Internal Revenue Bulletin 1998-38 (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. 98–45, page 4.
Low-income housing credit; satisfactory bond; “bond
factor” amounts for the period July through Septem-
ber 1998.This ruling announces the monthly bond factor
amounts to be used by taxpayers who dispose of qualified
low-income buildings or interests therein during the period
July through September 1998.
EMPLOYEE PLANS
Announcement 98–85, page 30.
Forms 5300, 5303, 5307 and 6406, and Schedule Q (Form
5300), used for requesting determination letters for ongoing
employee benefit plans, have been revised. The new revision
date is July 1998.
EXEMPT ORGANIZATIONS
Announcement 98–86, page 31.
A list is provided of organizations that no longer qualify as or-
ganizations to which contributions are deductible under sec-
tion 170 of the Code.
ADMINISTRATIVE
Rev. Proc. 98–48, page 7.
Qualified small business stock; rollover of gain; elec-
tion.Procedures are provided for taxpayers to make an
election under section 1045 of the Code to defer recogni-
tion of gain on the sale of qualified small business stock.
Rev. Proc. 98–50, page 8.
Form 1040 IRS e-fileprogram.Participants in the Form
1040 IRS e-fileprogram are informed of their obligations to
the Service, taxpayers, and other participants. Rev. Proc.
97–60 superseded.
Rev. Proc. 98–51, page 20.
Form 1040 on-line filing program.Participants in the
Form 1040 on-line filing program are informed of their oblig-
ations to the Service, taxpayers, and other participants. Rev.
Proc. 97–61 superseded.
Notice 98–49, page 5.
Section 408A; Roth IRAs, reporting requirements.This
notice describes certain reporting requirements for Roth
IRAs as described in section 408A of the Code and certain
changes to IRAs contained in the Internal Revenue Service
Restructuring and Reform Act of 1998. Notice 87–13 and
Notice 87–16 modified.
Announcement 98–84, page 30.
The Service announces a delay in changes to Forms W–2 and
W–3 until tax year 2000. In Announcement 98–55, 1998–26
I.R.B. 41, the Service requested comments on proposed
changes to the 1999 Forms W–2 and W–3. Based on a re-
view of those comments, the Service will postpone making
major revisions to Forms W–2 and W–3 until tax year 2000
forms, which will be filed in 2001.
Internal Revenue
bbuulllleettiinn
Bulletin No. 1998–38
September 21, 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 33.
Announcement of Declaratory Judgment Proceedings Under section 7428 begins on page 31.
IRB 1998-38 9/16/98 11:49 AM 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 1998-38 9/16/98 11:49 AM 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 1998-38 9/16/98 11:49 AM Page 3

For a list of bond factor amounts ap-
plicable to dispositions occurring during
other calendar years, see the following
revenue rulings: Rev. Rul. 95–83, 1995–
2 C.B. 8, for dispositions occurring dur-
ing calendar year 1995; Rev. Rul. 98–3,
1998–2 I.R.B. 4, for dispositions occur-
ring during the calendar years 1996 and
1997; Rev. Rul. 98–13, 1998–11 I.R.B. 4,
for dispositions occurring during the pe-
riod January through March 1998; and
Rev. Rul. 98–31, 1998–25 I.R.B. 4, for
dispositions occurring during the period
April through June 1998.
DRAFTING INFORMATION
The principal author of this revenue
ruling is Jack Malgeri of the Office of As-
sistant Chief Counsel (Passthroughs and
Special Industries). For further informa-
tion regarding this revenue ruling, contact
Mr. Malgeri at (202) 622-3040 (not a toll-
free call).
Section 6012.—Persons
Required To Make Returns of
Income
26 CFR 1.6012–5: Composite return in lieu of
specified form.
For the requirements for participation in the
Form 1040 IRS e-fileprogram, see Rev. Proc.
98–50, page 8.
26 CFR 1.6012–5: Composite return in lieu of
specified form.
For the requirements for participation in the
Form 1040 on-line filing program, see Rev. Proc.
98–51, page 20.
Section 6061.—Signing of
Returns and Other Documents
26 CFR 1.6061–1: Signing of returns and other
documents by individuals.
For the requirements for participation in the
Form 1040 IRS e-fileprogram, see Rev. Proc.
98–50, page 8.
26 CFR 1.6061–1: Signing of returns and other
documents by individuals.
For the requirements for participation in the
Form 1040 on-line filing program, see Rev. Proc.
98–51, page 20.
Section 42.—Low-Income
Housing Credit
Low-income housing credit; satisfac-
tory bond; “bond factor” amounts for
the period July through September
1998.This ruling announces the monthly
bond factor amounts to be used by tax-
payers who dispose of qualified low-in-
come buildings or interests therein during
the period July through September 1998.
Rev. Rul. 98–45
In Rev. Rul. 90–60, 1990–2 C.B. 3, the
Internal Revenue Service provided guid-
ance to taxpayers concerning the general
methodology used by the Treasury De-
partment in computing the bond factor
amounts used in calculating the amount of
bond considered satisfactory by the Sec-
retary under § 42(j)(6) of the Internal
Revenue Code. It further announced that
the Secretary would publish in the Inter-
nal Revenue Bulletin a table of “bond fac-
tor” amounts for dispositions occurring
during each calendar month.
This revenue ruling provides in Table 1
the bond factor amounts for calculating
the amount of bond considered satisfac-
tory under § 42(j)(6) for dispositions of
qualified low-income buildings or inter-
ests therein during the period July through
September 1998
September 21, 199841998–38 I.R.B.
Part I. Rulings and Decisions Under the Internal Revenue Code of 1986
Table 1
Rev. Rul. 98–45
Monthly Bond Factor Amounts for Dispositions Expressed
As a Percentage of Total Credits
Calendar Year Building Placed in Service
or, if Section 42(f)(1) Election Was Made,
the Succeeding Calendar Year
Month of 198719881989199019911992199319941995199619971998
Disposition
Jul ’9861.0975.2575.3377.2279.4982.0884.7087.1889.6092.2194.8197.21
Aug ’9861.0975.2575.1377.0179.2781.8584.4786.9389.3591.9794.6197.21
Sep ’9861.0975.25 74.9376.8179.0681.6384.2386.7089.1291.7494.4297.21
IRB 1998-38 9/16/98 11:49 AM Page 4

1998–38 I.R.B.5September 21, 1998
Roth IRA Guidance
Notice 98–49
PURPOSE AND BACKGROUND
This notice provides guidance relating
to Service-approved Roth IRA documents
and IRA reporting requirements. In addi-
tion, this notice summarizes a number of
recent changes in the law governing all
IRAs, which affect Notice 87–13, 1987–1
C.B. 432, and Notice 87–16, 1987–1 C.B.
446.
Roth IRAs are a new type of IRA, de-
scribed in § 408A of the Internal Revenue
Code (“Code”), that individuals can use
beginning in 1998. Section 408A was
added to the Code by § 302 of the Tax-
payer Relief Act of 1997 (“TRA 97”),
Pub. L. 105–34, to authorize a new type
of individual retirement arrangement (the
“Roth IRA”). This notice reflects
changes relating to Roth IRAs contained
in the Internal Revenue Service Restruc-
turing and Reform Act of 1998 (the “IRS
Restructuring Act”), Pub. L. 105–206.
The Internal Revenue Service recently
issued proposed regulations, §§ 1.408A–1
through 1.408A–9, relating to Roth IRAs,
which were published in the Federal Reg-
ister on September 3, 1998. This notice
incorporates definitions and terms that are
contained in those proposed regulations.
For more information on IRAs, includ-
ing Roth IRAs, see Publication 590, Indi-
vidual Retirement Arrangements (IRAs),
and Publication 553, Highlights of 1997
Tax Changes.
SECTION A. SERVICE-APPROVED
ROTH IRA DOCUMENTS
Q. A–1. Are there model forms avail-
able for establishing a Roth IRA?
A. A–1. Yes. The Service has issued
three model forms, Form 5305–R, Form
5305–RA and Form 5305–RB, that can be
used to establish a Roth IRA as a trust ac-
count, a custodial account or an annuity,
respectively. In the case of Form 5305–
RB, the model form is used as an endorse-
ment to an insurance company’s annuity
contract. Model forms issued by the Ser-
vice contain pre-approved language that,
if followed, will satisfy the applicable
statutory requirements.
Q. A–2. Can the model forms be
amended?
A. A–2. Article IX of each of these
model forms permits certain amendments
to be made to provisions of the Roth IRA
in accordance with the instructions to the
model forms. For example, under the
model forms, a spouse who is the sole
designated beneficiary is deemed to have
elected to treat the Roth IRA, upon the
death of the owner, as his or her own. The
model forms can be amended to give a
surviving spouse who is the sole desig-
nated beneficiary the option of not treat-
ing the Roth IRA, upon the death of the
owner, as his or her own.
Q. A–3. Is the Service currently ac-
cepting applications for opinion letters on
prototype Roth IRAs?
A. A–3. The Service is not currently
accepting applications for opinion letters
on prototype Roth IRAs. Announcement
97–122, 1997–50 I.R.B. 63, states that
transitional relief similar to that provided
under Rev. Proc. 97–29, 1997–1 C.B.
698, will be provided to sponsors and
their customers who establish Roth IRAs
with documents that have not been pre-
approved by the Service. Thus, for exam-
ple, if in January 1998 an individual made
a contribution to a trust or custodial ac-
count or purchased an annuity using doc-
uments or associated written material that
clearly designates the account or annuity
as a Roth IRA, then, provided certain re-
quirements are met, the individual will be
deemed to have established a Roth IRA
on that date using a document approved
by the Service for use as a Roth IRA.
SECTION B. IRA REPORTING
REQUIREMENTS
Q. B–1. What reporting requirements
apply to the trustees in the case of a
recharacterization of a contribution from
a FIRST IRA to a SECOND IRA as de-
scribed in § 1.408A–5 of the proposed In-
come Tax Regulations?
A. B–1. The general reporting require-
ments for Roth IRAs are described in pro-
posed regulation § 1.408A–7. In addition,
the following reporting requirements
apply to the trustees of the FIRST IRA and
the SECOND IRA when the IRA owner
elects to treat a contribution as having
been made to the SECOND IRA and not
to the FIRST IRA in accordance with the
rules in § 1.408A–5. To the extent that the
instructions for the 1998 Forms 1099–R
and 5498 are inconsistent with the instruc-
tions for completing those forms provided
in this Q&A B–1, trustees must follow the
guidance provided in this notice.
(1) Reporting by the trustee of the
FIRST IRA.The trustee of the FIRST
IRA reports the contribution on Form
5498 showing the character of the contri-
bution (rollover, conversion amount, or
regular). If the recharacterization (i.e.,
the transfer) occurs in calendar year 1998,
the trustee reports the recharacterization
as a distribution on Form 1099–R show-
ing Code G for direct rollover and show-
ing the gross amount (contribution and
earnings) in Box 1-Gross distribution and
0 (zero) in Box 2a-Taxable amount. For
recharacterizations that occur in later
years, the trustee reports in accordance
with applicable Federal tax forms and in-
structions. For recharacterizations that
occur in 1999, it is anticipated that the in-
structions to Form 1099–R will indicate
that the trustee reports the recharacteriza-
tion as a distribution on Form 1099–R
showing new Code R for recharacteriza-
tion and showing the gross amount (con-
tribution and earnings) in Box 1-Gross
distribution and 0 (zero) in Box 2a-Tax-
able amount.
(2) Reporting by the trustee of the SEC-
OND IRA.For recharacterized amounts
received on or before December 31, 1998,
that are recharacterized as amounts con-
tributed in calendar year 1998, the trustee
of the SECOND IRA reports the contribu-
tion as a rollover contribution on a 1998
Form 5498. For recharacterized amounts
received after December 31, 1998, the
trustee reports in accordance with applic-
able Federal tax forms and instructions. It
is anticipated that the instructions to the
1999 Form 5498 will provide that a
recharacterized amount received by the
trustee of the SECOND IRA will continue
to be reported as a rollover contribution,
but that (a) the checkbox entitled “Roth
conv.” on the 1998 Form 5498 will be
retitled to identify a contribution as a
recharacterization, (b) the trustee of the
SECOND IRA will check both the box
identifying the contribution as a recharac-
Part III. Administrative, Procedural, and Miscellaneous
IRB 1998-38 9/16/98 11:49 AM Page 5

terization contribution and the box that
identifies the type of IRA involved, and
(c) the recharacterization must be re-
ported on a Form 5498 that is separate
from any Form 5498 otherwise required
for the SECOND IRA.
Q. B–2. How does a trustee report on
Form 1099–R a distribution from a Roth
IRA that contains both regular and 1998
conversion contributions?
A. B–2. In the case of a distribution
from a Roth IRA that contains both regu-
lar and 1998 conversion contributions, the
trustee must use Code K in Box 7 of Form
1099–R.
SECTION C. OTHER RECENT
CHANGES TO IRAS
Q. C–1. What effect does the recharac-
terization of a contribution (as described
in § 1.408A–5 of the proposed Income
Tax Regulations) have on the rules gov-
erning the nontaxable return of basis in the
case of traditional IRA distributions?
A. C–1. Part III, “Distributions,” of
Notice 87–16, sets forth the rules for cal-
culating the nontaxable return of basis in
the case of distributions from traditional
IRAs. These rules continue to apply ex-
cept as modified below.
The total IRA account balances, the
total nondeductible contributions, and the
distribution amount (as these terms are
used in Notice 87–16) for an individual
for a taxable year are each adjusted to re-
flect recharacterized amounts contributed
to, or distributed from, the traditional
IRAs. For purposes of making this ad-
justment, the contribution that is being
recharacterized as a contribution to the
SECOND IRA is treated as having been
originally contributed to the SECOND
IRA on the same date and (in the case of a
regular contribution) for the same taxable
year that the contribution was made to the
FIRST IRA. If the recharacterization
transaction occurs after the close of the
taxable year and if the recharacterization
transaction involves a regular contribu-
tion for the prior taxable year, the rechar-
acterization is disregarded for the prior
taxable year in determining the total IRA
account balances.
Q. C–2. Are there any new exceptions
to the 10-percent additional tax on early
distributions from IRAs?
