a)5
1
⁄
4
- or 3
1
⁄
2
-inches in diameter.
(b)IRS recommends data be recorded in standard ASCII code. However, if data is recorded using EBCDIC, a 5
1
⁄
4
-inch
diskette must be used and a 1024 byte sector would be valid for System 36 or AS400. The following command to for-
mat the diskette into a 1024 byte sector is:
INIT 1042TAX,,FORMAT2
The save commands are as follows:
(1)The save command for System 36 is SAVE.
(2)The save command for AS400 is SAVF36F.
(c)Records must be a fixed length of 500 bytes per record.
(d)Delimiter character commas (,) must not be used.
(e)Positions 499 and 500 of each record have been reserved for use as carriage return/line feed (cr/lf) characters if applica-
ble.
(f)Filename of 1042TAX must be used. Do not enter any other data in this field. If a file will consist of more than one
diskette, the filename 1042TAX will contain a 3 digit extension. This extension will indicate the sequence of the diskettes
within the file. For example, if the file consists of three diskettes, the first diskette will be named 1042TAX.001, the sec-
ond diskette will be 1042TAX.002, and the third will be 1042TAX.003. The first diskette, 1042TAX.001 will begin with
a “T” Record and the third diskette, 1042TAX.003 will have a “Y” Record at the end of the file.
(g)A diskette file may consist of multiple diskettes as long as the filename conventions are followed.
(h)Diskettes must meet one of the following specifications:
CapacityTracksSides/DensitySector Size
1.44 mb96tpihd512
1.44 mb135tpihd512
1.2 mb96tpihd512
.02IRS/MCC encourages transmitters to use blank or currently formatted diskettes when preparing files. If extraneous data fol-
lows the end of transmission “Y” record, the file must be returned for replacement.
.03IRS/MCC prefers that 5
1
⁄
4
- and 3
1
⁄
2
-inch diskettes be created using MS/DOS; however, diskettes created using other operat-
ing systems may beacceptable (See Notes). IRS/MCC has equipment that can convert diskettes created under most operating sys-
tems to the appropriate MS-DOS format. IRS/MCC strongly recommends that transmitters submit a test file for 5
1
⁄
4
- and 3
1
⁄
2
-inch
diskettes, especially if their data was not created using MS-DOS.
*Note: TY98 will be the last year IRS will process 5
1
⁄
4
-inch diskettes.
*Note: IRS will discontinue processing non-MS-DOS compatible diskettes after TY98.
August 10, 1998321998–32 I.R.B.
IRB 1998-32 8/6/98 5:26 PM Page 32

*Note: 3
1
⁄
2
-inch diskettes created on a System 36 or AS400 are not acceptable.
.04Transmitters should check media for viruses before submitting it to IRS/MCC.
Sec. 6. Data Sequence Specifications
.01The first position of each record indicates the record type:
TransmitterT
RecipientQ
Withholding AgentW
End of TransmissionY
.02In order to be acceptable, records within the file must be in the following sequence:
(a)Single tape, cartridge, or diskette:
(1)A Transmitter “T” Record; then
(2)One or more Recipient “Q” Records followed by a corresponding Withholding Agent “W” Record then;
(3)Additional “Q” and “W” Record sequences for other withholding agents, as needed; then
(4)An End of Transmission “Y” Record.
(b)Multiple tapes and cartridges: (see Note)
(1)A Transmitter “T” Record at the beginning of eachtape and cartridge; then
(2)Sequence of Recipient “Q” Records followed by corresponding Withholding Agent “W” Records; then
(3)A sequence of Recipient “Q” Records may be continued from one tape to the next if they apply to the same with-
holding agent, without the necessity of repeating the “W” Record. The sequence might be, for example, QQQQ (end
of one tape); TQQQQW (beginning of next tape); then
(4)An End of Transmission “Y” Record ending the last tape.
(c)Multiple diskettes: (see Note)
(1)A Transmitter “T” Record; then
(2)One or more Recipient “Q” Records followed by a corresponding Withholding Agent “W” Record; then
(3)Additional “Q” and “W” Record sequences for other withholding agents as needed; then
(4)A sequence of Recipient “Q” Records may be continued from one diskette to the next if they apply to the same with-
holding agent, without the necessity of repeating the “W” Record. The sequence might be, for example, QQQQ (end
of one diskette); QQQQW (beginning of next diskette); then
(5)An End of Transmission “Y” Record ending the last diskette
.03The minimum file transmitted must consist of a Transmitter “T” Record, a Recipient “Q” Record, a Withholding Agent “W”
Record, and an End of Transmission “Y” Record.
*Note: Due to differences in the processing of 1042-S information filed on tapes, cartridges, and diskettes, it is required that
there be a “T” record at the beginning of each tape or cartridge, but not at the beginning of each diskette in a shipment.
Sec. 7. Transmitter “T” Record
.01This record identifies the entity preparing and transmitting the file. The transmitter and the withholding agent may be the
same, but they need not be.
.02The first record of a file MUSTbe a Transmitter “T” record, (preceded only by header labels, if any), and must appear on
each tape and cartridge; otherwise the file will be returned for replacement. For tape and cartridge files only, the Sequence Number,
position 131-132 of the “T” record must be increased by 1 (one) for each tape and cartridge.
.03The “T” Record is a fixed length of 500 positions.
.04All alpha characters entered in the “T” Record must be upper-case.
*Note: For all fields marked Required, the transmitter must provide the information described under Description and Remarks.
For those fields not marked Required, a transmitter must allow for the field, but may be instructed to enter blanks or
zeros in the indicated media position(s) and for the indicated length. All records are a fixed length of 500 positions.
Record Name: Transmitter “T” Record
PositionsField TitleLengthDescription and Remarks
1 Record Type1Required.Enter “T.”
2–5Tax Year4Required. Enter year for which income and withholding are being
reported (for example, enter “1998” for income and withholding
reported for 1998)(unless reporting for a different tax year).
1998–32 I.R.B.33August 10, 1998
IRB 1998-32 8/6/98 5:26 PM Page 33

*Note: When reporting APO/FPO addresses use the following format:
Example:
NamePVT Willard J. Doe
Street AddressCompany F, PSC Box 100
CityAPO (or FPO)
StateAE, AA, or AP*
ZIP Code098010100
*AE is the designation for ZIPs beginning with 090-098, AA for ZIP 340, and AP for ZIPs 962-966.
Record Name: Transmitter “T” Record (Continued)
PositionsField TitleLengthDescription and Remarks
6–14Transmitter’s9Required. Enter the Identification Number [Social Security Num-
Taxpayer ber (SSN) or Employer Identification Number (EIN)] of the
IdentificationTransmitter. Do Not enter blanks, hyphens, or alpha characters.
Number (TIN)A TIN consisting of all the same digits (e.g., 111111111) is not
acceptable.
15–54 Transmitter Name40Required.Enter name of transmitter of file. Abbreviate if necessary
to fit 40-character limit. Omit punctuation if possible. Left-justify
and blank fill.
55–94 Transmitter Address40Required.Enter mailing address of the transmitter. Street address
should include number, street, apartment or suite number (or P.O.
Box if mail is not delivered to street address). Abbreviate as needed
to fit 40-character limit. Omit punctuation if possible. Left-justify
and blank fill.
95–114City20Required. Enter the city or town of transmitter. If applicable, enter
APO or FPO only. Left-justify and blank fill.
115–116State Code2Required. Enter only the two-letter Post Office Code as shown in
the list below. Do NOT spell out the state name.
August 10, 1998341998–32 I.R.B.
AlabamaAL
AlaskaAK
ArizonaAZ
ArkansasAR
CaliforniaCA
ColoradoCO
ConnecticutCT
DelawareDE
District of ColumbiaDC
FloridaFL
GeorgiaGA
HawaiiHI
IdahoID
IllinoisIL
IndianaIN
IowaIA
KansasKS
KentuckyKY
LouisianaLA
MaineME
MarylandMD
MassachusettsMA
MichiganMI
MinnesotaMN
MississippiMS
MissouriMO
MontanaMT
NebraskaNE
NevadaNV
New HampshireNH
New JerseyNJ
New MexicoNM
New YorkNY
North Carolina NC
North DakotaND
OhioOH
OklahomaOK
OregonOR
PennsylvaniaPA
Rhode IslandRI
South CarolinaSC
South DakotaSD
TennesseeTN
TexasTX
UtahUT
VermontVT
VirginiaVA
WashingtonWA
West VirginiaWV
WisconsinWI
WyomingWY
American SamoaAS
Federated States
of MicronesiaFM
GuamGU
Northern Mariana
IslandsMP
Marshall IslandsMH PalauPW
Puerto RicoPR
Virgin IslandsVI
StateCodeStateCodeStateCode
IRB 1998-32 8/6/98 5:26 PM Page 34

1998–32 I.R.B.35August 10, 1998
Record Name: Transmitter “T” Record (Continued)
PositionsField TitleLengthDescription and Remarks
117–125ZIP Code9Required.Enter the ZIP code of the transmitter for all U.S. address-
es, U.S. Territories or Possessions, APO/FPO addresses. For trans-
mitters using a five-digit ZIP code, enter the ZIP code in the left-most
five positions and zero fill the remaining four positions. For trans-
mitters outside the U.S., enter nine zeros only. Do NOT blank fill.
126–130Transmitter 5Required.Enter the five character alpha/numeric Transmitter
Control CodeControl Code. This MUST be the TCC assigned to you for Forms
(TCC) 1042–S reporting ONLY. (The first two numbers will be “22.”)
131–132Sequence Number2The two-digit sequence assigned by the transmitter to this media,
starting with 01. If Header Labels are used, the sequence should be
the same as the Sequence Number.This field is required for tape
and cartridge only.
133–136Test Indicator4Required.Enter the word “test”if this is a test file; otherwise, enter
blanks.
137–498Reserved362Blank fill.
499–500Blank or2Enter blanks or carriage return line feed (CR/LF) characters.
Carriage Return
Line Feed
Transmitter “T” Record Layout
12–56–1415–5455–9495–114
115–116117–125126–130 131–132133–136137–498499–500
Sec. 8. Recipient “Q” Record
.01The “Q” Record contains complete name and address information for both Withholding Agent and Recipient of Income,
together with all the particulars of the income paid and tax withheld. Complete Withholding Agent data is required because each
Recipient “Q” Record is treated as if it were a separate Form 1042-S, and is processed independently of other records.
.02Since the “Q” Record is restricted to one type of income and one tax rate, under certain circumstances it would be necessary
to write more than one “Q” Record. Following are some of the circumstances when more than one “Q” record for a recipient would
be required:
(a)Different sources of income. For example, Recipient X derived income from Capital Gains (Income Code 09) and
Industrial Royalties (Income Code 10). A separate “Q” record must be reported for each income code; providing Gross
Income Paid and U.S. Federal Tax Withheld pertaining to the corresponding code.
(b)Change in Country Code during the year. For example, the withholding agent received notification via Form 1001 that
the recipient changed from country X to country Y. A separate “Q” record must be reported for each country code; pro-
viding Gross Income Paid, Tax Rate and U.S. Federal Tax Withheld. The amounts reported must be based on each coun-
try code and the period of time under that country code.
Record
Type
Tax
Year
Transmitter’s
TIN
Transmitter
Name
Transmitter
Address
City
State
Code
ZIP
Code
TCC
Sequence
Number
Test
Indicator
Reserved
Blank
or
CR/LF
IRB 1998-32 8/6/98 5:26 PM Page 35