A. C–2. Yes. Section 203 of TRA 97
added § 72(t)(2)(E) to the Code, which
provides that the additional 10-percent tax
does not apply to IRA distributions for
qualified higher education expenses of the
IRA owner, the owner’s spouse, or a child
or grandchild of either. Qualified higher
education expenses include tuition, sup-
plies, and, for students who are at least
half-time, room and board. (See Notice
97–60, 1997–46 I.R.B. 8.)
Section 303 of TRA 97 added
§ 72(t)(2)(F) to the Code, which provides
that the additional 10-percent tax does not
apply to an IRA distribution to acquire a
first-time home for the IRA owner or a
member of his or her family. To qualify,
the distribution must be used for costs
normally associated with acquiring a prin-
cipal residence and the IRA owner (and if
married, the owner’s spouse), generally,
must not have had an ownership interest
in a principal residence for the previous 2
years. If the distributed money is not
used for such purpose, the money can be
recontributed by the 120th day after the
distribution to the IRA without incurring
the 10-percent tax. This exception for a
first-time home purchase is subject to a
lifetime cap of $10,000 for each IRA
owner; thus, an individual and his or her
spouse would each be subject to a sepa-
rate $10,000 lifetime cap.
In addition, § 3436 of the IRS Restruc-
turing Act added § 72(t)(2)(A)(vii) to the
Code, which provides that the additional
10-percent tax does not apply to a distribu-
tion from a qualified retirement plan, in-
cluding an IRA, that is made on account of
a levy under § 6331 on the qualified retire-
ment plan. The provision applies to distri-
butions made after December 31, 1999.
Previous guidance relating to § 72(t)
was provided in Part D of Notice 87–13.
These rules continue to apply except as
modified above.
Q. C–3. What changes are there in the
“active participant” rules?
A. C–3. Section 301 of TRA 97
amended § 219 of the Code to provide for
increased deductible contributions to tra-
ditional IRAs that can be made by active
participants in employer-sponsored retire-
ment plans. In 1998, the IRA deduction
available to an unmarried active partici-
pant is phased out ratably between ad-
justed gross income of $30,000 and
$40,000. This phase-out range is in-
creased annually until 2005 when the
phase-out range will be $50,000 to
$60,000. In the case of joint returns, the
phase-out range is $50,000 to $60,000 for
1998, rising to $80,000 to $100,000 for
2007 and later years. In addition, an indi-
vidual who is not an active participant but
is married to someone who is can make a
fully deductible traditional IRA contribu-
tion if their combined adjusted gross in-
come is not more than $150,000, or a par-
tially deductible traditional IRA
contribution if their combined adjusted
gross income is between $150,000 and
$160,000.
Previous guidance relating to the active
participant rules was provided in Part IA
of Notice 87–16. These rules continue to
apply except as modified above.
Q. C–4. Are there any changes to the
permissible investments available in an
IRA?
A. C–4. Yes. Section 304 of TRA 97
amended § 408(m) of the Code to permit
IRAs to invest in certain platinum coins
and in gold, silver, platinum or palladium
bullion, provided the bullion is in the
physical possession of an IRA trustee.
Previous guidance relating to col-
lectibles was provided in Part V of Notice
87–16. These rules continue to apply ex-
cept as modified above.
EFFECT ON OTHER DOCUMENTS
Notice 87–16 and Notice 87–13 are
modified.
REQUEST FOR COMMENTS
The Service and Treasury invite com-
ments and suggestions concerning the
guidance provided in this notice. Any
correspondence received will be evalu-
ated to determine whether additional
guidance on Roth IRAs is necessary.
In particular, comments are requested
on appropriate reporting of recharacteri-
zation transactions described in proposed
regulation § 1.408A–5. The Service and
Treasury recognize that recharacterization
transactions present novel reporting is-
sues for IRA trustees, and this notice pro-
vides for reporting such transactions in a
manner that most closely approximates
reporting for ordinary IRA distributions,
contributions and trustee-to-trustee trans-
fers. However, the Service and Treasury
are considering other possible reporting
alternatives for recharacterization transac-
tions. For example, it might be appropri-
September 21, 199861998–38 I.R.B.
IRB 1998-38 9/16/98 11:49 AM Page 6

ate to require that the recharacterized con-
tribution be reported by the trustee of the
SECOND IRA on a Form 5498 for the
year for which it is treated as having been
contributed, even if the recharacterization
occurs in the subsequent year. Another
possible approach would be to require
only the reporting by the trustee of the
SECOND IRA involved in the recharac-
terization transaction that would have
been required if the contribution had ini-
tially been made to the SECOND IRA and
never had been made to the FIRST IRA.
Comments can be addressed to
CC:DOM:CORP:R (Notice 98–49), room
5228, Internal Revenue Service, POB
7604, Ben Franklin Station, Washington,
DC 20044. In the alternative, comments
may be hand delivered between the hours
of 8 a.m. and 5 p.m. to CC:DOM:CORP:
R (Notice 98–49), Courier’s Desk, Inter-
nal Revenue Service, 1111 Constitution
Avenue NW, Washington, DC. Alterna-
tively, taxpayers may transmit comments
electronically via the IRS Internet site at:
http://www.irs.ustreas.gov/prod/tax_regs/
comments.html.
DRAFTING INFORMATION
The principal author of this notice is
Roger Kuehnle of the Employee Plans Di-
vision. For further information regarding
this notice, please contact the Employee
Plans Division’s taxpayer assistance tele-
phone service at (202) 622-6074/6075
(not toll-free numbers), between the hours
of 1:30 and 3:30 p.m. Eastern Time, Mon-
day through Thursday.
Section 1045: Rollover of Gain
From Qualified Small Business
Stock to Another Qualified Small
Business Stock
Rev. Proc. 98–48
SECTION 1. PURPOSE
This revenue procedure provides pro-
cedures for taxpayers to make an election
under § 1045 of the Internal Revenue
Code (“§ 1045 election”) to defer recog-
nition of certain gain on the sale of quali-
fied small business stock (“QSB stock”).
SECTION 2. BACKGROUND
.01 Section 1045(a), as added by
§ 313(a) of the Taxpayer Relief Act of
1997, Pub. L. No. 105–34, 111 Stat. 788
(Aug. 5, 1997), and amended by § 6005(f)
of the Internal Revenue Service Restruc-
turing and Reform Act of 1998, Pub. L.
No. 105–206, 112 Stat. 685 (July 22,
1998), generally allows a taxpayer other
than a C corporation to elect not to recog-
nize gain from the sale of QSB stock held
by the taxpayer for more than six months.
If the taxpayer makes the election under
§ 1045 and this revenue procedure, gain
from such sale is recognized only to the
extent that the amount realized on the sale
exceeds:
(1) the cost of any QSB stock that
the taxpayer purchases during the 60-day
period beginning on the date of sale, re-
duced by
(2) any portion of the cost of the re-
placement QSB stock that was previously
taken into account under § 1045. How-
ever, the election is not available to defer
any gain on the sale that is treated as ordi-
nary income for purposes of the Code.
.02 Under § 1045(b), “qualified small
business stock” has the same meaning as
provided in § 1202(c).
.03 Section 1045(b)(5) provides that,
for QSB stock held through passthrough
entities, rules similar to the rules of
§ 1202(g) apply for purposes of § 1045.
For example, a passthrough entity may
make a § 1045 election if the entity sells
QSB stock held for more than six months
and purchases replacement QSB stock
during the 60-day period beginning on the
date of the sale. The benefit of deferral
with respect to a sale of QSB stock by the
passthrough entity will flow through to
taxpayers (other than C corporations) that
held interests in the entity during the en-
tire period in which the entity held the
QSB stock. Also, for example, if a pass-
through entity sells QSB stock held for
more than six months, an individual who
has held an interest in the entity during
the entire period in which the entity held
the QSB stock and who purchases re-
placement QSB stock during the 60-day
period beginning on the date of the sale of
the QSB stock may make the § 1045 elec-
tion with respect to the individual’s share
of any gain on the sale that the entity does
not defer under § 1045.
SECTION 3. PROCEDURE
.01 Time for Making the Election.
A § 1045 election must be made on
or before the later of December 31, 1998,
or the due date (including extensions) for
filing the income tax return for the taxable
year in which the QSB stock is sold.
.02 Manner of Making the Election.
(1) In general.Except as provided
in section 3.02(2) of this revenue proce-
dure, the election is made by:
(a) reporting the entire gain from
the sale of QSB stock on Schedule D,
Capital Gains and Losses, of the return in
accordance with the instructions for
Schedule D;
(b) writing “section 1045 roll-
over” directly below the line on which the
gain is reported; and
(c) entering the amount of the gain
deferred under § 1045 on the same line as
(b) above, as a loss, in accordance with
the instructions for Schedule D.
(2) Transition rule.If gain is re-
portable on a return filed before October
21, 1998, and the return does not satisfy
the requirements of section 3.02(1) of this
revenue procedure but discloses the gain
and includes an affirmative statement to
the effect that a § 1045 election applies to
the gain, the requirements of section
3.02(1) will be treated as satisfied and an
amended return is not required to make
the § 1045 election. Otherwise, an origi-
nal or amended return satisfying the re-
quirements of section 3.02(1) of this rev-
enue procedure is required to make the
§ 1045 election with respect to such gain.
.03 Scope of the Election.
If a person has more than one sale of
QSB stock in a taxable year that qualifies
for the § 1045 election, the person may
make a § 1045 election for any one or
more of those sales.
.04 Revocation.
A § 1045 election is revocable only
with the prior written consent of the Com-
missioner. To obtain the Commissioner’s
consent, the person who made the § 1045
election must submit a request for a pri-
vate letter ruling in accordance with the
provisions of Rev. Proc. 98–1, 1998–1
I.R.B. 7 (or its successor).
SECTION 4. EFFECTIVE DATE
This revenue procedure is effective for
sales of QSB stock occurring after August
5, 1997.
DRAFTING INFORMATION
The principal author of this revenue
1998–38 I.R.B.7September 21, 1998
IRB 1998-38 9/16/98 11:49 AM Page 7

procedure is J. Peter Baumgarten of the
office of Assistant Chief Counsel (Income
Tax and Accounting). For further infor-
mation regarding this revenue procedure,
contact Mr. Baumgarten on (202) 622-
4950 (not a toll-free call).
26 CFR 601.602: Tax forms and instructions.
(Also Part I, Sections 6012, 6061; 1.6012–5,
1.6061–1.)
Rev. Proc. 98–50
CONTENTS
SECTION 1PURPOSE
SECTION 2BACKGROUND AND
CHANGES
SECTION 3FORM 1040 IRS e-file
PROGRAM PARTICI-
PANTS—DEFINITIONS
SECTION 4ACCEPTANCE IN THE
FORM 1040 IRS e-file
PROGRAM
SECTION 5RESPONSIBILITIES OF
AN AUTHORIZED IRS
e-filePROVIDER
SECTION 6PENALTIES
SECTION 7 FORM 8453, U.S. INDI-
VIDUAL INCOME TAX
DECLARATION FOR
AN IRS e-fileRETURN
SECTION 8INFORMATION AN AU-
THORIZED IRS e-file
PROVIDER MUST FUR-
NISH TO THE TAX-
PAYER
SECTION 9DIRECT DEPOSIT OF
REFUNDS
SECTION 10REFUND ANTICIPA-
TION LOANS
SECTION 11BALANCE DUE RE-
TURNS
SECTION 12ADVERTISING STAN-
DARDS FOR AUTHO-
RIZED IRS e-file
PROVIDERS AND FI-
NANCIAL INSTITU-
TIONS
SECTION 13 MONITORING AND
SUSPENSION OF AN
AUTHORIZED IRS e-file
PROVIDER
SECTION 14ADMINISTRATIVE RE-
VIEW PROCESS FOR
DENIAL OF PARTICI-
PATION IN THE FORM
1040 IRS e-filePRO-
GRAM
SECTION 15ADMINISTRATIVE RE-
VIEW PROCESS FOR
SUSPENSION FROM
THE FORM 1040 IRS e-
filePROGRAM
SECTION 16 VITAAND TCE SPON-
SORED PARTICIPA-
TION IN THE FORM
1040 IRS e-filePRO-
GRAM
SECTION 17EMPLOYER SPON-
SORED PARTICIPA-
TION IN THE FORM
1040 IRS e-filePRO-
GRAM
SECTION 18 PILOT PROGRAMS
SECTION 19EFFECT ON OTHER
DOCUMENTS
SECTION 20 EFFECTIVE DATE
SECTION 21INTERNAL REVENUE
SERVICE OFFICE CON-
TACT
SECTION 22 PAPERWORK REDUC-
TION ACT
SECTION 1. PURPOSE
This revenue procedure informs those
who participate in the Form 1040 IRS
e-fileProgram (formerly known as the
Form 1040 Electronic Filing (ELF) Pro-
gram) of their obligations to the Internal
Revenue Service, taxpayers, and other
participants. The following returns can be
filed under the Form 1040 IRS e-filePro-
gram: (1) Form 1040 and Form 1040A,
U.S. Individual Income Tax Return; and
(2) Form 1040EZ, Income Tax Return for
Single and Joint Filers With No Depen-
dents. This revenue procedure updates
and supersedes Rev. Proc. 97–60, 1997–
52 I.R.B. 38.
SECTION 2. BACKGROUND AND
CHANGES
.01 Section 1.6012–5 of the Income
Tax Regulations provides that the Com-
missioner may authorize the use, at the
option of a person required to make a re-
turn, of a composite return in lieu of any
form specified in 26 CFR Part 1 (Income
Tax), subject to the conditions, limita-
tions, and special rules governing the
preparation, execution, filing, and correc-
tion thereof as the Commissioner may
deem appropriate.
.02 For purposes of this revenue proce-
dure, an electronically filed Form 1040,
Form 1040A, or Form 1040EZ is a com-
posite return consisting of electronically
transmitted data and certain paper docu-
ments. The paper portion of the return
consists of Form 8453, U.S. Individual
Income Tax Declaration for an IRS e-file
Return, and other paper documents that
cannot be electronically transmitted.
Form 8453 must be received by the Ser-
vice before the composite return is con-
sidered filed (see section 5.08 of this rev-
enue procedure). The composite return
must contain the same information that a
return filed completely on paper contains.
See section 7 of this revenue procedure
for procedures for completing Form 8453.
.03 Each year prior to the start of the
filing season, the Service will issue Publi-
cation 1345A, Filing Season Supplement
for Electronic Return Originators, and
Publication 1346, Electronic Return File
Specifications and Record Layouts for In-
dividual Income Tax Returns. These pub-
lications list the forms and schedules as-
sociated with the Form 1040 series that
can be electronically transmitted during
the upcoming filing season.
.04 For purposes of the Form 1040 IRS
e-fileProgram, a Form 1040, Form
1040A, or Form 1040EZ for any taxable
year cannot be electronically filed after
the 15th day of October following the
close of that taxable year, notwithstanding
the fact that the taxpayer has been granted
an extension to file a return beyond that
date. If the 15th day of October falls on a
Saturday, Sunday, or legal holiday, then
the electronically filed return may be filed
on the next succeeding day which is not a
Saturday, Sunday, or legal holiday.
.05 An amended tax return cannot be
electronically filed under the Form 1040
IRS e-fileProgram. A taxpayer must file
an amended tax return on paper in accor-
dance with the instructions for Form
1040X, Amended U.S. Individual Income
Tax Return.
.06 A tax return that has a foreign ad-
dress for the taxpayer cannot be electroni-
cally filed under the Form 1040 IRS e-file
Program. Army/Air Force (APO) and
Fleet (FPO) post offices are not consid-
ered foreign addresses for this purpose.
.07 A tax return for a decedent cannot
be electronically filed under the Form
1040 IRS e-fileProgram. The decedent’s
spouse or personal representative must
file a paper tax return for the decedent.
September 21, 199881998–38 I.R.B.
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.08 Some of the updates and changes
to Rev. Proc. 97–60 are as follows:
(1) the name of the program has
changed to the “Form 1040 IRS e-file
Program” and participants in the program
are known as “Authorized IRS e-file
Providers”;
(2) references to specific dates and spe-
cific tax years have been replaced with
more general references in order to elimi-
nate the need for annual updates to this
revenue procedure;
(3) the application period for new ap-
plicants who intend to participate in the
Form 1040 IRS e-fileProgram for any fil-
ing season is extended beyond the begin-
ning of the filing season (section 4.05);
and
(4) the provisions of this revenue pro-
cedure apply to participants in various
pilot programs conducted with respect to
the Form 1040 IRS e-fileProgram (sec-
tion 18).
SECTION 3. FORM 1040 IRS e-file
PROGRAM PARTICIPANTS—
DEFINITIONS
.01 After acceptance into the Form
1040 IRS e-fileProgram, as described in
section 4 of this revenue procedure, a par-
ticipant is referred to as an “Authorized
IRS e-fileProvider.”
.02 The Authorized IRS e-fileProvider
categories are:
(1) ELECTRONIC RETURN
ORIGINATOR. An “Electronic Return
Originator” (ERO) is: (a) an “Electronic
Return Preparer” who prepares tax re-
turns, including Forms 8453, for taxpay-
ers who intend to have their returns elec-
tronically filed; and/or (b) an “Electronic
Return Collector” who accepts completed
tax returns, including Forms 8453, from
taxpayers who intend to have their returns
electronically filed.
(2) SERVICE BUREAU. A “Service
Bureau” receives tax return information
on any media from an ERO, formats the
return information, and either forwards
the return information to a Transmitter or
sends back the return information to the
ERO. A Service Bureau may send Forms
8453 to the appropriate service center.
(3) SOFTWARE DEVELOPER. A
“Software Developer” develops software
for the purposes of (a) formatting the
electronic portion of returns according to
Publication 1346; and/or (b) transmitting
the electronic portion of returns directly
to the Service. A Software Developer
may also sell its software.
(4) TRANSMITTER. A “Transmit-
ter” transmits the electronic portion of a
return directly to the Service. An entity
that provides a “bump-up” service is a
Transmitter. A bump-up service provider
increases the transmission rate or line
speed of formatted or reformatted infor-
mation that is being sent to the Service via
a public switched telephone network. The
Service accepts transmissions using a va-
riety of telecommunications protocols.
.03 The Authorized IRS e-fileProvider
categories are not mutually exclusive.
For example, an ERO can, at the same
time, be considered a Transmitter, Soft-
ware Developer, or Service Bureau de-
pending on the function(s) performed.
.04 An ERO may have a “Drop-Off
Collection Point(s).” The activity at a
Drop-Off Collection Point is limited
solely to receiving a return or return infor-
mation that a taxpayer wants to have elec-
tronically filed and collecting a fee for
electronically filing that return. Return
preparation activity may not be conducted
at a Drop-Off Collection Point. Return
preparation activity includes, but is not
limited to, comparing amounts listed on
Form 8453 with those on the paper return
or return information provided by a tax-
payer and verifying routing numbers and
account numbers used for direct deposit
of refunds. Return preparation activity
does not include collecting a fee for elec-
tronic filing or ensuring that the taxpayer
has signed Form 8453. An ERO need not
have an ownership interest in the Drop-
Off Collection Point.
SECTION 4. ACCEPTANCE IN THE
FORM 1040 IRSe-filePROGRAM
.01 Except as provided in sections 4.02
through 4.04 of this revenue procedure,
an Electronic Filer or Authorized IRS
e-fileProvider that participated in the
most recent Form 1040 ELF or Form
1040 IRS e-filefiling season does not
have to reapply to participate in the next
Form 1040 IRS e-filefiling season. How-
ever, an Authorized IRS e-fileProvider
that intends to participate as a Transmitter
or a Software Developer must first suc-
cessfully complete, for each filing season,
the testing referred to in section 4.08 of
this revenue procedure. In addition, sec-
tion 4.15 of this revenue procedure pro-
vides for the Service’s issuance of creden-
tials necessary for participation in the
Form 1040 IRS e-fileProgram.
.02 Applicants and Authorized IRS
e-fileProviders must file a new Form
8633, Application to Participate in the
IRS e-fileProgram, with completed fin-
gerprint cards for the appropriate individ-
uals, if:
(1) the applicant has never partici-
pated in the Form 1040 ELF Program or
the Form 1040 IRS e-fileProgram;
(2) the applicant has previously been
denied participation in the Form 1040
ELF Program or the Form 1040 IRS e-file
Program;
(3) the applicant has been suspended
from the Form 1040 ELF Program or the
Form 1040 IRS e-fileProgram; or
(4) the Authorized IRS e-file
Provider is participating in the Form 1040
IRS e-fileProgram and wants to operate
an IRS e-filebusiness at an additional lo-
cation (except that an individual listed on
the Authorized IRS e-fileProvider’s ap-
plication who has submitted a fingerprint
card with a previously accepted applica-
tion need not submit an additional finger-
print card).
.03 An Authorized IRS e-fileProvider
must submit a revised Form 8633, signed
by all “Principals” and the “Responsible
Official” (as described in sections 4.09
through 4.12 of this revenue procedure),
with completed fingerprint cards for those
appropriate individuals who have not sub-
mitted a fingerprint card with a previously
accepted application, if:
(1) the Authorized IRS e-filePro-
vider participated solely as a Software
Developer in the most recent Form 1040
ELF or Form 1040 IRS e-filefiling sea-
son, and intends to participate as an ERO,
Service Bureau, or Transmitter;
(2) there is an additional Principal,
such as a partner or a corporate officer,
that must be listed on Form 8633;
(3) there is a Principal listed on Form
8633 that should be deleted; or
(4) the Responsible Official on Form
8633 changes.
.04 Except as provided in section 4.03
of this revenue procedure, an Authorized
IRS e-fileProvider must submit either a re-
vised Form 8633, or a letter containing the
same information contained in a revised
Form 8633, if any information on the Au-
1998–38 I.R.B.9September 21, 1998
IRB 1998-38 9/16/98 11:49 AM Page 9

thorized IRS e-fileProvider’s Form 8633
has changed. A revised Form 8633 or let-
ter submitted under this section should in-
clude only the changed information and
the following identifying information:
(1) the Authorized IRS e-filePro-
vider’s legal name;
(2) the Authorized IRS e-filePro-
vider’s employer identification number
and/or social security number (EIN/SSN);
(3) the Authorized IRS e-filePro-
vider’s “Doing Business As” (DBA)
name;
(4) whether the Authorized IRS e-file
Provider is controlled or owned by an-
other Authorized IRS e-fileProvider;
(5) the Authorized IRS e-file
Provider’s controlling office name;
(6) the Electronic Transmitter Identi-
fication Number (ETIN) of the Autho-
rized IRS e-fileProvider’s controlling of-
fice;
(7) the Electronic Filing Identifica-
tion Number (EFIN) of the Authorized
IRS e-fileProvider’s controlling office;
and
(8) the business address of the Au-
thorized IRS e-fileProvider’s controlling
office.
A Principal or the Responsible Official
must sign the revised Form 8633 or the
letter.
.05 Applicants and Authorized IRS
e-fileProviders described in section 4.02
of this revenue procedure must submit
new applications within the following
time periods:
(1) except as provided in section
4.05(2) of this revenue procedure, the ap-
plication period for new applicants who
intend to participate in the Form 1040 IRS
e-fileProgram for any filing season be-
gins on the 1st day of August preceding
the filing season and continues into the
filing season (see the Form 8633 instruc-
tions for the last date to file a new appli-
cation); however, applications submitted
after the 1st day of December preceding
the filing season may not be processed in
time for the applicant to participate in the
Form 1040 IRS e-fileProgram by the start
of the filing season; and
(2) if an applicant purchases an ex-
isting Authorized IRS e-fileProvider’s
business, a new application and proof of
sale must be submitted during the period
beginning 45 days before, and ending 30
days after, the date of the purchase.
.06 Revised applications described in
sections 4.03 and 4.04 of this revenue
procedure must be submitted within 30
days of the change(s) reflected on the re-
vised Form 8633 or in the letter. Autho-
rized IRS e-fileProviders that fail to sub-
mit revised applications may be
temporarily dropped from the Form 1040
IRS e-fileProgram.
.07 Applicants and Authorized IRS
e-fileProviders described in sections 4.02
through 4.04 of this revenue procedure
must file Form 8633 (or a letter as pro-
vided in section 4.04 of this revenue pro-
cedure) with the Application Processing
Center at the address listed in the instruc-
tions for Form 8633.
.08 Applicants and Authorized IRS
e-fileProviders described in sections 4.01
through 4.04 of this revenue procedure
that intend to participate as a Transmitter
or a Software Developer in the Form 1040
IRS e-fileProgram must first successfully
complete the necessary testing at the ap-
propriate service center(s). Such testing
must be completed for each filing season
during which the applicant or Authorized
IRS e-fileProvider intends to participate
as a Transmitter or Software Developer.
.09 Each individual listed as a Princi-
pal or a Responsible Official on a Form
8633 must:
(1) be a United States citizen or an
alien lawfully admitted for permanent res-
idence as described in 8 U.S.C.
§ 1101(a)(20) (1994);
(2) have attained the age of 21 as of
the date of application;
(3) submit with Form 8633 one stan-
dard fingerprint card with a full set of fin-
gerprints taken by a law enforcement
agency, except as provided in section 4.13
of this revenue procedure;
(4) except as provided in section
4.17 of this revenue procedure, pass a
suitability check that includes a credit
check, a tax compliance check, and a fin-
gerprint check; and
(5) meet any applicable state and
local licensing and/or bonding require-
ments in connection with the preparation
of tax returns and the collection of pre-
pared returns that taxpayers intend to have
electronically filed. However, if the state
and local licensing and/or bonding re-
quirements apply to a business entity, the
individual(s) must demonstrate that the
business entity meets the requirements.
.10 A Principal for a firm or organiza-
tion includes the following:
(1) Sole Proprietorship. The sole
proprietor is the Principal for a sole pro-
prietorship.
(2) Partnership. Each partner who
has a 5 percent or more interest in the
partnership is a Principal of the partner-
ship. If no partner has at least a 5 percent
or more interest in the partnership, the
Principal is an individual authorized to act
for the partnership in legal and/or tax mat-
ters (at least one such individual must be
listed on Form 8633).
(3) Corporation. The President,
Vice-President, Secretary, and Treasurer
of the corporation are each a Principal of
the corporation.
(4) Other. The Principal for a for-
profit entity that is not a sole proprietor-
ship, partnership, or corporation, is an in-
dividual authorized to act for the entity in
legal and/or tax matters (at least one such
individual must be listed on Form 8633).
.11 A Responsible Official is the indi-
vidual who oversees the daily operations
of an Authorized IRS e-fileProvider’s of-
fice. A Responsible Official may also be
a Principal. As set forth in section 4.12 of
this revenue procedure, a Responsible Of-
ficial may be responsible for more than
one office.
.12 The Responsible Official cate-
gories are:
(1) TIER I RESPONSIBLE OFFI-
CIAL. A “Tier I Responsible Official” is
a Responsible Official who does not meet
the definition of a “Tier II Responsible
Official.” A Tier I Responsible Official
should be able to visit on a daily basis
each office for which he or she is listed as
a Responsible Official. A Tier I Respon-
sible Official may be listed on a maxi-
mum of ten applications (Forms 8633).
(2) TIER II RESPONSIBLE OFFI-
CIAL. A “Tier II Responsible Official” is
an individual who has participated in the
Form 1040 ELF Program or Form 1040
IRS e-fileProgram as a Responsible Offi-
cial during at least the two most recent fil-
ing seasons and who has never been sus-
pended from participation in the Form
1040 ELF Program or Form 1040 IRS e-
fileProgram. A Tier II Responsible Offi-
cial should be able to visit on a daily basis
any office for which he or she is listed as
a Responsible Official. A Tier II Respon-
sible Official may be listed on a maxi-
September 21, 1998101998–38 I.R.B.
IRB 1998-38 9/16/98 11:49 AM Page 10

mum of twenty applications (Forms
8633).