(c)Change in a country’s tax treaty rate during the year. For example, effective April 1, country X changes its tax treaty rate
from 10% to 20%. A separate “Q” record must be reported for each of the tax rates. Provide the Gross Income Paid,
Tax Rate, and U.S. Federal Tax Withheld for the period of time under that tax rate.
(d)Gross Income Paid of more than one billion dollars. Report a Gross Income Paid of 99999999999 (dollars and cents) in
the first Recipient “Q” record. The second Recipient “Q” record will contain the remaining money amount.
*Note: The applicable tax rates must be obtained from Publication 515, Withholding of Tax on Nonresident Aliens and
Foreign Corporations, or Publication 901, U.S. Tax Treaties. The U.S. Federal Tax Withheld is computed using
the tax rate applicable to the recipient’s country of tax residency (as found in Publications 515 and 901) and the
amount of gross income paid to the recipient. Use of any other tax rates may cause your records to be rejected.
*Note: If you withheld an incorrect amount of tax, you must report the amount which was actually withheld, and use the
correct tax rate from Publications 515 and 901, and attach a letter stipulating that the amount of tax withheld is
correct. This action will permit the “incorrect” data to be accepted for processing, but does not relieve you of the
responsibility to withhold at the prescribed rates and to remit the correct amount of tax with Form 1042.
*Note: Apply the following formula to determine U.S. Federal Tax Withheld (field positions 374-384 of the “Q” Record).
All field positions described below are also in the “Q” Record:
Income Codes 15 and/or 16All Other Income Codes
Gross Income Paid (359-369)Gross Income Paid (359-369)
– Withholding Allowance (430-439) 3Tax Rate (372-373)
= Net Income Amount (440-439)= U.S. Federal Tax Withheld (374-384)
3T
ax Rate (372-373)
= U.S. Federal Tax Withheld (374-384)
.03Failure to provide multiple recipient “Q” records when necessary will generate math computation errors during processing
which will result in the file being returned for replacement.
.04All recipient “Q” Records for a particular Withholding Agent must be written before the corresponding Withholding Agent
“W” Record, and before “Q” Records for another Withholding Agent may begin.
.05For all fields marked “Required,” the transmitter must provide the information described under Description and Remarks. For
those fields not marked “Required,” the transmitter must allow for the field, but may be instructed to enter blanks or zeros in the
indicated media position(s) and for the indicated length.
.06All alpha characters entered in the “Q” Record must be upper case.
Record Name: Recipient “Q” Record
PositionsField TitleLengthDescription and Remarks
1Record Type1Required.Enter “Q”.
2–10 Withholding9Required. Enter the nine-digit Taxpayer Identification Number of
Agent’s Taxpayerthe Withholding Agent. Do NOT enter blanks, hyphens, or alpha
Identificationcharacters. A TIN consisting of all the same digit (e.g., 111111111) is
Number (TIN)not acceptable. Do NOT enter the recipient’s TIN in this field.
11–45Agent’s Name 35Required. Enter the name of the Withholding Agent whose TIN
appears in positions 2-10 of the “Q” Record. Abbreviate as needed.
Left-justify and blank fill.
*Note: A blank (except when all positions are blank in this field) or special character in position 11 is not acceptable.
46–80Agent’s Address35Required. Enter mailing address of the withholding agent. Street
address should include number, street, apartment or suite number (or
P.O. Box if mail is not delivered to street address). Abbreviate as
needed. Left-justify and blank fill unused positions.
81–100Agent’s City20Required.Enter the city or town (or other locality name). Enter
APO or FPO only, if applicable. Left-justify and blank fill unused
positions.
August 10, 1998361998–32 I.R.B.
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Record Name: Recipient “Q” Record (Continued)
PositionsField TitleLengthDescription and Remarks
101–102Agent’s State2Required. Enter the two-character state abbreviation from the list in
CodePart B. Sec. 7, Field Positions 115–116 of “T” Record. If not a U.S.
state, territory, or APO/FPO identifier, blank fill this field. Do not
use any of the two character Country Codes in the State Code
field.
103–111Agent’s ZIP9Required.Enter nine numeric characters for all U.S. addresses
Code(including territories and possessions). If a five-digit ZIP code is
used, enter the ZIP code in the left-most five positions and zero fill
the remaining four positions. Zero fill for addresses outside the U.S.
112Type of TIN1This field is used to identify the Taxpayer Identification Number
(TIN) in positions 113-121 as an Employer Identification Number
(EIN), a Social Security Number (SSN), or an Individual Taxpayer
Identification Number (ITIN). Enter the appropriate code from the
following table:
CodeType of TINType of Account
1EINA business, organization, sole proprietor, or other entity
2SSNAn individual, including a sole proprietor
OR
2ITINAn individual required to have a taxpayer identification number, but
who is not eligible to obtain an SSN
Blank N/AEnter a blank if type of TIN is undeterminable.
*Note: While not a “Required” field, this information is important for the correct processing of the recipient’s TIN.
113–121Recipient’s9Enter the Recipient’s nine-digit Taxpayer Identification Numbe
U.S. Taxpayer (TIN). Do NOT enter hyphens or alpha characters. Entry of all
Identificationzeroes, all ones, twos, etc. will have the effect of an incorrect TIN.
Number (TIN)Use the following instructions for Entries in Positions 113–121:
1.A TIN must be entered when Exemption Code “1” is entered in
Position 370 of the Recipient “Q” Record.
2.A TINmustbe entered when Income Code “16” or “17” is entered
in Positions 355–356 of the Recipient “Q” Record.
3.If the conditions in 1 and 2 are not present, or if a TIN is not avail-
able, enter blanks in Positions 113–121 of the Recipient’s “Q”
Record. Do NOT enter the Withholding Agent’s TIN in this field.
*Note: When the submission includes records where a TIN is required, but in which blanks are entered in Positions
113–121, provide a letter identifying the number of Recipient “Q” Records affected and presenting the reason(s)
the TIN(s) is not provided for each missing TIN.
* Note: A CORRECTED “Q” RECORD IS REQUIRED to be submitted upon later receipt of the Recipient TIN.
122–136Account15Enter the account number assigned by the withholding agent to the
Number recipient. This number is used to identify a specific account. This
field will be all blanks if account numbers are NOT assigned. This
field may contain numeric or alpha characters, blanks or hyphens.
Left-justify and blank fill.
*Note: A special character in position 122 is not acceptable.
1998–32 I.R.B.37August 10, 1998
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Record Name: Recipient “Q” Record (Continued)
PositionsField TitleLengthDescription and Remarks
137–138Country Code2Required. This field is used to identify the country for which the
(Do not enterrecipient is a resident for tax purposes and the tax treaty benefits are
“US” in this field)based. The rate of tax withheld is determined by this code.
*Note: Enter OC, Other Countries, only when the country of residence cannot be determined. If OC is used in this field,
the rate of tax (positions 372–373) must always be 30 percent.
* Note: This may or may not be the same as the country entered in the country name field (positions 335–354 of the
recipient “Q” record.)
* Note: If the country code for the recipient changes during the year, a new “Q” record will be required.
* Note: COUNTRY CODES: The list of country codes provided in the 1998 Paper Instructions for Form 1042–S should
be used to ensure the proper coding of the country code field. This list is updated each year with the most recent
country code changes. Refer to the updated yearly Paper Instructions for the list of country codes to be used in
the reporting of paper and magnetic/electronic Forms 1042–S for future tax years as well.
139–183Recipient Name45Required.Provide the FULL name of the recipient (nonresident
Line Onealien individual, fiduciary, foreign partnership, foreign corporation
or other foreign entity). Enter the surname of the recipient FIRST fol-
lowed by given names. For example, “DOE JOHN.” Enter an
asterisk(*) immediately before the surname, if the surname does
not begin in position 139(See Note). For example, ”JOHNb*DOE”
is acceptable (b denotes a blank). If there is more than one recipient,
enter the name of the first recipient only. Since some foreign recipi-
ents will not have a Taxpayer Identification Number (TIN), it is very
important that the FULL name of the recipient be provided. Titles, if
any, must be provided in Recipient Name Line Two. (If the recipient
is unknown, an account number must be entered in positions
122–136).Valid characters are alphabetic, numeric, ampersand (&),
hyphen (–), slash (/), asterisk (*), period (.), comma (,), apostrophe
(‘), or blank. Left-justify and blank fill.
* Note: A blank (except when all positions are blank in this field) or a special character in position 139 is not acceptable.
184–228Recipient Name45Enter supplementary recipient name information; otherwise enter
Line Twoblanks. Use this line for additional names (e.g., partners or joint own-
ers), for trade names, stage names, aliases, or titles. Use this line also
for “care of,” “via,” or “through” information. Valid characters are
alphabetic, numeric, blank, ampersand (&), hyphen (–), slash (/),
pound sign (#), period (.), comma (,), apostrophe (‘) and the percent
(%). The percent (% [short for “in care of”]) is valid in the first posi-
tion only. Left-justify and blank fill.
* Note: IRS encourages full identification of nonresident aliens (both individuals and organizations) because data is fur-
nished to their governments in accordance with tax treaties and exchange of information agreements.
* Note: An asterisk is not a valid character in this field.
* Note: A blank (except when all positions are blank in this field) or a special character in position 184 is not acceptable.
August 10, 1998381998–32 I.R.B.
IRB 1998-32 8/6/98 5:26 PM Page 38

Record Name: Recipient “Q” Record (Continued)
PositionsField TitleLengthDescription and Remarks
* Note: The following address fields should be adhered to in the order listed (outside the U.S. or within the U.S.), when
identifying the address of the recipient:
Addresses OUTSIDE the United States (Use the following fields):
a. Street Address (229-283)
b. City or Town (284-308)
c. Province (if applicable) (309-323)
d. Postal Code (if applicable)(324-332)
e. Country Name (335-354)
Addresses WITHIN the United States (Use the following fields):
a. Street Address (229-283)
b. City or Town (284-308)
c. Postal Code (Zip Code) (324-332)
d. U.S. State Code (333-334)
229–283Street Address55Required. Enter the recipient’s full street address. Street address should
include number, street, apartment or suite number (or P.O. Box if mail is
not delivered to street address). Valid characters are alphabetic, numeric,
blank, ampersand (&), hyphen (–), slash (/), period (.), comma (,), apos-
trophe (‘), and pound sign (#). Left-justify and blank fill.
* Note: A blank (except when all positions are blank in this field) or special character in position 229is not acceptable.
284–308City25Required.Enter the name of City, Town, Village, Municipality or rural
place of residence of the recipient. Valid characters are alphabetic,
numeric, blank, ampersand (&), hyphen (–), slash (/), period (.), comma
(,), apostrophe (‘), and parenthesis (). For U.S. military installations enter
either APO or FPO as applicable. The name of the installation or ship
must be entered in the Street Address Line. Left-justify and blank fill.
* Note: A blank (except when all positions are blank in this field) or a special character in position 284 is not acceptable.
309–323Province Name15Enter the name of the Province, Foreign State (but not the U.S. State),
County, Shire, District, Region, or other political subdivision. For
many countries the province (or other political subunit) is an impor-
tant part of the postal address. Valid characters are alphabetic, blank,
ampersand (&), hyphen (–), period (.), comma (,), apostrophe (‘) or
slash (/). Left-justify and blank fill.
Canadian Provinces or Codes are required (See Notes)
ProvinceProvince Code
AlbertaAB
British ColumbiaBC
ManitobaMB
New BrunswickNB
NewfoundlandNF
Nova Scotia (including Sable Island)NS
Northwest TerritoriesNT
OntarioON
Prince Edward IslandPE
QuebecQC
SaskatchewanSK
Yukon TerritoryYT
1998–32 I.R.B.39August 10, 1998
IRB 1998-32 8/6/98 5:26 PM Page 39

Record Name: Recipient “Q” Record (Continued)
PositionsField TitleLengthDescription and Remarks
* Note: A Canadian province may be expressed as a two-character code from the Canadian Province Code List, written
out in full, or appropriately abbreviated.
* Note: Either the Province or the Province Code must be entered. DO NOT ENTER BOTH.
* Note: A blank (except when all positions in this field are blank) or a special character in position 309 is not acceptable.
324–332Postal Code9Enter a Foreign orU.S. Postal Code (ZIP Code). A Postal Code is
(Zip Code)Requiredfor United States and U.S. Territories, Canadian, and
Australian addresses. Withholding Agents should make an effort to
obtain postal codes for all other countries. Only alphabetic, numer-
ic, and blank characters are valid. Do not omit any blanks that may
appear in the ZIP code. Use the following table to format Postal
Codes for the three required countries (“a” denotes alpha characters,
“n” denotes numerics, “b” denotes a blank). All postal codes should
be left-justified and blank filled.
CountryPostal Code Format
United States and
U.S. Territories nnnnnbbbb or nnnnnnnnn
Canadiananabnanbb
Australiannnnnbbbbb
* Note: A blank (except when all positions in this field are blank) or a special character in position 324 is not acceptable.
333–334U.S. State Code2Requiredfor United States addresses, including U.S. territories.
Enter the appropriate postal identifier listed for APO and FPO
addresses (see list of valid state codes and postal identifiers for
APO/FPO addresses in Part B. Sec. 7, Positions 115-116 of
Transmitter “T” Record). Enter blanks if the recipient does not
have a U.S. address.
335–354Country Name20The name of the recipient’s country ofresidence for all ad-
(Recipient’sdresses outside of the United States is Required in the field. Enter
Country of blanks if the RECIPIENT RESIDES IN the U.S., including U.S.
Residence)territories and APO/FPO. This field is not used to determine the rate
of tax. Valid characters are alphabetic, blank, ampersand (&), and
hyphen (–). Left-justify and blank fill.
* Note: Do not follow the country name with parentheses containing such information as Virgin Islands (British).
* Note: Do not list “Outside of USA”, “USA”, “US”, United States, or “Other Country” in this field.
* Note: This may or may not be the same country indicated in the Country Code field (Positions 137-138 of the Recipient
“Q” Record).
* Note: Omit political titles such as “People’s Republic of,” “Kingdom of,” etc. Use the English Language name instead
of the native language name (for example, use “Finland” and not “Soumi”)
* Note: A blank (except when all positions in this field are blank) or a special character in position 335 is not acceptable.
355–356Income Code2Required. Enter the income code EXACTLYas it appears below.
August 10, 1998401998–32 I.R.B.
IRB 1998-32 8/6/98 5:26 PM Page 40