.13 In lieu of a standard fingerprint
card, an individual may choose to submit
evidence that the individual is:
(1) an attorney in good standing of
the bar of the highest court of any State,
Commonwealth, possession, territory, or
the District of Columbia, and is not cur-
rently under suspension or disbarment
from practice before the Service or the bar
of the highest court of any State, Com-
monwealth, possession, territory, or the
District of Columbia;
(2) a certified public accountant who
is duly qualified to practice as a certified
public accountant in any State, Common-
wealth, possession, territory, or the Dis-
trict of Columbia, and is not currently
under suspension or disbarment from
practice before the Service or whose li-
cense to practice is not currently sus-
pended or revoked by any State, Com-
monwealth, possession, territory, or the
District of Columbia;
(3) an enrolled agent pursuant to part
10 of 31 C.F.R. Subtitle A;
(4) an officer of a publicly held cor-
poration; or
(5) a banking official who is bonded
and has been fingerprinted within the last
two years.
.14 If an Authorized IRS e-file
Provider has a foreign location, the state-
side contact representative will receive all
Service correspondence for the foreign lo-
cation relating to the Form 1040 IRS
e-fileProgram.
.15 The Service will issue credentials
each year to eligible applicants, Autho-
rized IRS e-fileProviders that do not have
to reapply pursuant to section 4.01 of this
revenue procedure, and Authorized IRS
e-fileProviders that comply with section
4.03 or 4.04 of this revenue procedure,
provided they have first satisfactorily
completed the testing described in section
4.08 of this revenue procedure if they in-
tend to participate as a Transmitter or
Software Developer. No one may partici-
pate in the Form 1040 IRS e-fileProgram
without the following credentials:
(1) a letter of acceptance into the
Form 1040 IRS e-fileProgram;
(2) an EFIN or a Service Bureau
Identification Number (SBIN);
(3) if appropriate, an ETIN; and
(4) if appropriate, a Collection Point
Identification Number (CPIN).
.16 The Service will not issue a letter
of acceptance to an ERO to participate in
any Form 1040 IRS e-filefiling season if
the Service did not receive and accept
during the immediately preceding filing
season any electronically filed returns
containing the ERO’s EFIN. In addition,
an ERO who has been issued a letter of
acceptance for any filing season may be
dropped from the Form 1040 IRS e-file
Program if the Service does not receive
and accept, prior to the 15th day of April
of that filing season, any electronically
filed returns containing the ERO’s EFIN.
In either case, the Service will notify the
ERO that it has been dropped from the
Form 1040 IRS e-fileProgram and ex-
plain what steps the ERO needs to take
for future participation in the program.
.17 If an Authorized IRS e-file
Provider is a Software Developer that per-
forms no other function in the Form 1040
IRS e-fileProgram but software develop-
ment, no Principal or Responsible Official
needs to pass a suitability check.
.18 If an ERO will have a Drop-Off
Collection Point(s) (as defined in section
3.04 of this revenue procedure), the ERO
must submit a Form 8633 that lists each
Drop-Off Collection Point. By listing a
Drop-Off Collection Point on Form 8633,
an ERO becomes a “parent” in relation to
a listed Drop-Off Collection Point.
.19 The Service may reject an applica-
tion to participate in the Form 1040 IRS
e-fileProgram for the following reasons
(this list is not all-inclusive). These rea-
sons apply to any firm, organization, Prin-
cipal, or Responsible Official listed on
Form 8633:
(1) conviction of any criminal of-
fense under the revenue laws of the
United States, or of any offense involving
dishonesty or breach of trust;
(2) failure to file timely and accurate
tax returns, including returns indicating
that no tax is due (unless the applicant did
not have a legal filing requirement);
(3) failure to timely pay any tax lia-
bilities;
(4) assessment of any tax penalties;
(5) suspension/disbarment from
practice before the Service;
(6) disreputable conduct or other
facts that would reflect adversely on the
Form 1040 IRS e-fileProgram;
(7) misrepresentation on an applica-
tion;
(8) suspension or rejection from the
program in a prior year;
(9) unethical practices in return
preparation;
(10) assessment against the applicant
of a penalty under § 6695(g) of the Inter-
nal Revenue Code;
(11) stockpiling returns prior to offi-
cial acceptance into the Form 1040 IRS
e-fileProgram (see section 5.14 of this
revenue procedure);
(12) knowingly and directly or indi-
rectly employing or accepting assistance
from any firm, organization, or individual
that is prohibited from applying to partici-
pate in the Form 1040 IRS e-fileProgram
(see section 14.09 of this revenue proce-
dure) or that is suspended from participat-
ing in the Form 1040 IRS e-fileProgram
(see section 13.11 of this revenue proce-
dure). This includes any individual
whose actions resulted in the rejection or
suspension of a corporation or a partner-
ship from the Form 1040 ELF Program or
the Form 1040 IRS e-fileProgram; or
(13) knowingly and directly or indi-
rectly accepting employment as an associ-
ate, correspondent, or as a subagent from,
or sharing fees with, any firm, organiza-
tion, or individual that is prohibited from
applying to participate in the Form 1040
IRS e-fileProgram (see section 14.09 of
this revenue procedure) or that is sus-
pended from participating in the Form
1040 IRS e-fileProgram (see section
13.11 of this revenue procedure). This in-
cludes any individual whose actions re-
sulted in the rejection or suspension of a
corporation or a partnership from the
Form 1040 ELF Program or the Form
1040 IRS e-fileProgram.
SECTION 5. RESPONSIBILITIES OF
AN AUTHORIZED IRS e-file
PROVIDER
.01 To ensure that complete returns are
accurately and efficiently filed, an Autho-
rized IRS e-fileProvider must comply
with all publications and notices of the
Service relating to the Form 1040 IRS
e-fileProgram. The Service will from
time to time update such publications and
notices to reflect changes to the program.
It is the responsibility of the Authorized
IRS e-fileProvider to ensure that it com-
1998–38 I.R.B.11September 21, 1998
IRB 1998-38 9/16/98 11:49 AM Page 11

plies with the latest version of all publica-
tions and notices. The publications and
notices governing the Form 1040 IRS
e-fileProgram include:
(1) Publication 1345, Handbook for
Electronic Return Originators of Individ-
ual Income Tax Returns, and Publication
1345A;
(2) Publication 1346;
(3) Publication 1436, Test Package
for Electronic Filing of Individual Income
Tax Returns; and
(4) Postings to the Electronic Filing
System Bulletin Board (EFS Bulletin
Board) and the IRS “Digital Daily” web
site at:
http://www.irs.ustreas.gov
on the Internet;
.02 An Authorized IRS e-fileProvider
must maintain a high degree of integrity,
compliance, and accuracy.
.03 An Authorized IRS e-fileProvider
may accept returns for the Form 1040 IRS
e-fileProgram only from the taxpayer fil-
ing the return, Drop-Off Collection Points
as listed on the ERO’s Form 8633 (see
section 4.18 of this revenue procedure), or
from another Authorized IRS e-file
Provider.
.04 If the taxpayer’s address on a Form
W–2, Wage and Tax Statement, Form
W–2G, Statement for Recipients of Cer-
tain Gambling Winnings, Form 1099–R,
Distributions From Pensions, Annuities,
Retirement or Profit-Sharing Plans, IRAs,
Insurance Contracts, etc., Form 1040,
Schedule C, Profit or Loss From Business
(Sole Proprietorship), or Form 1040,
Schedule C-EZ, Profit or Loss From
Business - Short Version, or any other tax
form is different than the taxpayer’s ad-
dress in the entity section of the electronic
portion of the taxpayer’s Form 1040, the
ERO or the Service Bureau must input for
transmission to the Service those ad-
dresses that differ from the taxpayer’s ad-
dress on the electronic portion of the tax-
payer’s Form 1040.
.05 If an Authorized IRS e-filePro-
vider charges a fee for the transmission of
the electronic portion of a tax return, the
fee may not be based on a percentage of
the refund amount or any other amount
from the tax return. An Authorized IRS
e-fileProvider may not charge a separate
fee for Direct Deposit. See section 9 of
this revenue procedure.
.06 An Authorized IRS e-fileProvider
must submit a revised Form 8633 (or a
letter as provided in section 4.04 of this
revenue procedure) to the Application
Processing Center within 30 days of when
any of the conditions or changes de-
scribed in section 4.03 or 4.04 of this rev-
enue procedure occur. See section 4.06 of
this revenue procedure.
.07 An Authorized IRS e-fileProvider
must notify the Application Processing
Center (at the address listed in the instruc-
tions for Form 8633) within 30 days of
discontinuing its participation in the Form
1040 IRS e-fileProgram. This does not
preclude reapplication in the future.
.08 An Authorized IRS e-fileProvider
must ensure that it promptly processes re-
turns submitted to it for electronic filing.
See sections 5.14, 5.15, 5.16, and 7.01 of
this revenue procedure. However, an Au-
thorized IRS e-fileProvider that receives
a return for electronic filing on or before
the due date of the return must ensure that
the electronic portion of the return is
transmitted on or before that due date (in-
cluding extensions). An electronically
filed return is not considered filed until
the electronic portion of the tax return has
been acknowledged by the Service as ac-
cepted for processing and a completed
and signed Form 8453 has been received
by the Service. However, if the electronic
portion of a return is successfully trans-
mitted on or shortly before the due date
and the Authorized IRS e-fileProvider
complies with section 7.01 of this revenue
procedure, the return will be deemed
timely filed. If the electronic portion of a
return is transmitted on or shortly before
the due date and is ultimately rejected, but
the Authorized IRS e-fileProvider and the
taxpayer comply with section 5.13 of this
revenue procedure, the return will be
deemed timely filed. For a balance due
return, see section 11 of this revenue pro-
cedure for instructions on how to make a
timely payment of tax.
.09 An Authorized IRS e-fileProvider
that functions as an ERO must:
(1) comply with the procedures for
completing and securing Forms 8453 de-
scribed in section 7 of this revenue proce-
dure;
(2) comply with the procedures de-
scribed in section 11 of this revenue pro-
cedure for handling a balance due return;
(3) while returns are being filed by
the ERO, retain and make available to the
Service upon request the following mater-
ial at the business address from which a
return was accepted for electronic filing:
(a) a copy of the signed Form
8453 and paper copies of Forms W–2,
W–2G, and 1099-R;
(b) a complete copy of the elec-
tronic portion of the return (which may be
retained on magnetic media) that can be
readily and accurately converted into an
electronic transmission that the Service
can process; and
(c) the acknowledgement file
(stating that the Service accepts the elec-
tronic portion of the taxpayer’s return for
processing) received from the Service or
from a third party Transmitter; and
(4) retain until the end of the calen-
dar year in which a return was filed, and
make available to the Service upon re-
quest the materials described in section
5.09(3) of this revenue procedure at either
the business address from which a return
was electronically filed or from the con-
tact representative named on Form 8633.
.10 An ERO who is the paid preparer
of an electronic tax return must also retain
for the prescribed amount of time the ma-
terials described in § 1.6107–1(b) that are
required to be kept by an income tax re-
turn preparer.
.11 An ERO must identify the paid pre-
parer (if any) in the appropriate field of
the electronic portion of the return and en-
sure that the paid preparer signed Form
8453. If Form 8453 is not signed by the
paid preparer, the ERO must attach to
Form 8453 a copy of pages 1 and 2 of the
Form 1040EZ, Form 1040A, or Form
1040 signed by the paid preparer. These
copies must be marked “COPY-DO NOT
PROCESS” to prevent duplicate filings.
.12 An ERO must ensure against the
unauthorized use of its EFIN and, if ap-
plicable, the CPIN(s) issued to its Drop-
Off Collection Point(s). An ERO must
not transfer its EFIN or the CPIN(s) of its
Drop-Off Collection Point(s) by sale,
merger, loan, gift, or otherwise to another
entity.
.13 If the Service rejects the electronic
portion of a taxpayer’s return (the Service
states that it rejects the electronic portion
of a taxpayer’s return for processing in
the acknowledgment file), and the reason
for the rejection cannot be rectified by the
actions described in section 6.02(3) of
this revenue procedure, the ERO, within
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24 hours of receiving the rejection, must
take reasonable steps to inform the tax-
payer that the taxpayer’s return has not
been filed. When the ERO advises the
taxpayer that the taxpayer’s return has not
been filed, the ERO must provide the tax-
payer with the reject code(s), an explana-
tion of the reject code(s), and the se-
quence number of each reject code(s) (see
Publication 1345A). If the taxpayer
chooses not to have the electronic portion
of the return corrected and transmitted to
the Service, or if the electronic portion of
the return cannot be accepted for process-
ing by the Service, the taxpayer must file
a paper return by the later of:
(1) the due date of the return; or
(2) ten calendar days after the date
the Service gives notification that the
electronic portion of the return is rejected
or that the electronic portion of the return
cannot be accepted for processing.
The paper return should include an expla-
nation of why the return is being filed
after the due date.
.14 An ERO is responsible for ensur-
ing that stockpiling does not occur at its
office(s) or Drop-Off Collection Point(s).
Stockpiling means collecting returns from
taxpayers or from another Authorized IRS
e-fileProvider prior to official acceptance
into the Form 1040 IRS e-fileProgram,
or, after official acceptance into the Form
1040 IRS e-fileProgram, waiting more
than three calendar days to send a return
to the Service after receiving the informa-
tion necessary for transmission of the
electronic portion of a tax return.
.15 An Authorized IRS e-fileProvider
that participates as a Service Bureau
must:
(1) deliver all electronic returns to a
Transmitter or to the ERO who gave the
electronic returns to the Service Bureau
within three calendar days of receipt;
(2) retrieve the acknowledgement
file from the Transmitter within one cal-
endar day of receipt by the Transmitter;
(3) send the acknowledgement file to
the ERO (whether related or not) within
one work day of retrieving the acknowl-
edgement file;
(4) if the Service Bureau processes
Forms 8453, send back to the ERO any
return and Form 8453 that needs correc-
tion, unless the correction is described in
section 6.02(3) of this revenue procedure;
(5) accept tax return information
only from Authorized IRS e-file
Providers;
(6) include its SBIN and the ERO’s
EFIN with all return information the Ser-
vice Bureau forwards to a Transmitter or
sends back to an ERO;
(7) retain each acknowledgement file
received from a Transmitter until the end
of the calendar year in which the elec-
tronic return was filed;
(8) if requested, serve as a contact
point between its client EROs and the
Service;
(9) if requested, provide the Service
with a list of each client ERO; and
(10) ensure against the unauthorized
use of its SBIN. A Service Bureau must
not transfer its SBIN by sale, merger,
loan, gift, or otherwise to another entity.
.16 An Authorized IRS e-fileProvider
that participates as a Transmitter must:
(1) send to the Service all electronic
portions of returns within three calendar
days of receipt;
(2) retrieve the acknowledgement
file within two work days of transmission;
(3) match the acknowledgement file
to the original transmission file and send
the acknowledgement file to the ERO or
the Service Bureau (whether or not the
ERO or the Service Bureau are related to
the Transmitter) within two work days of
retrieving the acknowledgement file;
(4) retain an acknowledgement file
received from the Service until the end of
the calendar year in which the electronic
return was filed;
(5) immediately contact the appro-
priate service center for further instruc-
tions if an acknowledgement of accep-
tance for processing has not been received
by the Transmitter within two work days
of transmission or if a Transmitter re-
ceives an acknowledgement for a return
that was not transmitted on the designated
transmission;
(6) promptly correct any transmis-
sion error that causes an electronic trans-
mission to be rejected;
(7) contact the service center that re-
jected the electronic portion of the return
for assistance if that portion of the return
has been rejected after three transmission
attempts;
(8) ensure the security of all trans-
mitted data;
(9) ensure against the unauthorized
use of its EFIN or ETIN. A Transmitter
must not transfer its EFIN or ETIN by
sale, merger, loan, gift, or otherwise to an-
other entity; and
(10) not use software that has a Ser-
vice assigned production password built
into the software.
.17 A Transmitter must accept elec-
tronic returns for transmission to the Ser-
vice only from Authorized IRS e-file
Providers. A Transmitter must include the
ERO’s EFIN and if applicable, the CPIN
on each return that the Transmitter ac-
cepts from an ERO. In addition, a Trans-
mitter must also include a Service Bu-
reau’s SBIN if a Service Bureau formats
the return information.
.18 An Authorized IRS e-fileProvider
that participates as a Software Developer
must:
(1) promptly correct any software
error which causes the electronic portion
of a return to be rejected;
(2) promptly distribute any software
correction;
(3) ensure that any software package
that will be used to transmit electronic
portions of returns from multiple Autho-
rized IRS e-fileProviders has the capabil-
ity of combining returns from these Au-
thorized IRS e-fileProviders into one
Service transmission file taking into ac-
count the sorting requirements of the Dec-
laration Control Number (DCN);
(4) ensure that no other entity uses
the Software Developer’s EFIN or ETIN.
A Software Developer must not transfer
by sale, merger, loan, gift, or otherwise its
EFIN or ETIN to another entity; and
(5) not incorporate into its software a
Service assigned production password.
.19 An ERO with a Drop-Off Collec-
tion Point must clearly display its name at
each Drop-Off Collection Point. The Ser-
vice will hold the ERO responsible for
any violation of the advertising standards
described in section 12 or any other viola-
tion of this revenue procedure that occurs
at a Drop-Off Collection Point listed on
the ERO’s Form 8633. The ERO must
also serve as the contact point between
the Service and the Drop-Off Collection
Point for all correspondence including
problem resolution and report evaluation.
.20 In addition to the specific responsi-
bilities described in this section, an Au-
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thorized IRS e-fileProvider must meet all
the requirements in this revenue proce-
dure to retain the privilege of participat-
ing in the Form 1040 IRS e-fileProgram.
SECTION 6. PENALTIES
.01 Penalties for Disclosure or Use of
Information.
(1) An Authorized IRS e-filePro-
vider, except a Software Developer, is a
tax return preparer (Preparer) under the
definition of § 301.7216–1(b) of the Regu-
lations on Procedure and Administration.
A Preparer is subject to a criminal penalty
for unauthorized disclosure or use of tax
return information. See § 7216 of the In-
ternal Revenue Code and § 301.7216–
1(a). In addition, § 6713 establishes civil
penalties for unauthorized disclosure or
use of tax return information.
(2) Under § 301.7216–2(h), disclo-
sure of tax return information among Au-
thorized IRS e-fileProviders for the pur-
pose of preparing a return is permissible.
For example, an ERO may pass on tax re-
turn information to a Service Bureau
and/or a Transmitter for the purpose of
having an electronic return formatted and
transmitted to the Service. However, if
the tax return information is disclosed or
used in any other way, a Service Bureau
and/or a Transmitter may be subject to the
penalties described in section 6.01(1) of
this revenue procedure.
.02 Other Preparer Penalties.
(1) Preparer penalties may be as-
serted against an individual or firm meet-
ing the definition of an income tax return
preparer under § 7701(a)(36) and
§ 301.7701–15. Preparer penalties that
may be asserted under appropriate cir-
cumstances include, but are not limited to,
those set forth in §§ 6694, 6695, and
6713.
(2) Under § 301.7701–15(d), Elec-
tronic Return Collectors, Service Bu-
reaus, Transmitters, and Software Devel-
opers are not income tax return preparers
for the purpose of assessing most preparer
penalties as long as their services are lim-
ited to “typing, reproduction, or other me-
chanical assistance in the preparation of a
return or claim for refund.”
(3) If an Electronic Return Collector,
Service Bureau, Transmitter, or the prod-
uct of a Software Developer alters the re-
turn information in a nonsubstantive way,
this alteration will be considered to come
under the “mechanical assistance” excep-
tion described in § 301.7701–15(d)(1). A
nonsubstantive change is a correction or
change limited to a transposition error,
misplaced entry, spelling error, or arith-
metic correction that falls within the fol-
lowing tolerances:
(a) the amount of “Total tax”,
“Federal income tax withheld”, “Refund”,
or “Amount you owe” on Form 8453 dif-
fers from the corresponding amount on
the electronic portion of the tax return by
no more than $7;
(b) the amount of “Total income”
on Form 8453 differs from the corre-
sponding amount on the electronic por-
tion of the tax return by no more than $25;
or
(c) dropping cents and rounding to
whole dollars.
(4) If an Electronic Return Collector,
Service Bureau, or Transmitter alters the
return information in a substantive way,
rather than having the taxpayer alter the
return, the Electronic Return Collector,
Service Bureau, or Transmitter will be
considered to be an income tax return pre-
parer for purposes of § 7701(a)(36).
(5) If an Electronic Return Collector,
Service Bureau, or Transmitter, or the
product of a Software Developer, goes be-
yond mechanical assistance, any of these
parties may be held liable for income tax
return preparer penalties. See Rev. Rul.
85–189, 1985–2 C.B. 341 (which de-
scribes a situation where a Software De-
veloper was determined to be an income
tax return preparer and subject to certain
preparer penalties).
.03 Other Penalties. In addition to the
above specified provisions, the Service
reserves the right to assert all appropriate
preparer, nonpreparer, and disclosure
penalties against an Authorized IRS e-file
Provider as warranted under the circum-
stances.
SECTION 7. FORM 8453, U.S.
INDIVIDUAL INCOME TAX
DECLARATION FOR AN IRS e-file
RETURN
.01 Procedures for Completing Form
8453.
(1) Form 8453 must be completed in
accordance with the instructions for that
form.
(2) The taxpayer(s)’s name, address,
social security number(s), and tax return
information in the electronic transmission
must be identical to the information on
the Form 8453 that the taxpayer(s) signed
and provided for submission to the Ser-
vice.
(3) An Authorized IRS e-file
Provider, a financial institution, or any
other entity associated with the electronic
filing of a taxpayer’s return must not put
its address in the section reserved for the
taxpayer’s address on Form 8453 or any-
where in the electronic portion of a return.
(4) Before the electronic portion of
the return is transmitted, the taxpayer
must verify the information on the elec-
tronic portion of the return and on Form
8453, and must sign Form 8453. Both
spouses’ signatures are required on the
Form 8453 prior to the electronic trans-
mission of a joint tax return. The tax-
payer may verify the information on the
electronic portion of the return by view-
ing this information on a computer dis-
play terminal. A taxpayer need not verify
the electronic portion of the return prior to
its transmission if the taxpayer provided a
completed paper return for filing and the
information on the electronic portion is
identical to the information provided by
the taxpayer.
(5) An Authorized IRS e-filePro-
vider must submit the taxpayer’s Form
8453 to the service center that acknowl-
edged acceptance of the electronic portion
of the return within one work day after the
Authorized IRS e-fileProvider receives
the acknowledgment file.
(6) An Authorized IRS e-filePro-
vider functioning as an ERO must sign
the “Declaration of ERO” on Form 8453.
(7) If the ERO is also the paid pre-
parer, the ERO must check the “Paid Pre-
parer” box and sign the “Declaration of
ERO” on Form 8453.
.02 Corrections to Form 8453.
(1) A new Form 8453 is not required
for a nonsubstantive change. A nonsub-
stantive change is limited to a correction
that does not exceed the tolerances de-
scribed in section 7.02(2) of this revenue
procedure for arithmetic errors, a transpo-
sition error, a misplaced entry, or a
spelling error. The incorrect nonsubstan-
tive information must be neatly lined
through on the Form 8453 and the correct
data entered next to the lined-through
entry. Also, the individual making the
correction must initial the correction.
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(2) The tolerances for section 7.02(1)
of this revenue procedure are:
(a) the amount of “Total income”
does not differ from the amount on the
electronic portion of the tax return by
more than $25; or
(b) the amount of “Total tax”,
“Federal income tax withheld”, “Refund”,
or “Amount you owe” does not differ
from the amount on the electronic portion
of the tax return by more than $7.
(3) If the ERO makes a substantive
change to the electronic portion of the re-
turn after Form 8453 has been signed by
the taxpayer, but before it is transmitted,
the ERO must have all the necessary par-
ties described above sign a new Form
8453 that reflects the corrections before
the electronic portion of the return is
transmitted.
(4) Dropping cents or rounding to
whole dollars does not constitute a sub-
stantive change or alteration to the return
unless the amount differs by more than
the above tolerances. All rounding should
be accomplished in accordance with the
instructions in the Form 1040 tax pack-
age.
.03 Missing Form 8453.If the Service
determines that a Form 8453 is missing,
the ERO must provide the Service with a
replacement. The ERO must also provide
a copy of the Form(s) W–2, W–2G,
1099R, and all other attachments to Form
8453.
.04 Substitute Form 8453.If a substi-
tute Form 8453 is used, it must be ap-
proved by the Service prior to use.
SECTION 8. INFORMATION AN
AUTHORIZED IRSe-filePROVIDER
MUST FURNISH TO THE TAXPAYER
.01 The ERO must furnish the tax-
payer with a complete paper copy of the
taxpayer’s return. However, the copy
need not contain the social security num-
ber of the paid preparer. See Rev. Rul.
78–317, 1978–2 C.B. 335. A complete
copy of a taxpayer’s return includes:
(1) Form 8453 and other paper docu-
ments that cannot be electronically trans-
mitted; and
(2) a printout of the electronic por-
tion of the return.
See section 2.02 of this revenue proce-
dure. The electronic portion of the return
can be contained on a replica of an offi-
cial form or on an unofficial form. How-
ever, on an unofficial form, data entries
must be referenced to the line numbers on
an official form. Also, a printout of the
electronic portion of the return does not
have to be provided to the taxpayer if the
taxpayer provided a completed paper re-
turn for electronic filing and the informa-
tion on the electronic portion of the return
is identical to the information provided by
the taxpayer.
.02 The ERO must advise the taxpayer
to retain a complete copy of the return and
any supporting material.
.03 The ERO must advise the taxpayer
that an amended return, if needed, must
be filed as a paper return and mailed to
the service center that would handle the
taxpayer’s paper return.
.04 The ERO must, upon request, pro-
vide the taxpayer with the DCN and the
date the Service acknowledged that the
electronic portion of the taxpayer’s return
was accepted for processing.
.05 The ERO must advise taxpayers of
the appropriate IRS TeleTax number to in-
quire about the status of their tax refund.
The ERO should also advise taxpayers to
wait at least three weeks from the date the
Service acknowledged that the electronic
portion of the taxpayer’s return was ac-
cepted for processing before calling the
TeleTax number.
.06 If a taxpayer chooses to use an ad-
dress other than his or her home address
on the return, the ERO must inform the
taxpayer that the address on the electronic
portion of the return, once processed by
the Service, will be used to update the
taxpayer’s address of record. The Service
uses the taxpayer’s address of record for
various notices that are required to be sent
to a taxpayer’s “last known address”
under the Internal Revenue Code, and for
refunds of overpayments of tax (unless
otherwise specifically directed by the tax-
payer, such as by Direct Deposit).
SECTION 9. DIRECT DEPOSIT OF
REFUNDS
.01 The Service will ordinarily process
a request for Direct Deposit but reserves
the right to issue a paper refund check.
.02 The Service does not guarantee a
specific date by which a refund will be di-
rectly deposited into the taxpayer’s finan-
cial institution account.
.03 Neither the Service nor Financial
Management Service (FMS) is responsi-
ble for the misapplication of a Direct De-
posit that is caused by error, negligence,
or malfeasance on the part of the tax-
payer, Authorized IRS e-fileProvider, fi-
nancial institution, or any of their agents.
.04 An ERO must:
(1) advise taxpayers of the option to
receive their refund by paper check or di-
rect deposit;
(2) not charge a separate fee for a Di-
rect Deposit;
(3) accept any Direct Deposit elec-
tion to any eligible financial institution
designated by the taxpayer;
(4) ensure that the taxpayer is eligi-
ble to choose Direct Deposit;
(5) caution the taxpayer that once the
electronic portion of the return has been
accepted for processing by the Service:
(a) the Direct Deposit election
cannot be rescinded;
(b) the routing number of the fi-
nancial institution cannot be changed; and
(c) the taxpayer’s account number
cannot be changed; and
(6) advise the taxpayer that refund
information is available by calling the ap-
propriate IRS TeleTax number. See sec-
tion 8.05 of this revenue procedure.
SECTION 10. REFUND
ANTICIPATION LOANS
.01 A Refund Anticipation Loan
(RAL) is money borrowed by a taxpayer
that is based on a taxpayer’s anticipated
income tax refund. The Service has no
involvement in RALs. A RAL is a con-
tract between the taxpayer and the lender.