Record Name: Recipient “Q” Record (Continued)
PositionsField TitleLengthDescription and Remarks
* Note: If the income code for the recipient changes during the year, a new “Q” record will be required.
Code
Type of Income
01 Interest paid by U.S. obligators-general
02 Interest on real property mortgages
03 Interest paid to a controlling foreign corporation
04 Interest paid by foreign corporations
05 Interest on tax-free covenant bonds
06 Dividends paid by U.S. corporations-general
07 Dividends paid by U.S. subsidiaries to foreign parent corporations (including consent dividends)
08 Dividends paid by foreign corporations
09 Capital gains
10 Industrial royalties
11 Motion picture or television copyright royalties
12 Other royalties (e.g., copyright, recording, publishing)
13 Real property income and natural resources royalties
14 Pensions, annuities, alimony, and/or insurance premiums
15 Scholarship or fellowship grants
16 Compensation for independent personal services
17 Compensation for dependent personal services
18 Compensation for teaching
19 Compensation during studying and training
20 Earnings as an artist or athlete
21 Social Security benefits
22 Railroad Retirement (Tier 1) benefits
23 Railroad Retirement (Tier 2) benefits
24 Real estate investment trust (REIT) distributions of capital gains
25 Trust distributions subject to IRC section 1445
26 Unsevered growing crops and timber distributions by a trust subject to IRC section 1445
27 Publicly traded partnership distributions subject to IRC section 1446
28 Gambling winnings
50 Other income
* Note: Use Income Code 01 for the reporting of interest payments to Canadian residents who are not U.S. citizens.
* Note: If compensation covered under Income Codes “16–19” are directly attributable to the recipient’s occupation as
an artist or athlete, use Income Code “20” instead.
* Note: If Income Code 20 is used, also use Recipient Code 09 (artist or athlete) instead of Recipient Code 01 (individual),
02 (corporation), or 03 (partnership).
357–358Recipient Code2Required. Enter the appropriate code from the list below. No other
codes or values are valid.
Code
Type of Recipient
01Individual (Notes 1 & 2)
02Corporation (Note 2)
03Partnership (Note 2)
04Fiduciary (trust)
05Nominee
06Government or International Organization
07“Tax Exempt” Organization [IRC section 501 (a)]
08Private Foundation
09Artist or Athlete(Note 2)
10Fiduciary (estate)
11Fiduciary (other)
19Other
20Type of Recipient unknown (Note 3)
1998–32 I.R.B.41August 10, 1998
IRB 1998-32 8/6/98 5:26 PM Page 41

Record Name: Recipient “Q” Record (Continued)
PositionsField TitleLengthDescription and Remarks
* Note 1: Recipient Code “01” (individual) MUST be entered when the Income Code is “21”, “22”, or “23”.
* Note 2: Use Recipient Code 09 (artist or athlete) instead of Recipient Code 01 (individual), 02 (corporation), or 03 (part-
nership) if Income Code 20 is used.
* Note 3: Use of Recipient Code 20 (type of recipient unknown) requires withholding at a 30 percent tax rate.
359–369Gross Income11Required. Enter the gross income amount in dollars and cents. An
Paidincome amount other than zero mustbe shown. (Do notenter the
decimal point.) For whole dollar amounts, the cents must be shown
as zeros. For example, $1500 should be shown as 00000150000
where the left-most five zeros are “filler” and the right-most two
zeros represent cents. Right-justify and zero fill.
370Exemption Code1Required. Enter the one-digit exemption code from the list below. If
the rate of tax is other than zero percent, enter a zero in this field. If
the rate of tax is zero percent, enter the code of 1-5 that applies.
CodeAuthority for Exemption
ZeroNo exemption claimed, rate of tax is above zero percent. (See Note 1)
1Income effectively connected with a U.S. trade or business. (An EIN
or SSN must be entered in Positions 113–121). (See Notes2 & 3)
2Exempt under an Internal Revenue Code section (other than portfo-
lio interest) (See Notes2 & 3)
3Income is non-U.S. sourced. (See Note4)
4Exempt under tax treaty. (See Note3)
5Portfolio interest exempt under an Internal Revenue Code section.
(See Note5)
* Note 1: Exemption Code zero is invalid when used in conjunction with a tax rate of zero.
* Note 2: Use Income Code 01, Exemption Code 2, for interest payments to Canadian residents who are not U.S. Citizens.
* Note 3: If exemption Code “1”, “2”, or “4” is used in conjunction with Income codes “16” or “17” (Positions 355–356
in the Recipient “Q” Record), the recipient’s U.S. Taxpayer Identification Number (TIN) MUST be provided
in Positions 113–121 of the Recipient “Q” Record.
* Note 4: Non-U.S. source income paid to a nonresident alien is not subject to U.S. tax. Use Exemption Code 3 when
entering an amount for information reporting purposes.
* Note 5: Exemption Code “5” can only be used in conjunction with Income Codes “01”, “02”, “03”, “04”, or “05”.
371Type of Return 1Required.Enter the one position code below to identify an
Indicator Original,Void or Corrected Return. (See Part A. Sec. 13.)
CodeDescription
ZeroIf this is an OriginalReturn.
VEnter a “V” to void the incorrect original return submitted.(See
Transaction 1, Part A, Sec. 13.11)
CEnter a “C” if this is to identify the Correct Return.(See Transaction
2, Part A, Sec. 13.11)
372–373Tax Rate2Required. Enter the appropriate tax rate found in Publication 515,
Withholding of Tax on Nonresident Aliens and Foreign Corporations.
An appropriate rate mustbe shown. The correct tax rate applies to
the Country Code identified in field positions 137-138 of the “Q”
Record. Do not use percent signs or decimal points. For fractional
rates, drop the fraction.
August 10, 1998421998–32 I.R.B.
IRB 1998-32 8/6/98 5:26 PM Page 42

Record Name: Recipient “Q” Record (Continued)
PositionsField TitleLengthDescription and Remarks
* Note: When exemption code “1” through “5” is used in position 370, the Tax Rate MUST be zero.
* Note: If the recipient’s country of tax residence cannot be determined, and you enter OC in positions 137–138, the rate
of tax must always be 30 percent.
* Note: If the country’s treaty rate for the recipient changes during the year, a new “Q” record will be required.
* Note: If an incorrect amount of tax was withheld or an incorrect tax rate was used to withhold, report the correct tax rate
specified in Publications 515 and 901, but report the actual amount of money withheld, and include a letter of expla-
nation. This will permit the “incorrect” data to be accepted for processing, but does not relieve the withholding agent
of the responsibility to withhold at the prescribed tax rates and remit the correct amount of tax with Form 1042.
374–384U.S. Federal11Required.Enter in dollars and cents the amount of tax withheld, if
Tax Withheldany. An amount mustbe shown if the Tax Rate is other than “00”, or
if income is not otherwise exempt from withholding. If Tax Rate is
“00”, the amount of tax withheld should be zero. Do notenter the
decimal point. For whole dollar amounts, the cents must be shown
as zeros. For example, $1500 should be shown as 00000150000
where the left-most five zeros are “filler” and the right-most two
zeros represent cents. Right-justify and zero fill.
* Note: Do not enter more than the gross income paid reported in field positions 359–369.
* Note: If the amount of tax withheld is incorrect, the filer must include a letter to explain the reason for the incorrect
amount of tax withheld and reported in this field.
* Note: Apply the following formula to determine U.S. Federal Tax Withheld. All field positions described below are also
in the “Q” Record:
Income Codes 15 and/or 16All Other Income Codes
Gross Income Paid (359–369)Gross Income Paid (359–369)
– Withholding Allowance (430–439)3Tax Rate (372–373)
= Net Income Amount (440–449)= U.S. Federal Tax Withheld (374–384)
3Tax Rate (372–373)
= U.S. Federal Tax Withheld (374–384)
385–419Payer’s Name35Enter the name of the Payer of Income if different from the
Withholding Agent. Abbreviate as needed. If Withholding Agent and
Payer are one and the same, blank fill Payer’s Name. Valid charac-
ters are alphabetic, numeric, blank, ampersand (&), period (.),
comma (,), apostrophe (‘) and hyphen (–). Left-justify and blank fill.
420–428Payer’s TIN9Enter the Payer’s Taxpayer Identification Number if there is an entry in
the Payer Name Field. Blank fill if unknown or Payer’s Name is blank.
429Awaiting1If a filer is awaiting Form W–8 from this recipient, enter
Form W–8 Indicatorrecipient, enter “Y”; otherwise, enter a blank.
430–439Foreign Student10(For filers reporting Income Codes “15” or “16” in Position 355–356
Withholding of the recipient “Q” record.) Enter in dollars and cents the gross
Allowanceamount of withholding allowances for a foreign student, if using
AmountIncome Code “15” with respect to a payment of U.S. source scholar-
ships and fellowship grants or “16”,Independent-Personal Services.
Do NOT enter decimal point. If the Income Code in Positions
355–356 is other than “15” or “16”, enter blanks. The withholding
allowance reported may equal, but may NOT exceed,the amount
reported in positions 359–369 (Gross Income Paid) of the “Q” Record.
Right-justify and zero fill when a money amount is reported.
1998–32 I.R.B.43August 10, 1998
IRB 1998-32 8/6/98 5:26 PM Page 43

Record Name: Recipient “Q” Record (Continued)
PositionsField TitleLengthDescription and Remarks
* Note: Apply the following formula to determine U.S. Federal Tax Withheld in positions 374–384 of the “Q” Record. All
field positions described below are also in the “Q” Record:
Income Codes 15 and/or 16
Gross Income Paid (359–369)
– Withholding Allowance (430–439)
= Net Income Amount (440–449)
3Tax Rate (372–373)
=U.S. Federal Tax Withheld (374–384)
* Note: Do not enter more than the gross income paid reported in field positions 359-369.
440–449Net Income10Enter in dollars and cents the net amount of income paid to a foreign
Amountstudent. Do NOT enter a decimal point. If the Income Code (posi-
tions 355-356) is other than “15” or “16”, enter blanks. Right-justi-
fy and zero fill if a money amount is reported.
* Note: Apply the following formula to determine U.S. Federal Tax Withheld in positions 374–384 of the “Q” Record. All
field positions described below are also in the “Q” Record:
Income Codes 15 and/or 16
Gross Income Paid (359–369)
– Withholding Allowance(430–439)
= Net Income Amount (440–449)
3Tax Rate (372–373)
= U.S. Federal Tax Withheld (374–384)
450–459Amount of 10If State Tax has been withheld for any Tax reason, enter that amount
State Incomehere, in dollars and cents. Right-justify and zero fill. If no entry,
Tax Withheldzero fill.
460–463Tax Year4Enter “1998” (unless reporting for prior year data).
464–477Reserved14Blank Fill
478–498Special Data 21This portion of the “Q” Record may be used for the filer’s own
Entriespurposes, (i.e., Do Not Mail). If this field is not utilized, enter blanks.
499–500Blank or2Enter blanks or carriage return line feed (CR/LF) characters.
Carriage Return
Line Feed
Recipient “Q” Record Layout
12–1011–4546–8081–100101–102
103–111112113–121122–136137–138139–183
August 10, 1998441998–32 I.R.B.
Record
Type
Withholding
Agent’s
TIN
Agent’s
Name
Agent’s
Address
Agent’s
City
Agent’s
State
Code
Agent’s
ZIP
Code
Type
of
TIN
Recipient’s
U.S.
TIN
Account
Number
Country
Code
Recipient Name
Line One
IRB 1998-32 8/6/98 5:26 PM Page 44