.02 Any entity that is involved in the
Form 1040 IRS e-fileProgram, including
a financial institution that accepts direct
deposits of income tax refunds, has an
obligation to every taxpayer who applies
for a RAL to clearly explain to the tax-
payer that a RAL is in fact a loan, and not
a substitute for, or a quicker way of, re-
ceiving an income tax refund. An Autho-
rized IRS e-fileProvider must advise the
taxpayer that if a Direct Deposit is not
timely, the taxpayer may be liable to the
lender for additional interest on the RAL.
.03 An Authorized IRS e-fileProvider
may assist a taxpayer in applying for a
RAL.
.04 An Authorized IRS e-fileProvider
may charge a flat fee to assist a taxpayer
in applying for a RAL. The fee must be
identical for all of the Authorized IRS
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e-fileProvider’s customers and must not
be related to the amount of the refund or a
RAL. The Authorized IRS e-fileProvider
must not accept a fee from a financial in-
stitution for any service connected with a
RAL that is contingent upon the amount
of the refund or a RAL.
.05 The Service has no responsibility
for the payment of any fees associated
with the preparation of a return, the trans-
mission of the electronic portion of a re-
turn, or a RAL.
.06 An Authorized IRS e-fileProvider
may disclose tax information to the lend-
ing financial institution in connection
with an application for a RAL only with
the taxpayer’s written consent as speci-
fied in § 301.7216–3(b).
.07 An Authorized IRS e-fileProvider
that is also the return preparer, and the fi-
nancial institution or other lender that
makes an RAL, may not be related tax-
payers within the meaning of § 267 or
§ 707.
.08 Section 6695(f) imposes a $500
penalty on a return preparer who endorses
or negotiates a refund check issued to any
taxpayer other than the return preparer.
However, a bank, as defined in § 581,
may accept the full amount of a refund
check as a deposit in the taxpayer’s ac-
count for the benefit of the taxpayer. Sec-
tion 1.6695-1(f) clarifies § 6695(f) by ex-
plaining that the prohibition on a return
preparer negotiating a refund check is
limited to a refund check for a return that
the return preparer prepared. A preparer
that is also a financial institution, but has
not made a loan to the taxpayer on the
basis of the taxpayer’s anticipated refund,
may (1) cash a refund check and remit all
of the cash to the taxpayer or accept a re-
fund check for deposit in full to a tax-
payer’s account, provided the bank does
not initially endorse or negotiate the
check; or (2) endorse a refund check for
deposit in full to a taxpayer’s account pur-
suant to a written authorization of the tax-
payer. A preparer bank may also subse-
quently endorse or negotiate a refund
check as part of the check-clearing
process through the financial system after
initial endorsement. Any income tax re-
turn preparer that violates this provision
may be suspended from the Form 1040
IRS e-fileProgram.
SECTION 11. BALANCE DUE
RETURNS
.01 All service centers that accept elec-
tronically filed returns will accept elec-
tronically filed balance due returns.
.02 Taxpayers who file balance due re-
turns under the Form 1040 IRS e-filePro-
gram for any taxable year are responsible
for making full and timely payment of
any tax that is due. Failure to make full
payment on or before the due date of the
return (determined without regard to ex-
tensions) will result in the imposition of
interest and may result in the imposition
of penalties.
.03 Taxpayers have several options for
paying balances due, including the fol-
lowing:
(1) DIRECT DEBIT. Taxpayers
may authorize the Service to debit their
checking or savings account for the
amount of the balance due;
(2) PAY BY CHECK. Taxpayers
may pay any balance due by sending a
check, along with Form 1040-V, Payment
Voucher, to the Service. The Authorized
IRS e-fileProvider must furnish Form
1040-V to any taxpayer paying a balance
due by check; and
(3) INSTALLMENT AGREE-
MENT. Taxpayers who cannot pay the
balance due with the return may request
an installment payment arrangement by
filing Form 9465, Installment Agreement
Request, with their return.
SECTION 12. ADVERTISING
STANDARDS FOR AUTHORIZED IRS
e-file PROVIDERS AND FINANCIAL
INSTITUTIONS
.01 An Authorized IRS e-fileProvider
must comply with the advertising and so-
licitation provisions of 31 C.F.R. Part 10
(Treasury Department Circular No. 230).
This circular prohibits the use or partici-
pation in the use of any form of public
communication containing a false, fraud-
ulent, misleading, deceptive, unduly in-
fluencing, coercive, or unfair statement or
claim. Any claims concerning faster re-
funds by virtue of electronic filing must
be consistent with the language in official
Service publications.
.02 An Authorized IRS e-fileProvider
must adhere to all relevant federal, state,
and local consumer protection laws that
relate to advertising and soliciting.
.03 An Authorized IRS e-fileProvider
must not use the Service’s name, “Internal
Revenue Service” or “IRS”, within a
firm’s name. However, once accepted
into the Form 1040 IRS e-fileProgram, a
participant may represent itself as an “Au-
thorized IRS e-fileProvider.”
.04 An Authorized IRS e-fileProvider
must not use improper or misleading ad-
vertising in relation to the Form 1040 IRS
e-fileProgram (including the time frames
for refunds and RALs).
.05 An Authorized IRS e-fileProvider
using promotional materials or logos pro-
vided by the Service must comply with all
Service instructions pertaining to the pro-
motional materials or logos.
.06 An Authorized IRS e-fileProvider
using the Direct Deposit name and logo
must comply with the following:
(1) The name “Direct Deposit” will
be used with initial capital letters or all
capital letters;
(2) The logo/graphic for Direct De-
posit will be used whenever feasible in
advertising copy; and
(3) The color or size of the Direct
Deposit logo/graphic may be changed
when used in advertising pieces.
.07 Advertising materials must not
carry the FMS, IRS, or other Treasury
Seals.
.08 Advertising for a cooperative elec-
tronic return filing project (public/private
sector) must clearly state the names of all
cooperating parties.
.09 In advertising the availability of a
RAL, an Authorized IRS e-fileProvider
and a financial institution must clearly
(and, if applicable, in easily readable
print) refer to or describe the funds being
advanced as a loan, not a refund; that is, it
must be made clear in the advertising that
the taxpayer is borrowing against the an-
ticipated refund and not obtaining the re-
fund itself from the financial institution.
.10 If an Authorized IRS e-filePro-
vider uses radio or television broadcasting
to advertise, the broadcast must be pre-
recorded. The Authorized IRS e-file
Provider must keep a copy of the pre-
recorded advertisement for a period of at
least 36 months from the date of the last
transmission or use.
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.11 If an Authorized IRS e-filePro-
vider uses direct mail or fax communica-
tions to advertise, the Authorized IRS e-
fileProvider must retain a copy of the
actual mailing or fax, along with a list or
other description of the firms, organiza-
tions, or individuals to whom the commu-
nication was mailed, faxed, or otherwise
distributed for a period of at least 36
months from the date of the last mailing,
fax, or distribution.
.12 Acceptance to participate in the
Form 1040 IRS e-fileProgram does not
imply endorsement by the Service, FMS,
or the Treasury Department of the soft-
ware or quality of services provided.
SECTION 13. MONITORING AND
SUSPENSION OF AN AUTHORIZED
IRS e-filePROVIDER
.01 The Service will monitor an Au-
thorized IRS e-fileProvider for confor-
mity with this revenue procedure. Before
suspending an Authorized IRS e-file
Provider, the Service may issue a warning
letter that describes specific corrective ac-
tion for deviations from this revenue pro-
cedure. However, the Service can imme-
diately suspend, without notice, an
Authorized IRS e-fileProvider from the
Form 1040 IRS e-fileProgram. In most
circumstances, a suspension from partici-
pation in the Form 1040 IRS e-filePro-
gram is effective as of the date of the let-
ter informing the Authorized IRS e-file
Provider of the suspension.
.02 If a Principal or Responsible Offi-
cial is suspended from the Form 1040 IRS
e-fileProgram, every entity that listed the
suspended Principal or Responsible Offi-
cial on its Form 8633 may also be sus-
pended.
.03 The Service will monitor the Au-
thorized e-fileProvider’s compliance with
the provisions of section 6695(g) (relating
to the due diligence requirements for re-
turns claiming the earned income credit).
.04 The Service will monitor the
timely receipt of Forms 8453, as well as
their overall legibility.
.05 The Service will monitor the qual-
ity of an Authorized IRS e-fileProvider’s
transmissions throughout the filing sea-
son. The Service will also monitor the
electronic portion of returns and tabulate
rejections, errors, and other defects. If
quality deteriorates, the Authorized IRS
e-fileProvider will receive a warning
from the Service.
.06 The Service will monitor Drop-Off
Collection Points and advise a parent of
any Form 1040 IRS e-fileProgram viola-
tions the Service has encountered with a
parent’s Drop-Off Collection Point. If a
parent fails to correct a Drop-Off Collec-
tion Point problem, the parent will be re-
quired to eliminate that Drop-Off Collec-
tion Point. Failure to take corrective
action or eliminate a Drop-Off Collection
Point may cause the Service to suspend
the parent from participating in the Form
1040 IRS e-fileProgram.
.07 The Service will monitor com-
plaints about an Authorized IRS e-file
Provider and issue a warning or suspen-
sion letter as appropriate.
.08 The Service reserves the right to
suspend an Authorized IRS e-fileProvider
from participation in the Form 1040 IRS
e-fileProgram for violating any provision
of this revenue procedure. Generally, the
Service will advise a suspended Autho-
rized IRS e-fileProvider concerning the
requirements for reacceptance into the
Form 1040 IRS e-fileProgram. The fol-
lowing reasons may lead to a warning let-
ter and/or suspension of an Authorized
IRS e-fileProvider from the Form 1040
IRS e-fileProgram (this list is not all-in-
clusive):
(1) the reasons listed in section 4.19
of this revenue procedure;
(2) deterioration in the format of in-
dividual transmissions;
(3) unacceptable cumulative error or
rejection rate;
(4) untimely received, illegible, in-
complete, missing, or unapproved substi-
tute Forms 8453;
(5) stockpiling returns at any time
while participating in the Form 1040 IRS
e-fileProgram;
(6) failure on the part of a Transmit-
ter to retrieve acknowledgement files
within two work days of transmission by
the Service;
(7) failure on the part of a Transmit-
ter to provide an ERO or Service Bureau
with acknowledgement files within two
work days after receipt from the Service;
(8) significant complaints about an
Authorized IRS e-fileProvider’s perfor-
mance in the Form 1040 IRS e-filePro-
gram;
(9) failure on the part of an Autho-
rized IRS e-fileProvider to ensure against
the unauthorized use of its EFIN and/or
ETIN;
(10) having more than one EFIN for
the same business entity at the same loca-
tion (the business entity is generally the
entity that reports on its return the income
derived from electronic filing), unless the
Service has issued more than one EFIN to
a business entity at the same location. For
example, the Service may issue more than
one EFIN to accommodate high volumes
of returns;
(11) failure on the part of a Transmit-
ter to include a Service Bureau’s SBIN in
the transmission of a return submitted by
a Service Bureau;
(12) failure on the part of an ERO to
include a Drop-Off Collection Point’s
CPIN as part of a return collected from a
Drop-Off Collection Point;
(13) failure on the part of an Autho-
rized IRS e-fileProvider to cooperate
with the Service’s efforts to monitor Au-
thorized IRS e-fileProviders and investi-
gate electronic filing abuse;
(14) failure on the part of an Autho-
rized IRS e-fileProvider to properly use
the standard/non-standard W–2 indicator;
(15) failure on the part of an Autho-
rized IRS e-fileProvider to properly use
the refund anticipation loan (RAL) indi-
cator;
(16) failure on the part of a Service
Bureau or a Transmitter to include the
ERO’s EFIN as part of a return that the
ERO submits to the Service Bureau or the
Transmitter;
(17) violation of the advertising stan-
dards described in section 12 of this rev-
enue procedure;
(18) failure to maintain and make
available records as described in section
5.09(4) of this revenue procedure;
(19) accepting a tax return for filing
through the Form 1040 IRS e-filePro-
gram either directly or indirectly from a
firm, organization, or individual (other
than the taxpayer who is submitting his or
her return) that is not an Authorized IRS
e-fileProvider;
(20) submitting the electronic por-
tion of a return with information that is
not identical to the information on Form
8453;
(21) failure to timely submit a re-
vised Form 8633 (or a letter containing
the same information contained in a re-
vised Form 8633) notifying the Service of
changes described in section 4.03 or 4.04
of this revenue procedure; or
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IRB 1998-38 9/16/98 11:49 AM Page 17

(22) failure to comply with a provi-
sion of an implementing document for
any pilot program in which the Autho-
rized IRS e-fileProvider is a participant
(see section 18 of this revenue proce-
dure).
.09 The Service may list in the Internal
Revenue Bulletin, district office listings,
district office newsletters, and the EFS
Bulletin Board the name and owner(s) of
any entity suspended from the Form 1040
IRS e-fileProgram and the effective date
of the suspension.
.10 A district director may warn Au-
thorized IRS e-fileProviders that are
using the services of a rejected or a sus-
pended Authorized IRS e-fileProvider
that sections 4.19(12) and (13) of this rev-
enue procedure prohibit a business rela-
tionship with a rejected or a suspended
Authorized IRS e-fileProvider. However,
in appropriate circumstances, the Service
may immediately suspend the Authorized
IRS e-fileProvider without such warning.
.11 If an Authorized IRS e-filePro-
vider is suspended from participating in
the Form 1040 IRS e-fileProgram, the pe-
riod of suspension includes the remainder
of the calendar year in which the suspen-
sion occurs plus the next two calendar
years. A suspended participant may sub-
mit a new application for the application
period immediately preceding the end of
the suspension.
SECTION 14. ADMINISTRATIVE
REVIEW PROCESS FOR DENIAL OF
PARTICIPATION IN THE FORM 1040
IRS e-filePROGRAM
.01 An applicant that has been denied
participation in the Form 1040 IRS e-file
Program has the right to an administrative
review. During the administrative review
process, the denial of participation re-
mains in effect.