184–228229–283284–308309–323324–332333–334
335–354355–356357–358359–369370371
372–373374–384385–419420–428429430–439
440–449450–459460–463464–477478–498499–500
Sec. 9. Withholding Agent “W” Record
.01Enter a “W” Record after the last “Q” Record submitted for a particular Withholding Agent. The “W” Record serves as a
summary of the preceding “Q” Record data, and enables IRS to cross check the correctness of information received.
.02Several “W” Records for different withholding agents may appear on the same Transmitter’s file. Also, the “W” Record may
refer to “Q” Records on more than one reel, provided all of the preceding “Q” Records are for the same withholding agent.
.03A “W” Record may only be followed by new Recipient “Q” Records for the next Withholding Agent, if any, or by a tape mark
and/or trailer label when more reels follow this reel, or by an End of Transmission “Y” Record, when this is the last reel of the file.
The “W” Record cannot be the last record on the file.
.04Each “W” Record has a fixed length of 500 positions.
.05If the field is not applicable, allow for the field by entering blanks or zeros as instructed.
.06All alpha characters entered in the “W” Record must be upper case.
Record Name: Withholding Agent “W” Record
PositionsField TitleLengthDescription and Remarks
1Record Type1Required. Enter “W.”
2–3Reserved2Blank fill.
4–12Employer9Required. Enter the nine-digit Employer Identification Number of
Identificationthe Withholding Agent. Omit the hyphen.
Number (EIN)
13–47Agent’s Name35Required.Enter the name of the Withholding Agent, up to the limit
of 35 characters. Abbreviate as needed, omitting punctuation. Left-
justify and blank fill.
1998–32 I.R.B.45August 10, 1998
Recipient Name
Line Two
Street
Address
City
Province
Name
Postal
Code
U.S. State
Code
Country
Name
Income
Code
Recipient
Code
Gross
Income
Paid
Exemption
Code
Type of
Return
Indicator
Tax
Rate
U.S.
Federal Tax
Withheld
Payer’s
Name
Payer’s
TIN
Awaiting
Form W-8
Indicator
Foreign
Student
Withholding
Allow. Amt.
Net
Income
Amount
Amount of
State Tax
Withheld
Tax
Year
Reserved
Special
Data
Entries
Blank
or
CR/LF
Recipient “Q” Record Layout (Continued)
IRB 1998-32 8/6/98 5:26 PM Page 45

Record Name: Withholding Agent “W” Record (Continued)
PositionsField TitleLengthDescription and Remarks
48–82Agent’s Address35Required. Enter the mailing address of the withholding agent.
Street address should include number, street, apartment or suite num-
ber (or P.O. Box if mail is not delivered to street address). Abbreviate
as needed, omitting punctuation. Left-justify and blank fill.
83–102City20Required. Enter the city, town, or other locality name. If applicable
enter APO or FPO only. Left-justify and blank fill.
103–104State2Required. Enter the two-character alphabetic state code or the postal
identifier for APO/FPO addresses from the list in Part B. Sec. 7, posi-
tions 115–116 of “T” Record.
105–113ZIP Code9Required.Enter nine numeric characters for all U.S. addresses
(including territories, possessions, and APO/FPO). For five-digit ZIP
codes, left-justify and zero fill. Zero fill for addresses outside the
U.S.
114–121Total “Q” 8Required.Enter the total number of “Q” Records for this withhold-
Record Counting agent; that is, the total count of “Q” Records following the last
“W” Record, or if this is the first “W” Record on the file, the total
number of “Q” Records since the “T” Record. The presence of a “T”
Record does not interrupt the count, which may therefore include
consecutive “Q” Records on more than one tape reel. Right-justify
and zero fill unused positions.
122–134Total Gross13Required.Enter the total gross amount. Calculate this total by
Amount Paidadding the gross income paid reported in all “Q” Records counted in
the preceding Positions 114–121. Do not “round off” this total, since
it is used to verify the total money amount from the “Q” records.
Right-justify and zero fill.
135–147Total Tax13Required. Enter the total tax withheld. Calculate this total by adding
Withheldthe tax withheld reported in all “Q” records counted in the preceding
Positions 114-121. Do not “round off” this total, since it is used to
verify the total tax withheld from the “Q” records. Right-justify and
zero fill.
148–151Tax Year4Required. Enter the four digit year “1998” of the calendar year for
which income and withholding are being reported. All recipient “Q”
Records must report payments for this year only. Different tax years
may not appear on the same file.
152–167Withholding16Enter the Withholding Agent’s phone number and extension.
Agent’s Phone
Number and
Extension
168–498Reserved331Blank fill.
499–500Blank or 2Required. Enter blanks or carriage return line feed characters
Carriage (CR/LF).
Return Line
Feed
August 10, 1998461998–32 I.R.B.
IRB 1998-32 8/6/98 5:26 PM Page 46

Withholding Agent “W” Record Layout
12–34–1213–4748–8283–102103–104
105–113114–121122–134135–147148–151152–167
168–498499–500
Sec. 10. End of Transmission “Y” Record
.01The “Y” Record is a fixed record length of 500 positions and all positions listed are required. The “Y” Record is a summa-
ry of the number of withholding agents and total number of tape reels in the entire file.
.02This record will be written after the last “W” Record of the entire file. End the last reel ONLY of a file with an End of
Transmission “Y” Record. The “Y” Record may only be preceded by a “W” Record. It may only be followed by a tape mark, or a
tape mark and a trailer label (if trailer labels are used), or a trailer label.
.03Please note that if submitting a multi-reel file, there will only be one End of Transmission “Y” record. The End of
Transmission “Y” record will be the last record in the final block on the last reel in the file.
Record Name: End of Transmission “Y” Record
PositionsField TitleLengthDescription and Remarks
1Record Type1Required. Enter “Y”.
2–4Withholding3Required. Enter the total number of withholding agents on this file.
Agent Countthis count will be the same as the total number of “W” Records.
Right-justify and zero fill.
5–7Reel Count3Required. Enter the total number of reels/cartridges for this trans-
mission. Right-justify and zero fill.
8–498Reserved491Blank fill.
499-500Blank or2Required. Enter blanks or carriage return line feed characters (CR/LF).
Carriage Return
Line Feed
End of Transmission “Y” Record Layout
12–45–78–498499–500
1998–32 I.R.B.47August 10, 1998
Record
Type
ReservedEIN
Agent’s
Name
Agent’s
Address
CityState
ZIP
Code
Total
“Q”
Record
Count
Total
Gross
Amount
Paid
Total Tax
Withheld
Tax
Year
Withholding
Agent’s Phone
Number and
Extension
Reserved
Blank
or
CR/LF
Record
Type
Withholding
Agent Count
Reel CountReserved
Blank
or
CR/LF
IRB 1998-32 8/6/98 5:26 PM Page 47

Part C. Bisynchronous (Mainframe) Electronic Filing Specifications
Sec. 1. General
In compliance with Year 2000 changes, the current bisynchronous electronic filing communication package will change
in the future.
.01Bisynchronous electronic filing of Forms 1042–S information returns is offered as an alternative to magnetic media (tape,
tape cartridge, or diskette) or paper filing, but is not a requirement. This method uses IBM 3780 communications protocols and is
used primarily by mainframe filers. Electronic filing will fulfill the magnetic media requirements for those payers who are required
to file magnetically. It may also be used by payers who are under the filing threshold requirement, but would prefer to file their
information returns this way.
.02The electronic filing of information returns is not affiliated with the Form 1040 electronic filing program. These two pro-
grams are totally independent, and filers must obtain separate approval to participate in each of them. All inquiries concerning the
electronic filing of information returns should be directed to IRS/MCC. IRS/MCC personnel cannot answer questions or assist tax-
payers in the filing of Form 1040 tax returns. Filers with questions of this nature will be directed to the Customer Service toll free
number (1-800-829-1040) for assistance.
.03Filers participating in the electronic filing program for information returns will submit their returns to IRS/MCC electroni-
cally, and not through magnetic media or paper filing.
.04If a request for an extension is approved, transmitters who file electronically will be granted an extension of 30 days to file.
Part A., Sec. 11, explains procedures for requesting extensions of time. Filers are encouraged to file their data as soon as possible.
.05The formats of the “T,” “Q,” “W,” and “Y,” Records are the same for electronically filed records as they are for 5
1
⁄
4
- and 3
1
⁄
2
-inch diskettes, tapes, and tape cartridges. For electronically filed documents, each transmission is considered a separate file; there-
fore, each transmission must have an End of Transmission (EOT) “Y” Record.
Sec. 2. Electronic Filing Approval Procedure
.01Filers must obtain, or already have, a Transmitter Control Code (TCC) assigned to them prior to submitting their files elec-
tronically. (Filers who currently have a TCC for magnetic filing do not have to request a second TCC for electronic filing.) Refer
to Part A. Sec. 7 for information on how to obtain a TCC.
.02Filers using bisynchronous protocols must obtain an IRS/MCC-assigned password prior to submitting test or actual data files.
To obtain a password, the following steps must be taken:
(a)Bisynchronous filers who already have a TCC to file Forms 1042-S (beginning numbers “22”) must submit either Form
4419 or a letter to indicate that they wish to file information returns electronically. If you do not currently have a TCC
number or one that begins with “22”, a new number will be assigned. If a letter is submitted, it must contain the fol-
lowing:
1)Name and address of transmitter.
2)Transmitter Control Code.
3)Name and phone number of a contact person within the filer’s organization to whom a password will be assigned.
(b)Within 30 days of receiving the application or letter, IRS/MCC will send Form 6086, Time Sharing Operation (TSO)
Password Assignment, to the filer which will contain the password to be used for electronic submissions.
(c)Upon receipt of Form 6086, the user (person who will actually transmit the data) will separate the acknowledgment from
the password. Both the user and the user’s manager mustsign the acknowledgment and mail to:
)
Chief, Security and Disclosure Branch
IRS, Martinsburg Computing Center
P.O. Box 1208, MS-370
Martinsburg, WV 25402
(d)The users or filers should retain a copy of the signed acknowledgment for their records. It is the filer’s responsibility to
ensure that the password is not compromised. Access to IRS/MCC computers will not be allowed without a valid pass-
word. After a password is received and the acknowledgment returned, the filer may submit a data file.
(e)If filers have any questions relating to the security procedures, and/or they need to report their password has been com-
promised, they must contact IRS/MCC as soon as possible at:
)
IRS/MCC
Information Returns Branch
P. O. Box 1359
Martinsburg, WV 25402-1359
August 10, 1998481998–32 I.R.B.
IRB 1998-32 8/6/98 5:26 PM Page 48

%
or by calling 304-263-8700.
.03It is the user’s responsibility to remember the password and not allow the password to be compromised.
Sec. 3. Test Files
.01Filers are not required to submit a test file; however, the submission of a test file is encouraged for first time electronic filers
in order to resolve any data or communication problems prior to the filing season. If filers wish to submit an electronic test file for
Tax Year 1998 (returns to be filed in 1999), it mustbe submitted to IRS/MCC no earlier than December 1, 1998, and no later than
February 15, 1999.
.02If a filer encounters problems while transmitting electronic test files, contact IRS/MCC for assistance.
.03A password and a TCC number (beginning with “22”) must be obtained before submitting an electronic test file.
.04Bisynchronous electronic test files will be processed and filers will be notified as to the acceptability of their data within 10
workdays of the date the data and transmittal Form 4804 are received by IRS/MCC.
Sec. 4. Electronic Submissions
.01Electronically filed information may be submitted to IRS/MCC 7 days a week, 24 hours a day, except for routine mainte-
nance/backup which is performed at 4:00 a.m. Eastern Time. Technical assistance will be available Monday through Friday between
8:30 a.m. and 4:30 p.m. Eastern Time by calling 304-263-8700.
.02Lengthy transmissions (100,000 or more records)are not encouraged since the transmission may be interrupted by line noise
problems. It is advisable to break lengthy files into multiple transmissions.
.03The time required to transmit information returns electronically will vary depending on the modem speed, if IBM 3780 data
compression is used, and if the records are blocked. The following transmission rates were based on actual test files received at
MCC:
4,500 records50 minutes (4800 bps, no compression, one record per block)
54,000 records4 hours(9600 bps, compression, two records per block)
Sec. 5. Transmittal Requirements
.01All data submitted electronically is verified by transmittal Form 4804. The transmitter must mail the signed Form 4804 the
same day the transmission is made. No return is considered filed until a Form 4804 is received by IRS/MCC.
.02Form 4804 can be ordered by calling the IRS toll free forms and publications order number 1-800-TAX-FORM (1-800-829-
3676)or it may be computer-generated. A copy of the form is also available in the back of this publication. The Form 4804 can
be downloaded from IRP-BBS at 304-264-7070or from the Internet at http://www.irs.ustreas.gov.If a filer chooses to comput-
er- generate Form 4804, all of the information contained on the original form, including the affidavit, must also be contained on the
computer-generated form.
.03The TCC in the “T” Record must be the TCC used to transmit the file and should appear on the transmittal Form 4804.
.04 Forms 4804 may be mailed to the following addresses:
Please indicate on the envelope the following message:
CONTAINS FORM 4804 INFORMATION - NO MAGNETIC MEDIA
If by Postal Service: )
IRS-Martinsburg Computing Center
Information Reporting Program
ATTN: Electronic Filing Coordinator
P.O. Box 1359
Martinsburg, WV25402-1359
*Note: The ZIP Code has changed from 25401-1359 to 25402-1359 for the IRS P.O. Box addresses for Martinsburg, WV.
If by truck or air freight: (
IRS-Martinsburg Computing Center
Information Reporting Program
ATTN: Electronic Filing Coordinator
Route 9 and Needy Road
Martinsburg, WV 25401
1998–32 I.R.B.49August 10, 1998
IRB 1998-32 8/6/98 5:26 PM Page 49

Sec. 6. IBM 3780 Bisynchronous Communication Specifications
In compliance with Year 2000 changes, the current bisynchronous electronic filing communication package will change in
the future.
.01Transmissions using IBM 3780 bisynchronous protocols must be in EBCDIC character code. Modems must be compatible
with either Bell 208B for 4800 bps transmissions, AT&T 2296A for 9600 bps transmissions, or Hayes OPTIMA 288 V.FC Smart
modem for 14400 bps transmissions. These modems are dial-up type modems using the Public Switched Telephone Network. IBM
3780 data compression is acceptable for any bisynchronous transmission. Records may be blocked up to 4096 bytes with INTER
RECORD SEPARATORS.
.02IRS/MCC will accept information returns filed electronically over switched telecommunications network circuits. For 4800
bps, the circuit will be 304-264-7080.For 9600 bps, the circuit will be 304-264-7040. For 14400 bps, the circuit will be 304-264-
7045.These circuits are equipped for bisynchronous transmission using the IBM 3780 protocol.
.03The 4800 bps line terminates at a Bell 208B modem. The Bell 208B modem uses phase-shift keying and eight-phase modu-
lation to transmit binary serial data signals over the telephone line in half-duplex mode. The following options have been selected:
— Transmit Level set to -4 dBm
— Compromise Equalizer in (4-Db Slope)
— DSR off in Analog Loop Mode
— Automatic Answer
— Transmitter Internally Timed
— RS-CS Interval of 50 ms
.04The 9600 bps line terminates at an AT&T Dataphone II 2296A modem. The AT&T 2296A modem is a full-duplex, CCITT
V.32 compatible unit which operates at 9600 bps or 4800 bps (fall back). The following options have been selected:
— Receiver Responds to Remote Loopback
— Loss-of-Carrier Disconnect
— Received-Space Disconnect
— Send-Space Disconnect
— Automatic Answer
— Answer on Ring 1
— DTR Interlock
— Retrain Enable
— Internal Timing
— CTS Controlled by RTS
— 0 – 1 ms RTS to CTS Delay
— CTS Dependent on Carrier
— RR Indicates Carrier
— 9600 Trellis Coding
— 4800 bps Fallback
— 4 dB Compromise Equalization
.05The 14400 bps line terminates at a Hayes OPTIMA 288 V.FC Smartmodem. The Hayes OPTIMA Smartmodem is a half-
duplex, ITU-T (formerly CCITT) V.32 and V.32 bis compatible unit which operates at 14400 bps, 9600 bps, or 4800 bps (fallback).
The following options have been selected:
— Monitor DTR signal
— Assert DSR signal after handshake negotiation, but before connect result code
— Ring control S=1
Sec. 7. Bisynchronous Electronic Filing Record Specifications
.01For bisynchronous filing there are two additional identifier records which must be used to transmit data. These records are
500 positions in length and are the first ($$REQUEST) and second ($$ADD) records sent in an electronic transmission. The pur-
pose of these records is to provide the password and identity of the transmitter. These records may be shorter as long as inter record
separators are used. The $$REQUEST, $$ADD and the data file should be transmitted as one file. In some cases, filers have
attempted to send the $$REQUEST and $$ADD as separate files. Doing this will result in a failed transmission.
.02With the exception of these additional records, the file format for electronic filing is the same as for magnetic media filing.
The format of each of these records is as follows:
August 10, 1998501998–32 I.R.B.
IRB 1998-32 8/6/98 5:26 PM Page 50

Record Name: $$REQUEST
Field
Position Field TitleLengthDescription and Remarks
1–20$$REQUEST20Enter the following characters: $$REQUEST ID=MSGFILE
Identifier
Record
21–500Blank480Enter Blanks.
Electronic Filing Identifier $$REQUEST Record – Record Layout
1–2021–500
.03Upon making contact with IRS/MCC and furnishing a valid password in the $$ADD identifier record, a data transmission
session will commence. The transmission will continue until an End of Transmission (EOT) “Y” record is received. At the end of
each transmission, the following message should be received electronically by the filer: “DATA RECEIVED AT MCC” and the line
will be disconnected. If this message is not received, there was a problem with the submission, and the filer should contact
IRS/MCC immediately.
.04 Upon receiving a data file and transmittal Form 4804, IRS/MCC will release the data for further processing. If the media can-
not be processed, the filer will be notified by either letter or telephone that the data must be retransmitted. This file name, if neces-
sary, will be provided by IRS/MCC and is to be placed in positions 45-51 of the $$ADD record when the file is retransmitted.
Record Name: $$ADD
Field
Position Field TitleLengthDescription and Remarks
1–9$$ADD9Enter the following characters: $$ADD ID=
Identifier
Record
10–17Password8Enter the password assigned by IRS/MCC. For information con-
cerning the password, see Part C. Sec. 2.
18Blank 1 Enter a blank.
19–26 BATCHID8 Enter the following characters: BATCHID=
27Quote1Enter a single quote (‘).
28–43Transmitter16Enter the transmitter’s name. This name should remain consistent in
Nameall transmissions. If the transmitter’s name exceeds 16 positions,
truncate the name.
44 Type of File1Enter the Type of File Indicator from the list below:
Indicator
O = Original Filing
T = Test File
C = Correction File
R = Replacement File
E = Extension File
1998–32 I.R.B.51August 10, 1998
$$REQUEST
Identifier
Record
Blank
IRB 1998-32 8/6/98 5:26 PM Page 51

Record Name: $$ADD (Continued)
Field
Position Field TitleLengthDescription and Remarks
45–51 Replacement 7 Use this field only if this is a replacement file.Enter the replace-
File Namement file name which IRS/MCC has assigned to this file. This file
name will be provided to the filer in the letter notifying them that a
replacement file is necessary. If contact is made by telephone, the
replacement file name will be given to the filer by IRS/MCC at that
time. For other than replacement files, this field will contain blanks.
52Quote1Enter a single quote (‘).
53–500Blank448Enter blanks.
Electronic Filing Identifier $$ADD Record – Record Layout
1–910–171819–262728–43
4445–515253–500
Part D. Asynchronous (IRP-BBS) Electronic Filing Specifications
Sec. 1. General
.01Asynchronous electronic filing of Forms 1042–S originals, corrections, and replacements is offered as an alternative to mag-
netic media (tape, tape cartridge, or diskette) or paper filing, but is not a requirement. Electronic filing using the Information Report-
ing Program-Bulletin Board System (IRP-BBS) will fulfill the magnetic media requirements for those filers who are required to file
magnetically. It may also be used by those payers who are under the filing threshold requirement, but would prefer to file their infor-
mation returns this way. If the original file was sent magnetically, but was returned for replacement, the replacement may be transmit-
ted electronically. Also, if the original file was submitted via magnetic media, any corrections may be transmitted electronically.
.02 The electronic filing of information returns is not affiliated with the Form 1040 electronic filing program. These two pro-
grams are totally independent, and filers must obtain separate approval to participate in each of them. All inquiries concerning the
electronic filing of information returns should be directed to IRS/MCC. IRS/MCC personnel cannot answer questions or assist tax-
payers in the filing of Form 1040 tax returns. Filers with questions of this nature will be directed to the Customer Service toll free
number (1-800-829-1040)for assistance.
.03 Filers participating in the electronic filing program for information returns will submit their returns to IRS/MCC electroni-
cally and not through magnetic media or paper filing. Filessubmitted in this manner mustbe in standardASCII code.
.04 If a request for extension is approved transmitters who file electronically will be granted an extension of time to file. Part A.
Sec. 11, explains procedures for requesting extensions of time. Filers are encouraged to file their data as soon as possible.
.05The formats of the “T,” “Q,” “W,” and “Y” Records are the same for electronically filed records as they are for 5
1
⁄
4
- and 3
1
⁄
2
-
inch diskettes, tapes, and tape cartridges and must be in standard ASCII code. For electronically filed documents, each transmission
is considered a separate file; therefore, each transmission must have an End of Transmission (EOT) “Y” Record.
Sec. 2. Electronic Filing Approval Procedure
.01Filers must obtain, or already have, a TCC assigned to them prior to submitting their files electronically. Filers who currently
have a TCC for magnetic filing of Form 1042–S (beginning with numbers “22”) do not have to request a second TCC for electronic
filing. Refer to Part A. Sec. 7 for information on how to obtain a TCC.
August 10, 1998521998–32 I.R.B.
$$ADD
Identifier
Record
PasswordBlankBATCHIDQuote
Transmitter
Name
Type of
File
Indicator
Replacement
File Name
QuoteBlank
IRB 1998-32 8/6/98 5:26 PM Page 52