.02 In response to the submission of a
Form 8633, the Application Processing
Center will either (1) accept an applicant
into the Form 1040 IRS e-fileProgram, or
(2) issue a proposed letter of denial that
explains to the applicant why the Applica-
tion Processing Center proposes to reject
the application to participate in the Form
1040 IRS e-fileProgram.
.03 An applicant that receives a pro-
posed letter of denial may mail or deliver,
within 30 calendar days of the date of the
proposed letter of denial, a written re-
sponse to the Application Processing Cen-
ter. The applicant’s response must ad-
dress the Application Processing Center’s
reason(s) for proposing the denial to par-
ticipate.
.04 Upon receipt of an applicant’s
written response, the Application Process-
ing Center will reconsider its proposed
letter of denial. The Application Process-
ing Center may either (1) withdraw its
proposed letter of denial and accept the
applicant into the Form 1040 IRS e-file
Program, or (2) finalize the proposed de-
nial letter.
.05 If an applicant receives a final de-
nial letter from the Application Processing
Center, the applicant is entitled to an ap-
peal, in writing, to the Director of Prac-
tice.
.06 The appeal must be mailed or deliv-
ered to the Application Processing Center
within 30 calendar days of the date of the
final denial letter. An applicant’s written
appeal must contain a detailed explana-
tion, with supporting documentation, of
why the denial should be reversed.
.07 The Application Processing Center
will, upon receipt of a written appeal to
the Director of Practice, forward to the
Director of Practice its file on the appli-
cant and the material described in section
14.06 of this revenue procedure. The Ap-
plication Processing Center will forward
these materials to the Director of Practice
within 15 calendar days of receipt of the
applicant’s written appeal.
.08 Failure to respond within either of
the 30-day periods described in sections
14.03 and 14.06 of this revenue procedure
irrevocably terminates an applicant’s right
to an administrative review or appeal.
.09 If an application for participation
in the Form 1040 IRS e-fileProgram is
denied, the applicant is ineligible to sub-
mit a new application for two years from
the application date of the denied applica-
tion.
SECTION 15. ADMINISTRATIVE
REVIEW PROCESS FOR
SUSPENSION FROM THE FORM 1040
IRS e-filePROGRAM
.01 An Authorized IRS e-fileProvider
that has been suspended from participa-
tion in the Form 1040 IRS e-fileProgram
has the right to an administrative review.
During the administrative review process,
the suspension remains in effect.
.02 If an Authorized IRS e-file
Provider receives a suspension letter, the
Authorized IRS e-fileProvider may mail
or deliver, within 30 calendar days of the
date of the suspension letter, a detailed
written explanation, with supporting doc-
umentation, of why the suspension letter
should be withdrawn. This written re-
sponse should be sent to the district office
or service center that issued the suspen-
sion letter.
.03 Upon receipt of the Authorized IRS
e-fileProvider’s written response, the dis-
trict office or service center will reconsider
its suspension of the Authorized IRS e-file
Provider. The district office or service cen-
ter may either (1) withdraw its suspension
letter, or (2) affirm the suspension.
.04 If an Authorized IRS e-file
Provider receives a letter affirming the
suspension, the Authorized IRS e-file
Provider is entitled to an appeal, in writ-
ing, to the Director of Practice.
.05 The appeal must be mailed or de-
livered to the district office or service
center that issued the suspension letter
within 30 calendar days of the date of the
letter affirming the suspension. The Au-
thorized IRS e-fileProvider’s written ap-
peal must contain detailed reasons, with
supporting documentation, for reversal of
the suspension.
.06 The district office or service center
whose decision to suspend is being ap-
pealed will, upon receipt of a written ap-
peal to the Director of Practice, forward
its file on the Authorized IRS e-file
Provider to the Director of Practice. The
district office or service center will also
forward to the Director of Practice the
material described in section 15.05 of this
revenue procedure. The district office or
the service center will forward these ma-
terials within 15 calendar days of the re-
ceipt of the Authorized IRS e-file
Provider’s written request for appeal.
.07 Failure to appeal within either of
the 30-day periods described in sections
15.02 and 15.05 of this revenue procedure
irrevocably terminates an Authorized IRS
e-fileProvider’s right to an appeal.
SECTION 16. VITA AND TCE
SPONSORED PARTICIPATION IN THE
FORM 1040 IRS e-filePROGRAM
.01 This revenue procedure applies to
VITA (Volunteer Income Tax Assistance)
and TCE (Tax Counseling for the Elderly)
September 21, 1998181998–38 I.R.B.
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sponsors, subject to the exceptions and re-
strictions described in this section.
.02 For purposes of this section, the
District Director may be represented by an
individual designated by the District Di-
rector such as a District Office Electronic
Tax Administration (ETA) Coordinator or
a Taxpayer Education Coordinator.
.03 To be accepted in, or to continue
participation in, the Form 1040 IRS e-file
Program, a VITA or TCE sponsor must:
(1) have obtained the District Direc-
tor’s permission (and, in the case of a
TCE sponsor, the permission of the Ser-
vice office that is funding the TCE pro-
gram) to provide electronic filing; and
(2) have a manual or electronic qual-
ity review system for each return to be
electronically filed.
.04 The District Director will advise
the VITA and TCE sponsor how to submit
or transmit returns. Some of the options
available to the District Director are:
(1) having the VITA or TCE sponsor
submit returns on paper, magnetic disk, or
in an electronic transmission to the Dis-
trict Office ETA Coordinator or other lo-
cally designated office;
(2) having the VITA or TCE sponsor
directly transmit returns to the appropriate
service center; or
(3) having the VITA or TCE sponsor
use a third party Transmitter.
.05 A VITA or TCE sponsor is not re-
quired to sign Form 8453 as ERO. How-
ever, if the VITA or TCE sponsor chooses
not to sign Form 8453, the VITA or TCE
sponsor must otherwise furnish on Form
8453 its VITA or TCE acronym and, if
operating from multiple sites, a site desig-
nation number.
.06 A VITA or TCE sponsor can only
accept a return for electronic filing that is
(1) prepared at the VITA or TCE site by a
VITA or TCE volunteer, (2) prepared by a
taxpayer that meets the criteria for VITA
or TCE assistance, or (3) prepared by a
paid preparer that meets the criteria for
VITA or TCE assistance.
.07 Only returns and accompanying
forms and schedules included in a district,
VITA, or TCE training course may be ac-
cepted for electronic filing by a VITA or
TCE sponsor.
.08 A VITA or TCE sponsor and a Dis-
trict Director may enter into an agreement
that provides for the retention of copies of
tax returns and Forms 8453 by a District
Director. This information must be re-
tained by either the VITA or TCE sponsor
or a District Director. This information
must not be given to a third party, includ-
ing a third party Transmitter.
.09 A District Director is responsible for
ensuring that Form 8453 is sent to the ap-
propriate district office or service center.
However, a District Director may delegate
to the VITA or TCE sponsor the responsi-
bility for mailing Form 8453 to the appro-
priate district office or service center.
.10 A VITA or TCE sponsor may col-
lect a fee only if it is directly related to de-
fraying the actual cost of electronically
transmitting a tax return. A VITA or TCE
sponsor may also collect this fee on be-
half of a third party Transmitter who elec-
tronically transmitted a VITA or TCE re-
turn.
.11 Before a VITA or TCE sponsor
may collect a fee for electronically filing
a tax return, the VITA or TCE sponsor
must ensure that the taxpayer understands
that:
(1) the fee is not for the preparation
of the return; and
(2) the VITA or TCE service is of-
fered without regard to either the elec-
tronic filing of a return or the collection of
a fee.
SECTION 17. EMPLOYER
SPONSORED PARTICIPATION IN THE
FORM 1040 IRS e-file PROGRAM
.01 This revenue procedure applies to
an employer who chooses to offer elec-
tronic filing as an employee benefit to (1)
business owners and spouses, (2) employ-
ees and spouses, and/or (3) dependents of
business owners and employees, subject
to the exceptions and restrictions de-
scribed in this section.
.02 For purposes of this section, the
District Director may be represented by
an individual designated by the District
Director.
.03 An employer may choose to trans-
mit the electronic portion of returns or
may arrange to have them transmitted
through a third party. If an employer
chooses to transmit from more than one
location, the employer must submit a
properly completed Form 8633 for each
location.
.04 An employer may offer electronic
filing as an employee benefit whether the
employer chooses to transmit tax returns
or contracts with a third party to transmit
the tax returns.
.05 If an employer contracts with a
third party to transmit tax returns, the em-
ployer may collect from participating em-
ployees a fee that is directly related to de-
fraying the actual cost of transmitting the
electronic portion of a tax return.
.06 An employer is not required to sign
Form 8453 as ERO. However, if the em-
ployer chooses not to sign Form 8453, the
employer must otherwise furnish on Form
8453 its name, address, and the designa-
tion “Employee Benefit,” and if operating
from multiple sites, a site designation
number.
.07 An employer and a District Direc-
tor may enter into an agreement that pro-
vides for the retention of copies of tax re-
turns including Forms 8453. In the
absence of such an agreement, this infor-
mation must be retained by the employer.
This information is not to be given to a
third party, including a third party Trans-
mitter.
SECTION 18. PILOT PROGRAMS
.01 The Service regularly conducts
pilot programs to introduce new technol-
ogy into the Form 1040 IRS e-filePro-
gram. These pilot programs are usually
conducted within a limited geographic
area or within a limited taxpayer or practi-
tioner community. The Service estab-
lishes rules for participating in these pilot
programs and embodies these rules in an
implementing document typically re-
ferred to as a “Memorandum of Under-
standing” (MOU) or “Memorandum of
Agreement” (MOA). Pilot participants
must agree to the provisions of the imple-
menting document in order to participate
in the pilot program.
.02 An implementing document sup-
plements this revenue procedure, but does
not supersede it. Participants in a pilot
program remain subject to the provisions
of this revenue procedure unless the im-
plementing document specifically pro-
vides otherwise.
.03 A violation of a provision of an im-
plementing document is considered a vio-
lation of this revenue procedure and may
subject the participant to penalties and/or
suspension as provided in this revenue
procedure. See section 13.08(22) of this
revenue procedure.
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SECTION 19. EFFECT ON OTHER
DOCUMENTS
Rev. Proc. 97–60, 1997–52 I.R.B. 38,
is superseded.
SECTION 20. EFFECTIVE DATE
This revenue procedure is effective
September 21, 1998.
SECTION 21. INTERNAL REVENUE
SERVICE OFFICE CONTACT
All questions regarding this revenue
procedure should be directed to the Inter-
nal Revenue Service. The telephone
number for this purpose is (202) 283-
0531 (not a toll-free number).
SECTION 22. PAPERWORK
REDUCTION ACT
The collections of information con-
tained in this revenue procedure have
been reviewed and approved by the Of-
fice of Management and Budget in accor-
dance with the Paperwork Reduction Act
(44 U.S.C. 3507) under control number
1545–1512.
An agency may not conduct or sponsor,
and a person is not required to respond to,
a collection of information unless the col-
lection of information displays a valid
control number.
The collections of information in this
revenue procedure are in sections 5, 8, 9,
and 12. This information is required to
implement the Form 1040 IRS e-filePro-
gram and to enable taxpayers to file their
individual income tax returns electroni-
cally. The information will be used to en-
sure that taxpayers receive accurate and
essential information regarding the filing
of their electronic returns and to identify
the persons involved in the filing of elec-
tronic returns. The collections of infor-
mation are required to retain the benefit of
participating in the Form 1040 IRS e-file
Program. The likely respondents are
business or other for-profit institutions.
The estimated total annual reporting
and recordkeeping burden is 1,146,272
hours.
The estimated annual burden per re-
spondent/recordkeeper varies from six (6)
minutes to 15.5 hours, depending on indi-
vidual circumstances, with an estimated
average of 15.28 hours (or approximately
six (6) minutes per electronically filed re-
turn). The estimated number of respon-
dents and recordkeepers is 75,000.
The estimated annual frequency of re-
sponses is on occasion.
Books or records relating to a collec-
tion of information must be retained as
long as their contents may become mater-
ial in the administration of any internal
revenue law. Generally, tax returns and
tax return information are confidential, as
required by 26 U.S.C. § 6103.
26 CFR 601.602: Tax forms and instructions.
(Also Part I, Sections 6012, 6061; 1.6012–5,
1.6061–1.)
Rev. Proc. 98–51
CONTENTS
SECTION 1PURPOSE
SECTION 2 BACKGROUND AND
CHANGES
SECTION 3 ON-LINE FILING PAR-
TICIPANTS—DEFINI-
TIONS
SECTION 4 ACCEPTANCE IN THE
FORM 1040 ON-LINE
FILING PROGRAM
SECTION 5 RESPONSIBILITIES OF
AN ON-LINE FILER
SECTION 6 PENALTIES
SECTION 7 FORM 8453-OL, U.S. IN-
DIVIDUAL TAX DEC-
LARATION FOR ON-
LINE FILING
SECTION 8 INFORMATION AN ON-
LINE FILER MUST
FURNISH TO THE TAX-
PAYER
SECTION 9 DIRECT DEPOSIT OF
REFUNDS
SECTION 10 BALANCE DUE RE-
TURNS
SECTION 11 ADVERTISING STAN-
DARDS FOR ON-LINE
FILERS
SECTION 12 MONITORING AND
SUSPENSION OF AN
ON-LINE FILER
SECTION 13 ADMINISTRATIVE RE-
VIEW PROCESS FOR
DENIAL OF PARTICI-
PATION IN THE FORM
1040 ON-LINE FILING
PROGRAM
SECTION 14ADMINISTRATIVE RE-
VIEW PROCESS FOR
SUSPENSION FROM
THE FORM 1040 ON-
LINE FILING PRO-
GRAM
SECTION 15 PILOT PROGRAMS
SECTION 16EFFECT ON OTHER
DOCUMENTS
SECTION 17 EFFECTIVE DATE
SECTION 18INTERNAL REVENUE
SERVICE OFFICE CON-
TACT
SECTION 19 PAPERWORK REDUC-
TION ACT
SECTION 1. PURPOSE
This revenue procedure informs those
who participate in the Form 1040 On-
Line Filing Program of their obligations
to the Internal Revenue Service, taxpay-
ers, and other participants. The following
returns can be filed under the Form 1040
On-Line Filing Program: (1) Form 1040
and Form 1040A, U.S. Individual Income
Tax Return; and (2) Form 1040EZ, In-
come Tax Return for Single and Joint Fil-
ers With No Dependents. This revenue
procedure updates and supersedes Rev.