.02Once a TCC is obtained, filers using IRP-BBS assign their own passwords and do not need special approval.
.03With all passwords, it is the user’s responsibility to remember the password and not allow the password to be compromised.
However, if filers do forget their password, call 304-263-8700 for assistance.
*Note: Passwords on the IRP-BBS are case sensitive.
Sec. 3. Test Files
.01Filers are not required to submit a test file; however, the submission of a test file is encouraged for first time electronic filers
in order to resolve any data or communication problems prior to the filing season. If filers wish to submit an electronic test file for
Tax Year 1998 (returns to be filed in 1999), itmustbe submitted to IRS/MCC no earlier thanDecember 1, 1998, and no later than
February 15, 1999.
.02If a filer encounters problems while transmitting the electronic test file, contact IRS/MCC for assistance.
.03 Filers can verify the status of their transmitted test data by dialing the IRP-BBS. This information will be available within 10
workdays after their transmission is received by IRS/MCC.
Sec. 4. Electronic Submissions
.01Electronically filed information may be submitted to IRS/MCC 24 hours a day, 7 days a week. Technical assistance will be
available Monday through Friday between 8:30 a.m. and 4:30 p.m. Eastern Time by calling 304-263-8700.
.02Filers may submit as many documents as they choose electronically. Filers are allowed 240 minutes a day; however, more
time may be requested if needed. It may be advantageous to break down large files (files in excess of two hours of transmission
time)into several smaller files.
.03 Do not transmit data using IRP-BBS January 1 through January 7.This will allow time for the IRP-BBS to be updat-
ed to reflect current year changes.
.04Data compression is encouraged when submitting information returns by way of the IRP-BBS. MCC has the ability to decom-
press files created using several popular software compression programs such as ARC, LHARC, and PKZIP. Software data com-
pression can be done alone or in conjunction with V.42bis hardware compression.
The time required to transmit information returns electronically will vary depending on the modem speed and the type of data
compression used, if any. However, transmissions to IRP-BBS will be significantly faster than electronic filing to the mainframe.
The time required to transmit a file can be reduced by as much as 85 percent by using software compression and hardware
compression.
The following are actual transmission rates achieved in test uploads at MCC using compressed files (PKZIP) and the XMODEM-
1K protocol. The actual transmission rates will vary depending on the protocol that is used. (ZMODEM is normally the fastest pro-
tocol and XMODEM and KERMIT are the slower protocols).
.05Files submitted to IRP-BBS must have a unique filename; therefore, the IRP-BBS will build the filename that must be used.
The name will consist of the filer’s TCC, submission type (T = Test, P = Production, C = Correction, and R = Replacement) and a se-
quence number. Filers may call the file anything they choose on their end. The sequence number will be incremented every time
they send, or attempt to send, a file. Record the upload date, time, and filename. This information will be needed by MCC in order
to identify the file if assistance is required and to complete Form 4804.
.06Electronic filers must transmit their files by the due date of the return. If a file is bad, the filer will have 45 days to transmit
the first replacement file and 30 days thereafter if additional replacements are necessary.
.07Filers are advised not to resubmit an entire file if records were omitted from the original transmission. This will result in du-
plicate filing. A new file should be sent consisting of the records that had not previously been submitted.
1998–32 I.R.B.53August 10, 1998
Transmission
Speed in bps500 Records2500 Records10000 Records
96001 min 5 sec 4 min 35 sec21 min 20 sec
1920041 sec2 min 51 sec13 min 23 sec
3840025 sec1 min 55 sec9 min 10 sec
IRB 1998-32 8/6/98 5:26 PM Page 53

.08The TCC in the Transmitter “T” Record must be the TCC used to transmit the file.
Sec. 5. Transmittal Requirements
.01The results of the electronic transmission will be posted to the (F)ile Status area of the IRP-BBS, however, no further pro-
cessing will occur until the signed Form 4804 is received. The transmitter must mail the signed Form 4804 the same day the elec-
tronic transmission is made. No return is considered filed until a Form 4804 is received by IRS/MCC.
.02Form 4804 can be ordered by calling the IRS toll free forms and publication order number 1-800-TAX-FORM, (1-800-829-
3676) downloaded from the IRP-BBS at 304-264-7070,or it may be computer generated. It may also be obtained from the Internet
at http://www.irs.ustreas.gov.A copy of the form is also available in the back of this publication. If a filer chooses to computer-
generate Form 4804, all of the information contained on the original form, including the affidavit, must also be contained on the
computer-generated form.
.03 The TCC used in the Transmitter “T” Record is the TCC which must appear on the transmittal Form 4804.
.04Forms 4804 may be mailed to the following addresses:
Please indicate on the envelope the following message:
CONTAINS FORM 4804 INFORMATION - NO MAGNETIC MEDIA
If by Postal Service: )
IRS-Martinsburg Computing Center
Information Reporting Program
ATTN: Electronic Filing Coordinator
P.O. Box 1359
Martinsburg, WV 25402-1359
*Note: The ZIP Code has changed from 25401-1359 to 25402-1359 for the IRS P.O. Box addresses for Martinsburg, WV.
If by truck or air freight: (
IRS-Martinsburg Computing Center
Information Reporting Program
ATTN: Electronic Filing Coordinator
Route 9 and Needy Road
Martinsburg, WV 25401
Sec. 6. Information Reporting Program-Bulletin Board System(IRP-BBS) Specifications
.01 The IRP-BBS is an electronic bulletin board system available to filers of information returns. In addition to filing information
returns electronically, the IRP-BBS provides other capabilities. Some of the advantages of IRP-BBS are as follows:
(1)Notification within 10 workdays as to the acceptability of the data transmitted.
(2)Immediate access to the latest changes and updates that affect the Information Reporting Program at IRS/MCC (program,
legislative, etc.).
(3)Access to publications such as the Publication 1187 as soon as they are available.
(4)Capability to communicate with IRS/MCC personnel.
(5)Ability to retrieve information and files applicable to the IRP-BBS.
.02The IRP-BBS is available for public use and accessible using various personal computer communications equipment; how-
ever, electronic submission of information returns is limited to holders of valid TCCs. A TCC is not needed to access those portions
of the IRP-BBS that contain forms and publications or to leave questions or messages for IRS/MCC personnel.
.03Filers using IRP-BBS can determine the acceptability of files submitted by checking the file status area of the bulletin board.
These reports are not immediately available but will be available 10 workdays after the transmission is received by IRS/MCC.
.04 Contact the IRP-BBS by dialing 304-264-7070.The communication software settings for IRP-BBS are:
– No parity
– Eight data bits
– One stop bit
– Full duplex
The communication software should be set up to use the fastest speed allowed by the filer’s modem.
.05 Due to the large number of communication products available, it is impossible to provide specific information on a particular
software package or hardware configuration. Filers should contact their software or hardware supplier for assistance.
.06IRP-BBS software provides a menu-driven environment allowing access to different parts of IRP-BBS. Whenever possible,
August 10, 1998541998–32 I.R.B.
IRB 1998-32 8/6/98 5:26 PM Page 54

IRS/MCC personnel will provide assistance in resolving any communication problems with IRP-BBS.
.07IRP-BBS can be accessed at speeds from 1200 to 28,800 bps. The speed is automatically negotiated for connection at the
speed of the calling modem. The communication standards supported include Industry Standard 212A, V.22bis, V.32, V.32bis, V.34,
and V.FC. Point-to-point error control is supported using the V.42 ITU-T standard or MNP 2-4. Data compression is supported
using V.42bis ITU-T standard or MNP5.
Sec. 7. IRP-BBS First Logon Procedures
.01 The following information will be requested to set up the filer’s user profile when logging onto the IRP-BBS for the first time.
(a)Enter the letter, that corresponds to the filer’s terminal, from the following:
<A> IBM PC <B> IBM w/ANSI<C> Atari
<D> ADM-3 <E> H19/Z19/H89 <F> Televid 925
<G> TRS-80 <H> Vidtex <I> VT-52
<J> VT-100 <CR> if none of the above
Most PCS, clones, etc., will select the IBM PC emulation. Machines with color, CGA, EGA, or VGA should select IBM
w/ANSI.
(b)Upper/lower case, line feed needed, O (zero) nulls after each <CR>, do you wish to modify this? (Most users answer
no.)
Common User Problems
PROBLEMPROBABLE CAUSESOLUTION
File does not Not startingStart upload/download on filer’s end
upload/download communication when prompted by
‘Awaiting Start Signal’
All files not processed Compressing several files intoCompress only one file for every
filenamefilename
Replacement neededOriginal data does not meetReplacement must be submitted within
processing and/or format45 days of original transmission
requirements
Cannot determine file statusNot dialing back thru IRP-BBSWithin 10 days after sending a file, check
to check the status of the fileunder (F)ile Status for notification of
acceptability
Transfer aborts before it startsTransfer protocol mismatch Ensure protocols match on both the send-
ing and receiving ends
Loss of carrier during sessionIncorrect modem settings onReference your modem manual about
user’s endincreasing the value of the S10 register
Unreadable screens afterANSI.SYS driver not loaded in theSelect non ANSI under (Y)our settings
selecting “IBM w/ANSI”user’s PC
IRS Encountered Problems
IRS cannot complete final User did not mail the Form 4804 Mail completed Form 4804 the same day
processing of data as the electronic transmission
IRS cannot determine which User did not indicate which fileMust enter the filename that is being
file is being replacedbeing replacedreplaced under the replacement option
IRS cannot determine the typeUser incorrectly indicated T, P. C,When prompted, enter the correct type of
of file being sentor R for the type of filefile for data being sent
1998–32 I.R.B.55August 10, 1998
IRB 1998-32 8/6/98 5:26 PM Page 55

IRS Encountered Problems (Continued)
PROBLEMPROBABLE CAUSESOLUTION
Replacement file not replacedUser did not dial back thru IRP-BBSWithin 10 workdays check under (F)ile
within 45 daysto check the status of file for notification of acceptability
Duplicate dataTransmitter sends correctionsOnly submit corrections
for entire filefor incorrect records
Part E. Magnetic/Electronic Specifications For Extension of Time
Sec. 1. General Information
.01The specifications in Part E include the required 200- byte record format for extension of time to file requests submitted mag-
netic media or electronically. Also included are the instructions for the information that is to be entered in the record. Withholding
Agents are advised to read this section in its entirety to ensure proper filing.
.02Only filers who have been assigned a Transmitter Control Code may request an extension of time magnetically or electroni-
cally. If you meet the threshold of more than 50 payers, when requesting an extension but are below the 250 documents threshold,
you must still submit a Form 4419, Application for Filing Information Returns Magnetically/ Electronically. Requests for exten-
sions of time may be made for Forms 1042–S, 1098, 1099, 5498, W–2G, and W–2.
.03For Tax Year 1998 (returns due to be filed in 1999), transmitters requesting an extension of time to file for more than 50
withholding agents (not recipients) are required to file the extension request on magnetic media or electronically.Transmit-
ters requesting an extension of time for 10 to 50 withholding agents (not recipients) are encouraged to file the request magnetically
or electronically. The request may be filed on tape, tape cartridge, and 5
1
⁄
4
- and 3
1
⁄
2
-inch diskette or electronically.
.04For an extension request filed on magnetic media, the transmitter must mail the completed, signed Form 8809, Request for
Extension of Time to File Information Returns, in the same package as the corresponding media. For extension requests filed elec-
tronically, the transmitter must FAX the Form 8809 the same day the transmission is made.
.05 Withholding Agents, or Transmitters submitting an extension of time magnetically or electronically should not submit
a list of withholding agent names and TIN with the Form 8809 since this information is included on the magnetic or elec-
tronic file. However, Line 6 of the Form 8809 must be completed with the total number of withholding agent records in-
cluded on the magnetic media or electronic file.
.06To be considered, an extension request must be postmarked or transmitted by the due date of the returns; otherwise, the re-
quest will be denied.
.07The extension record format is also on the IRP-BBS and can be downloaded. See Part D for more information on how to
contact the IRP-BBS.
.08A magnetically-filed request for an extension of time should be sent using the following addresses:
If by Postal: )
IRS-Martinsburg Computing Center
Information Reporting Program
ATTN: Extension of Time Coordinator
P O Box 879
Kearneysville, WV 25430
If by truck or air freight: (
IRS-Martinsburg Computing Center
Information Reporting Program
ATTN: Extension of Time Coordinator
Route 9 and Needy Road
Martinsburg, WV 25401
*Note: Due to the large volume of mail received by IRS/MCC and the time factor involved in processing the Form 8809, it is
imperative the attention line be present on all envelopes or packages containing Extension of Time (EOT) requests.
.09 Requests for extensions of time to file postmarked by the United States Postal Service on or before the due date of the returns,
and delivered by United States mail to the IRS/MCC after the due date, are treated as timely under the “timely mailing as timely fil-
ing” rule. A similar rule applies to designated private delivery services (PDSs). See Part A, Sec. 10, for more information on PDSs.
For requests delivered by a designated PDS, but through a non-designated service, the actual date of receipt by IRS/MCC will be
used as the filing date.
August 10, 1998561998–32 I.R.B.
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.10 Withholding Agents who submit their extension of time requests magnetically or electronically will receive a letter from
IRS/MCC with an attached list of multiple withholding agents, based on information contained in the file, specifying approval
and/or denial.
.11Do not submit tax year 1998 extension of time to file requests on magnetic media or electronically before January 1, 1999.
.12 Filers may request an extension of time as soon as they are awarethat an extension is necessary but not later than the due
date of the return. It will take a minimum of 30 days for IRS/MCC to respond to an extension request. Under certain circumstances
a request for an extension of time could be denied. In such cases, the withholding agent receives a denial letter. When this denial let-
ter is received, the transmitter has 20 days to provide the additional or necessary information and resubmit the extension request to
IRS/MCC.
.13Each piece of magnetic media musthave an external media label containing the following information:
(a)Withholding agent’s name (Transmitter’s name if reporting for multiple withholding agents)
(b)Transmitter Control Code (TCC)
(c)Tax year
(d)The words “Extension of Time”
(e)Record count
.14 A request for an extension of time to file is not automatically granted. Approval or denial is dependent on information pro-
vided on the Form 8809.
.15 If the first request for an extension of time to file was submitted magnetically or electronically, additional extension requests
should be submitted in the same manner.
.16 If an additional extension of time is needed, a second Form 8809 and file may be submitted before the end of the initial ex-
tension period with a postmark reflecting the date mailed. Line 7 on the form should be checked to indicate that the original exten-
sion has been received and the additional extension is being requested.
.17See Part A. Sec. 11, for complete information on requesting an extension of time to file information returns. If there are addi-
tional questions or concerns, contact IRS/MCC.
*Note: The specifications for requesting an extension of time magnetically or electronically DO NOT APPLY to Form
1042. Form 1042 is not an information return. Form 2758 must be used to request an extension of time for Form
1042 and sent to the IRS, Philadelphia Service Center, Philadelphia PA 19255.
Sec. 2. Magnetic Tape, Tape Cartridge, 8mm, 4mm, QIC (Quarter Inch Cartridge), 5
1
⁄
4
- and 3
1
⁄
2
-inch
Diskette, and IRP-BBS Specifications
.01 Tape specifications are as follows:
(a)9 track.
(b)EBCDIC (Extended Binary Coded Decimal Interchange Code) or ASCII (American Standard Coded Information Inter-
change) recording mode.
(c) 1600 or 6250 BPI.
(d)A block must not exceed 32,600 tape positions and must be a multiple of 200.
(e) Record length of 200 bytes.
(f) Labeled or unlabeled tapes may be submitted.
.02 Tape cartridge specifications are as follows:
(a)Must be IBM 3480, 3490 or AS400 compatible.
(b) Must meet American National Standard Institute (ANSI) standards and have the following characteristics:
(1)Tape cartridges will be
1
⁄
2
inch tape contained in plastic cartridges which are approximately 4 inches by 5 inches by 1
inch in dimension.
(2)Magnetic tape will be chromium dioxide particle based
1
⁄
2
inch tape.
(3)Cartridges will be 18-track or 36-track parallel. Indicate on the external media label whether the tape cartridge is 18
or 36 track.
(4) Mode will be full function.
(5) The data may be compressed using EDRC (Memorex) or IDRC (IBM) compression.
(6)Either EBCDIC or ASCII.
(c)A block must not exceed 32,600 tape positions and must be a multiple of 200.
(d) Record length of 200 bytes.
(e)Labeled or unlabeled tape cartridges may be submitted.
.03 8mm, 4mm, and Quarter Inch Cartridge Specifications
(a)In most instances, IRS/MCC can process 8mm tape cartridges that meet the following specifications:
(1)Must meet American National Standard Institute (ANSI) standards, and have the following characteristics:
(a) Created from an AS400 operating systems only.
1998–32 I.R.B.57August 10, 1998
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(b)8mm (.315-inch) tape cartridges will be 2
1
⁄
2
-inch by 3
3
⁄
4
-inch.
(c) The 8mm tape cartridges must meet the following specifications:
TracksDensityCapacity
120 (43245 BPI)2.5 Gb (10Gb)
121 (45434 BPI)5 Gb (20 Gb)
(d)Mode will be full function.
(e) Compressed data is not acceptable.
(f)Either EBCDIC (Extended Binary Coded Decimal Interchange Code) or ASCII (American Standard Coded In-
formation Interchange) may be used. However, IRS/MCC encourages the use of EBCDIC. This information
must appear on the external media label affixed to the cartridge.
(g)A file may consist of more than one cartridge, however, no more than 250,000 documents may be transmitted
per file or per cartridge. The filename, for example; IRSEOT, will contain a three digit extension. The extension
will indicate the sequence of the cartridge within the file 1 of 3, 2 of 3, and 3 of 3 and would appear in the header
label IRSEOT.001, IRSEOT.002, and IRSEOT.003 on each cartridge of the file.
(2)The 8mm (.315-inch) tape cartridge records defined in this revenue procedure may be blocked subject to the follow-
ing:
(a) A blockmust notexceed 32,600 tape positions.
(b) f the use of blocked records would result in a short block, all remaining positions of the block must be filled with
9’s; however, the last block of the file may be filled with 9’s or truncated. Do not pad a block with blanks.
(c)All records, except the header and trailer labels, may be blocked or unblocked. A record may not contain any
control fields or block descriptor fields which describe the length of the block or the logical records within the
block. The number of logical records within a block (the blocking factor) must be constant in every block with
the exception of the last block which may be shorter (see item (2) above). The block length must be evenly di-
visible by 200.
(d) Various SAVE commands have been successful, however, the SAVE OBJECT COMMAND is not acceptable.
(e)Records may not span blocks.
(3)For faster processing, IRS/MCC encourages transmitters to use header labeled cartridges. IRSEOT may be used as
a suggested filename.
(4)For the purposes of this revenue procedure, the following must be used:
Tape Mark:
(a) Used to signify the physical end of the recording on tape.
(b)For even parity, use BCD configuration 001111 (8421).
(c)May follow the header label and precede and/or follow the trailer label.
(5)IRS/MCC can only read one data file on a tape. A data file is a group of records which may or may not begin with a
tapemark, but must end with a trailer label. Any data beyond the trailer label cannot be read by IRS programs.
(b) 4mm (.157-inch) cassettes are now acceptable with the following specifications:
(1)4mm cassettes will be 2
1
⁄
4
-inch by 3-inch.
(2)The tracks are 1 (one).
(3)The density is 19 (61000 BPI).
(4)The typical capacity is DDS (DAT data storage) at 1.3 Gb or 2 Gb, or DDS–2 at 4Gb.
(5)The general specifications for 8mm cartridges will also apply to the 4mm cassettes.
(c) Various Quarter Inch Cartridges (QIC) are now acceptable.
(1)QIC cartridges will be 4” by 6”.
(2)QIC cartridges must meet the following specifications:
SizeTracksDensity Capacity
QIC–114/54 (8000 BPI) 22Mb or 30Mb
QIC–248/95 (8000 BPI) 45Mb or 60Mb
QIC–1201515 (10000 BRI) 120Mb or 200Mb
QIC–1501816 (10000 BRI) 150Mb or 250Mb
QIC–3202617 (16000 BPI) 320Mb
QIC–5252617 (16000 BPI) 525Mb
QIC–10003021 (36000 BRI) 1Gb
QIC–13503018 (51667 BPI) 1.3Gb
QIC–2Gb4234 (40640 BPI) 2Gb
(3)The general specifications that apply to 8mm cartridges will also apply to QIC cartridges.
August 10, 1998581998–32 I.R.B.
IRB 1998-32 8/6/98 5:26 PM Page 58

.04 Diskette specifications are as follows:
(a)5
1
⁄
4
- or 3
1
⁄
2
-inches in diameter.
(b)ASCII recording mode only.Additional specifications may be found in Part B., Sec. 5, of this revenue procedure.
(c) Record length of 200 bytes.
(d)Diskettes must be created using the MS/DOS operating system.
(e)Filename of IRSEOT must be used. No other filenames are acceptable. If a file will consist of more than one diskette,
the filename IRSEOT will contain a three-digit extension. This extension will indicate the sequence of the diskettes
within the file. For example, the first diskette will be named IRSEOT.001, the second diskette will be name
IRSEOT.002, etc.
(f) Delimiter characters MUST NOT BE USED (i.e., commas (,) or quotes (“”)).
(g)Positions 199 and 200 of each record have been reserved for use as carriage return/line feed (cr/lf) characters, if applica-
ble.
.05 Bisynchronous electronic (IRP-BBS) specifications include:
(a) Transmitter must have TCC and a valid IRS/MCC- assigned password prior to submitting data files.
(b) Access phone numbers:
4800 bps304-264-7080
9600 bps304-264-7040
14400 bps304-264-7045
*Note: See Part C, Bisynchronous (Mainframe) Electronic Filing Specifications, for detailed information on filing with
IRS/MCC via bisynchronous protocols.
.06 IRP-BBS specifications include:
(a)Transmitter must have TCC.
(b)IRP-BBS access phone number is 304-264-7070.
(c)Communications software settings are:
— No parity
— Eight data bits
— One stop bit
— Full duplex
(d) Access speeds from 1200 to 28,800 bps.
*Note: See Part D, IRP-BBS Electronic Filing Specifications, for detailed information on filing with IRS/MCC via
IRP/BBS.
Sec. 3. Record Layout
.01Positions 6 through 185 of the following record should contain information about the withholding agentfor whom the exten-
sion of time to file is being requested. Do not enter transmitter information in these fields. Only one TCC may be present in a file.
MAGNETICALLY/ELECTRONICALLY EXTENSIONS OF TIME
RECORD LAYOUT
Field
Position Field TitleLengthDescription and Remarks
1–5Transmitter5Required.Enter the five character alpha/numeric Transmitter Con-
Control Codetrol Code (TCC) issued by IRS. Only one TCC per file is accept-
able.
6–14 (Withholding 9 Required.Must be the valid nine-digit EIN/SSN assigned to the
Agent’s TIN -Withholding Agent. Do not enter blanks, hyphens or alpha
Form 1042–S) characters. All zeros, ones, twos, etc. will have the effect of an in-
correct TIN. For foreign entities that are not required to have a TIN,
this field may be blank; however, the Foreign Entity Indicator, posi-
tion 187, mustbe set to “X.”
15–54Withholding 40 Required.Enter the name of the withholding agent whose TIN
Agents’s Nameappears in positions 6–14. Left justify information and fill unused
positions with blanks.
1998–32 I.R.B.59August 10, 1998
IRB 1998-32 8/6/98 5:26 PM Page 59

MAGNETICALLY/ELECTRONICALLY EXTENSIONS OF TIME
RECORD LAYOUT (Continued)
Field
Position Field TitleLengthDescription and Remarks
55–94Second Agent40 If additional space is needed, this field may be used to continue
Name name line information (e.g., c/o First National Bank); otherwise,
enter blanks.
95–134 Withholding 40 Required.Enter agent’s address. Street address should include
Agent’snumber, street, apartment or suite number (or P.O. Box if mail is
Address snot delivered to a street address).
135–174 Withholding 40 Required.Enter agent’s city, town, or post office.
Agent’s City
175–176 Withholding 2 Required.Enter agent’s valid U.S. Postal Service state abbrevia-
Agent’s Statetion (refer to Part B. Sec. 7, “T” record field positions 115–116) fo
rlist of valid state codes.
177–185 Withholding 9 Required.Enter agent’s ZIP code. If using a five-digit ZIP
Agent’s Zip Code code, left justify information and fill unused positions with blanks.
186 Document 1 Required.Enter the document you are requesting an extension of
Indicatortime for using the following code:
Code Document
41042–S
Do not enter any other value in this field when requesting an extension for Form 1042–S.
187Foreign Entity 1 Enter character “X” if the payer is a foreign entity.
Indicator
188–198 Blank 11 Enter blanks.
199–200 Blank 2 Enter blanks.Diskette filers may code the ASCII carriage return/
line feed characters (cr/lf).
Extension of Time Record Layout
1–56–1415–5455–9495–134135–174
175–176177–185186187188–198199-200
Part F. Miscellaneous Information
Sec. 1. Addresses for Martinsburg Computing Center
To submit an application to file, waiver request (forms), correspondence, and magnetic media files, use the following:
August 10, 1998601998–32 I.R.B.
Transmitter
Control
Code
Agent
TIN
Agent
Name
Second
Agent
Name
Agent
Address
Agent
City
Agent
State
Agent ZIP
Code
Document
Indicator
Foreign
Entity
Indicator
Blank
Blank
or
CR/LF
IRB 1998-32 8/6/98 5:26 PM Page 60

Mailing by U. S. Postal Service: )
IRS—Martinsburg Computing Center
Information Reporting Program
P.O. Box 1359
Martinsburg, WV 25402-1359
Shipping by truck or air freight:
IRS—Martinsburg Computing Center
Information Reporting Program
Route 9 and Needy Road
Martinsburg, WV 25401
To submit a magnetically filed extension of time request, use the following:
Mailing by U.S. Postal Service: )
IRS-Martinsburg Computing Center
Information Reporting Program
Attn: Extension of Time Coordinator
P. O. Box 879
Kearneysville, WV 25430
Shipping by truck or air freight:
IRS-Martinsburg Computing Center
Information Reporting Program
Attn: Extension of Time Coordinator
Route 9 and Needy Road
Martinsburg, WV 25401
Sec. 2. Telephone Numbers for Contacting IRS/MCC
%
Information Reporting Program Call Site:
?
304-263-8700
Between 8:30 a.m. and 4:30 p.m. Eastern Time
Monday through Friday
Telecommunication Device for the Deaf (TDD):
304-267-3367
Information Returns FAX Machine:
304-264-5602
Electronic Filing:
(IRP-BBS)
(Asynchronous)
304-264-7070
1998–32 I.R.B.61August 10, 1998
IRB 1998-32 8/6/98 5:26 PM Page 61

Mainframe Filing
(Bisynchronous Filing)
4.8 Modems304-264-7080
9.6 Modems304-264-7040
14.4 Modems 304-264-7045
HOURS OF OPERATION -
24 HOURS A DAY
7 DAYS A WEEK
This is the end of Publication 1187 for Tax Year 1998.
August 10, 1998621998–32 I.R.B.
IRB 1998-32 8/6/98 5:26 PM Page 62

1998–32 I.R.B.63August 10, 1998
$
I R B
1042S
Box of
I R B
1042S
Box of
I R B
1042S
Box of
Internal Revenue Service
Martinsburg Computing Center
P O Box 1359
Martinsburg WV 25402-1359
I R B
1042S
Box of
I R B
1042S
Box of
I R B
1042S
Box of
Internal Revenue Service
Martinsburg Computing Center
Route 9 and Needy Road
Martinsburg WV 25401
(Reproduce as needed)
To expedite handling, please affix this label, or a substitute
label, to your OUTSIDE shipping container.
(use this label for U S Postal deliveries)(use this label for truck or air freight deliveries)
IRB 1998-32 8/6/98 5:26 PM Page 63

August 10, 1998641998–32 I.R.B.
Foundations Status of Certain
Organizations
Announcement 98–76
The following organizations have
failed to establish or have been unable to
maintain their status as public charities or
as operating foundations. Accordingly,
grantors and contributors may not, after
this date, rely on previous rulings or des-
ignations in the Cumulative List of Orga-
nizations (Publication 78), or on the pre-
sumption arising from the filing of notices
under section 508(b) of the Code. This
listing does notindicate that the organiza-
tions have lost their status as organiza-
tions described in section 501(c)(3), eligi-
ble to receive deductible contributions.
Former Public Charities.The following
organizations (which have been treated as
organizations that are not private founda-
tions described in section 509(a) of the
Code) are now classified as private foun-
dations:
American Indian Cultural Society of
North Florida Inc., Tallahassee, FL
An Ark of Love Inc., Oakland, CA
Belize International Educational
Foundation Inc., Lakeland, FL
Big Orange Soccer Club Inc.,
Sweetwater, TN
Booker Street Center, Jackson, MS
Bret Harte Educational Assoc., San Jose,
CA
Caddo Fencers Booster Club, Shreveport,
LA
Catskill Theatre Arts Center, Inc.,
Forestburgh, NY
Center for School and Community
Relations, Inc., Flagtown, NJ
Challenger 2 Expedition, Inc., Windsor,
MA
Charlotte H. Edwards Christian Institute,
Inc., Powder Springs, GA
Christa McAuliffe Staff and Parents
Actively Contributing to Education,
Oxnard, CA
Chula Vista Connection Neighbors
Helping Neighbors, Chula Vista, CA
Church of Grace, Lancaster, PA
Clearwater Resource Coalition Inc.,
Orofino, ID
Citizens Concerned for Balanced
Education, San Francisco, CA
Citizens for the Preservation of Santa
Rosa Creek, Santa Rosa, CA
David Institute, Tustin, CA
Easy Does It Inc., Houston, TX
Edison Boosters Club Inc., Minneapolis,
MN
Ellen M. Leach Memorial Home, Inc.,
Sterling, MA
Environmental Fund, Inc., Petersburg,
VA
Eureka Symphony Orchestra, Eureka, CA
Family Outreach Services, Inc.,
Nacogdoches, TX
Fast Foundation, Inc., Charlotte, NC
Fayette Elementary School PTO Inc.,
Fayetteville, GA
Florence Housing Development
Authority, Florence, AL
Foundation for the Future, Las Vegas,
NV
Friends of Bayfront Park Inc., Miami, FL
Greater Bethlehem Housing Corp.,
St. Louis, MO
Hebrew Hospital Home of Westchester,
Inc., Bronx, NY
His Image Outreach, Bedford, OH
Hopkins County Literacy Council Inc.,
Sulphur Springs, TX
Illumination Society, Inc., Schenectady,
NY
Impact Outreach Inc., Arlington, VA
Indiana Harvest Inc., Indianapolis, IN
Kinetic Image Inc., New York, NY
Life Stride Ministries, Inc., Boston, MA
Living Hope Crisis Pregnancy Center,
Chester, CA
Missionary of Mercy Mission Inc.,
Detroit, MD
Mountain Thunder Productions, Inc.,
Lansing, MI
Needy School Childrens Fund Inc., Perry,
FL
Offspring, Inc., Baltimore, MD
One Heart Music Press LTD, Bethany,
OK
Our Community Associations, St. Louis,
MO
Pantheon Corporation of Indiana,
Griffith, IN
Pomfret House, Inc., Woodstock, VT
Pony League of El Cajon, El Cajon, CA
Radio Lollipop USA Inc., Miami, FL
Richlee Deserved Foundation, Tacoma,
WA
Sacramento Girls Softball League Inc.,
Sacramento, CA
Somber Reptile Art and Music
Development Center, Inc., Atlanta, GA
Wagon Wheel James Street Residence
Inc., Syracuse, NY
If an organization listed above submits
information that warrants the renewal of
its classification as a public charity or as a
private operating foundation, the Internal
Revenue Service will issue a ruling or de-
termination letter with the revised classi-
fication as to foundation status. Grantors
and contributors may thereafter rely upon
such ruling or determination letter as pro-
vided in section 1.509(a)–7 of the Income
Tax Regulations. It is not the practice of
the Service to announce such revised clas-
sification of foundation status in the Inter-
nal Revenue Bulletin.
Part IV. Items of General Interest
IRB 1998-32 8/6/98 5:26 PM Page 64

1998–32 I.R.B.65August 10, 1998
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the
effect:
Amplified describes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus,
if an earlier ruling held that a principle
applied to A, and the new ruling holds
that the same principle also applies to B,
the earlier ruling is amplified. (Compare
with modified, below).
Clarified is used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confu-
sion. It is not used where a position in a
prior ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously
published ruling and points out an essen-
tial difference between them.
Modified is used where the substance
of a previously published position is
being changed. Thus, if a prior ruling
held that a principle applied to A but not
to B, and the new ruling holds that it ap-
plies to both A and B, the prior ruling is
modified because it corrects a published
position. (Compare with amplified and
clarified, above).
Obsoleted describes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used
in a ruling that lists previously published
rulings that are obsoleted because of
changes in law or regulations. A ruling
may also be obsoleted because the sub-
stance has been included in regulations
subsequently adopted.
Revoked describes situations where the
position in the previously published rul-
ing is not correct and the correct position
is being stated in the new ruling.
Superseded describes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a pe-
riod of time in separate rulings. If the
new ruling does more than restate the
substance of a prior ruling, a combination
of terms is used. For example, modified
and superseded describes a situation
where the substance of a previously pub-
lished ruling is being changed in part and
is continued without change in part and it
is desired to restate the valid portion of
the previously published ruling in a new
ruling that is self contained. In this case
the previously published ruling is first
modified and then, as modified, is super-
seded.
Supplemented is used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and
that list is expanded by adding further
names in subsequent rulings. After the
original ruling has been supplemented
several times, a new ruling may be pub-
lished that includes the list in the original
ruling and the additions, and supersedes
all prior rulings in the series.
Suspended is used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.
Abbreviations
The following abbreviations in current use and for-
merly used will appear in material published in the
Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C.—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contribution Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign Corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statements of Procedral Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.
Definition of Terms
IRB 1998-32 8/6/98 5:26 PM Page 65

August 10, 1998661998–32 I.R.B.
Numerical Finding List
1
Bulletins 1998–29 through 31
Announcements:
98–62, 1998–29 I.R.B. 13
98–68, 1998–29 I.R.B. 14
98–69, 1998–30 I.R.B. 16
98–70, 1998–30 I.R.B. 17
98–71, 1998–30 I.R.B. 17
98–72, 1998–31 I.R.B.14
98–73, 1998–31 I.R.B.14
98–74, 1998–31 I.R.B.15
98–75, 1998–31 I.R.B.15
Notices:
98–36, 1998–29 I.R.B. 8
98–37, 1998–30 I.R.B.13
Railroad Retirement Quarterly Rate:
1998–31 I.R.B. 7
Proposed Regulations:
REG–104641–97, 1998–29 I.R.B. 9
REG–110403–98, 1998–29 I.R.B.11
REG–116608–97, 1998–29 I.R.B. 12
REG–119227–97, 1998–30 I.R.B. 13
Revenue Procedures:
98–43, 1998–29 I.R.B. 8
Revenue Rulings:
98–34, 1998–31 I.R.B. 12
98–35, 1998–30 I.R.B. 4
98–36, 1998–31 I.R.B.6
Treasury Decisions:
8771, 1998–29 I.R.B. 6
8772, 1998–31 I.R.B. 8
8773, 1998–29 I.R.B. 4
8774, 1998–30 I.R.B. 5
8775. 1998–31 I.R.B.4
1
A cumulative list of all revenue rulings, revenue
procedures, Treasury decisions, etc., published in
Internal Revenue Bulletins 1998–1 through 1998–28
will be found in Internal Revenue Bulletin 1998–29,
dated July 20, 1998.
IRB 1998-32 8/6/98 5:26 PM Page 66

1998–32 I.R.B.67August 10, 1998
Finding List of Current Action on
Previously Published Items
1
Bulletins 1998–29 through 31
*Denotes entry since last publication
1
A cumulative finding list for previously published
items mentioned in Internal Revenue Bulletins
1998–1 through 1998–28 will be found in Internal
Revenue Bulletin 1998–29, dated July 20, 1998.
IRB 1998-32 8/6/98 5:26 PM Page 67

August 10, 1998681998–32 I.R.B.
Notes
IRB 1998-32 8/6/98 5:26 PM Page 68

1998–32 I.R.B.69August 10, 1998
Notes
IRB 1998-32 8/6/98 5:26 PM Page 69

August 10, 1998701998–32 I.R.B.
Notes
IRB 1998-32 8/6/98 5:26 PM Page 70

IRB 1998-32 8/6/98 5:26 PM Page 71

INTERNAL REVENUE BULLETIN
The Introduction on page 3 describes the purpose and content of this publication. The weekly Internal Revenue Bulletin is sold
on a yearly subscription basis by the Superintendent of Documents. Current subscribers are notified by the Superintendent of
Documents when their subscriptions must be renewed.
CUMULATIVE BULLETINS
The contents of this weekly Bulletin are consolidated semiannually into a permanent, indexed, Cumulative Bulletin. These are
sold on a single copy basis and are not included as part of the subscription to the Internal Revenue Bulletin. Subscribers to the week-
ly Bulletin are notified when copies of the Cumulative Bulletin are available. Certain issues of Cumulative Bulletins are out of print
and are not available. Persons desiring available Cumulative Bulletins, which are listed on the reverse, may purchase them from the
Superintendent of Documents.
HOW TO ORDER
Check the publications and/or subscription(s) desired on the reverse, complete the order blank, enclose the proper remittance,
detach entire page, and mail to the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402. Please
allow two to six weeks, plus mailing time, for delivery.
WE WELCOME COMMENTS ABOUT THE
INTERNAL REVENUE BULLETIN
If you have comments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it, we
would be pleased to hear from you. You can e-mail us your suggestions or comments through the IRS Internet Home Page
(www.irs.ustreas.gov) or write to the IRS Bulletin Unit, T:FP:F:CD, Room 5560, 1111 Constitution Avenue NW, Washington, DC
20224. You can also leave a recorded message 24 hours a day, 7 days a week at 1–800–829–9043.
IRB 1998-32 8/6/98 5:26 PM Page 72