Proc. 97–61, 1997–52 I.R.B. 50.
SECTION 2. BACKGROUND AND
CHANGES
.01 Section 1.6012–5 of the Income
Tax Regulations provides that the Com-
missioner may authorize the use, at the
option of a person required to make a re-
turn, of a composite return in lieu of any
form specified in 26 C.F.R. Part 1 (In-
come Tax), subject to the conditions, limi-
tations, and special rules governing the
preparation, execution, filing, and correc-
tion thereof as the Commissioner may
deem appropriate.
.02 For purposes of this revenue proce-
dure, an on-line electronically filed Form
1040, Form 1040A, or Form 1040EZ is a
composite return consisting of electroni-
cally transmitted data and certain paper
documents. The paper portion of the re-
turn consists of Form 8453–OL, U.S. In-
dividual Income Tax Declaration for On-
Line Filing, and other paper documents
that cannot be electronically transmitted.
Form 8453–OL must be received by the
Service before the composite return is
considered filed (see section 5.07 of this
revenue procedure). The composite re-
turn must contain the same information
that a return filed completely on paper
September 21, 1998201998–38 I.R.B.
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contains. See section 7 of this revenue
procedure for procedures for completing
Form 8453–OL.
.03 Each year prior to the start of the
filing season, the Service will issue Publi-
cation 1345A, Filing Season Supplement
for Electronic Return Originators, and
Publication 1346, Electronic Return File
Specifications and Record Layouts for In-
dividual Income Tax Returns. These pub-
lications list the forms and schedules as-
sociated with the Form 1040 series that
can be electronically transmitted during
the upcoming filing season.
.04 For purposes of the Form 1040 On-
Line Filing Program, a Form 1040, Form
1040A, or Form 1040EZ for any taxable
year cannot be electronically filed after
the 15th day of October following the
close of that taxable year, notwithstanding
the fact that the taxpayer has been granted
an extension to file a return beyond that
date. If the 15th day of October falls on a
Saturday, Sunday, or legal holiday, then
the electronically filed return may be filed
on the next succeeding day which is not a
Saturday, Sunday, or legal holiday.
.05 An amended tax return cannot be
electronically filed under the Form 1040
On-Line Filing Program. A taxpayer
must file an amended tax return on paper
in accordance with the instructions for
Form 1040X, Amended U.S. Individual
Income Tax Return.
.06 A tax return that has a foreign ad-
dress for the taxpayer cannot be electroni-
cally filed under the Form 1040 On-Line
Filing Program. Army/Air Force (APO)
and Fleet (FPO) post offices are not con-
sidered foreign addresses for this purpose.
.07 A tax return for a decedent cannot
be electronically filed under the Form
1040 On-Line Filing Program. The dece-
dent’s spouse or personal representative
must file a paper tax return for the dece-
dent.
.08 Some of the updates and changes
to Rev. Proc. 97–61 are as follows:
(1) references to specific dates and
specific tax years have been replaced with
more general references in order to elimi-
nate the need for annual updates to this
revenue procedure;
(2) the application period for new
applicants that intend to participate in the
Form 1040 On-Line Filing Program for
any filing season is extended beyond the
beginning of the filing season (section
4.05);
(3) On-Line Filers participating as
Software Developers must provide the
Service with a copy of their software and
its accompanying documentation (section
5.10(9));
(4) the number of returns that may be
filed from one software package or from
one e-mail address has been increased
from three returns to five (sections
5.09(2), 5.10(3), 5.10(4), and 5.11(12));
and
(5) the provisions of this revenue
procedure apply to participants in various
pilot programs conducted with respect to
the Form 1040 On-Line Filing Program
(section 15).
SECTION 3. ON-LINE FILING
PARTICIPANTS—DEFINITIONS
.01 After acceptance into the Form
1040 On-Line Filing Program, as de-
scribed in section 4 of this revenue proce-
dure, a participant is referred to as an
“On-Line Filer.”
.02 The On-Line Filer categories are:
(1) ON-LINE SERVICE PRO-
VIDER. An “On-Line Service Provider”
is an on-line information service organi-
zation that provides paying subscribers
(individuals who use the various services
offered by an On-Line Service Provider)
dial-up access to a variety of data bases.
For purposes of the Form 1040 On-Line
Filing Program, an On-Line Service
Provider must also have:
(a) an established subscriber or
client base to whom the On-Line Service
Provider offers services on a continuing
basis and about which the On-Line Ser-
vice Provider maintains certain minimum
information identifying the subscriber.
Such information could include the sub-
scriber’s name, account number, credit
card number, or demand deposit account
number;
(b) a port capacity of at least 1,000
lines or the ability to simultaneously ser-
vice 1,000 customers;
(c) a network of personal comput-
ers that are linked by modems;
(d) access to a broad spectrum of
information and/or entertainment ser-
vices; and
(e) a client base that has the ability
to communicate using electronic mail.
(2) SOFTWARE DEVELOPER. A
“Software Developer” develops software
for the purposes of (a) formatting the
electronic portion of returns according to
Publication 1346; and/or (b) transmitting
the electronic portion of returns directly
to the Service. A Software Developer
may also sell its software.
(3) TRANSMITTER. A “Transmit-
ter” transmits the electronic portion of a
return directly to the Service. An entity
that provides a “bump-up” service is a
Transmitter. A “bump-up” service
provider increases the transmission rate or
line speed of formatted or reformatted in-
formation that is being sent to the Service
via a public switched telephone network.
The Service accepts transmissions using a
variety of telecommunications protocols.
.03 The On-Line Filer categories are
not mutually exclusive. For example, a
Software Developer can, at the same time,
be considered a Transmitter or an On-
Line Service Provider depending on the
function(s) performed.
SECTION 4. ACCEPTANCE IN THE
FORM 1040 ON-LINE FILING
PROGRAM
.01 Except as provided in sections 4.02
through 4.04 of this revenue procedure,
an On-Line Filer that participated in the
most recent Form 1040 On-Line filing
season does not have to reapply to partici-
pate in the next Form 1040 On-Line filing
season. However, an On-Line Filer that
intends to participate as a Transmitter or a
Software Developer must first success-
fully complete, for each filing season, the
testing referred to in section 4.11 of this
revenue procedure. In addition, section
4.14 of this revenue procedure provides
for the Service’s issuance of credentials
necessary for participation in the Form
1040 On-Line Filing Program.
.02 Applicants must file a new Form
8633, Application to Participate in the
IRS e-fileProgram, with completed fin-
gerprint cards for the appropriate individ-
uals, if:
(1) the applicant has never partici-
pated in the Form 1040 On-Line Filing
Program;
(2) the applicant has previously been
denied participation in the Form 1040 On-
Line Filing Program; or
(3) the applicant has been suspended
from the Form 1040 On-Line Filing Pro-
gram.
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Applicants must designate that the
Form 8633 is for the Form 1040 On-Line
Filing Program by checking the box titled
“ON-LINE FILING.”
.03 An On-Line Filer must submit a re-
vised Form 8633 (designated for the Form
1040 On-Line Filing Program as de-
scribed in section 4.02 of this revenue
procedure), signed by all “Principals” and
the “Responsible Official” (as described
in section 4.12 of this revenue procedure),
with completed fingerprint cards for those
appropriate individuals who have not sub-
mitted a fingerprint card with a previously
accepted application, if:
(1) the On-Line Filer participated
solely as a Software Developer in the
most recent Form 1040 On-Line filing
season and intends to participate as an
On-Line Service Provider or Transmitter;
(2) there is an additional Principal,
such as a partner or a corporate officer,
that must be listed on Form 8633;
(3) there is a Principal listed on Form
8633 that should be deleted; or
(4) the Responsible Official on Form
8633 changes.
.04 Except as provided in section 4.03
of this revenue procedure, an On-Line
Filer must submit either a revised Form
8633 (designated for the Form 1040 On-
Line Filing Program as described in sec-
tion 4.02 of this revenue procedure), or a
letter containing the same information
contained in a revised Form 8633, if any
information on the On-Line Filer’s Form
8633 has changed. A revised Form 8633
or letter submitted under this section
should include only the changed informa-
tion and the following identifying infor-
mation:
(1) the On-Line Filer’s legal name;
(2) the On-Line Filer’s employer
identification number and/or social secu-
rity number (EIN/SSN);
(3) the On-Line Filer’s “Doing Busi-
ness As” (DBA) name;
(4) whether the On-Line Filer is con-
trolled or owned by another On-Line
Filer;
(5) the On-Line Filer’s controlling
office name;
(6) the Electronic Transmitter Identi-
fication Number (ETIN) of the On-Line
Filer’s controlling office;
(7) the Electronic Filing Identifica-
tion Number (EFIN) of the On-Line
Filer’s controlling office; and
(8) the business address of the On-
Line Filer’s controlling office.
A Principal or the Responsible Official
must sign the revised Form 8633 or the
letter.
.05 For applicants described in section
4.02 of this revenue procedure, the appli-
cation period begins on the 1st day of Au-
gust preceding the filing season during
which they intend to participate in the
Form 1040 On-Line Filing Program. The
application period continues into the fil-
ing season (see the Form 8633 instruc-
tions for the last date to file a new appli-
cation); however, applications submitted
after the 1st day of December preceding
the filing season may not be processed in
time for the applicant to participate in the
Form 1040 On-Line Filing Program by
the start of the filing season.
.06 Revised applications described in
sections 4.03 and 4.04 of this revenue
procedure must be submitted within 30
days of the change(s) reflected on the re-
vised Form 8633 or in the letter. On-Line
Filers that fail to submit revised applica-
tions may be temporarily dropped from
the Form 1040 On-Line Filing Program.
.07 Applicants and On-Line Filers de-
scribed in sections 4.02 through 4.04 of
this revenue procedure must file Form
8633 (or a letter as provided in section
4.04 of this revenue procedure) with the
Application Processing Center at the ad-
dress listed in the instructions for Form
8633.
.08 Applicants described in section
4.02 that submit their applications on or
before the 31st day of December preced-
ing the filing season must submit the fol-
lowing information (or the name and
phone number of an individual who can
provide the information) to the IRS Head-
quarters Form 1040 On-Line Filing Pro-
gram Analyst (see section 18 of this rev-
enue procedure) no later than the 31st day
of December preceding the filing season:
(1) the brand name of the software
the applicant will be using, has devel-
oped, or will be transmitting, and the fol-
lowing information regarding the soft-
ware:
(a) the name of the Software De-
veloper for the software;
(b) the name of the Transmitter for
the software;
(c) the retail cost of the software
and any additional costs for transmitting
the electronic portion of the taxpayer’s re-
turn;
(d) whether the software can be
used to file Federal/State returns;
(e) whether the software is avail-
able on the Internet and, if so, the Internet
address; and
(f) the Professional Package name
of the software submitted for Participants
Acceptance Testing (PATS) and whether
the software has successfully completed
PATS;
(2) the applicant’s point of contact
for matters relating to the Form 1040 On-
Line Filing Program and the telephone
number for the point of contact;
(3) the applicant’s customer service
telephone number; and
(4) the procedures the applicant will
use to ensure that no more than five re-
turns are transmitted from one software
package or from one e-mail address (see
sections 5.09(2), 5.10(3), 5.10(4), and
5.11(12)).
.09 Applicants described in section
4.02 that do not submit their applications
on or before the 31st day of December
preceding the filing season during which
they intend to participate must submit the
information described in sections 4.08(1)
through (4) at the time they submit their
applications.
.10 On-Line Filers must submit any
changes to the information contained in
sections 4.08(1) through (4) of this rev-
enue procedure to the IRS Headquarters
Form 1040 On-Line Filing Program Ana-
lyst by the 31st day of December preced-
ing the next filing season.
.11 Applicants and On-Line Filers de-
scribed in sections 4.01 through 4.04 of
this revenue procedure that intend to par-
ticipate as a Transmitter or a Software De-
veloper in the Form 1040 On-Line Filing
Program must first successfully complete
the necessary testing at the appropriate
service center(s). Such testing must be
completed for each filing season during
which the applicant or On-Line Filer in-
tends to participate as a Transmitter or
Software Developer.
.12 Each individual listed as a Princi-
pal or a Responsible Official on a Form
8633 must:
(1) be a United States citizen or an
alien lawfully admitted for permanent res-
idence as described in 8 U.S.C. § 1101(a)-
(20) (1994);
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(2) have attained the age of 21 as of
the date of application;
(3) submit with Form 8633 one stan-
dard fingerprint card with a full set of fin-
gerprints taken by a law enforcement
agency, except as provided in section 4.13
of this revenue procedure; and
(4) except as provided in section
4.15 of this revenue procedure, pass a
suitability check that includes a credit
check, a tax compliance check, and a fin-
gerprint check.
.13 In lieu of a standard fingerprint
card, an individual may choose to submit
evidence that the individual is:
(1) an attorney in good standing of
the bar of the highest court of any State,
Commonwealth, possession, territory, or
the District of Columbia, and is not cur-
rently under suspension or disbarment
from practice before the Service or the bar
of the highest court of any State, Com-
monwealth, possession, territory, or the
District of Columbia;
(2) a certified public accountant who
is duly qualified to practice as a certified
public accountant in any State, Common-
wealth, possession, territory, or the Dis-
trict of Columbia, and is not currently
under suspension or disbarment from
practice before the Service or whose li-
cense to practice is not currently sus-
pended or revoked by any State, Com-
monwealth, possession, territory, or the
District of Columbia;
(3) an enrolled agent pursuant to part
10 of 31 C.F.R. Subtitle A;
(4) an officer of a publicly held cor-
poration; or
(5) a banking official who is bonded
and has been fingerprinted within the last
two years.
.14 The Service will issue credentials
each year to eligible applicants, On-Line
Filers that do not have to reapply pursuant
to section 4.01 of this revenue procedure,
and On-Line Filers that comply with sec-
tion 4.03 or 4.04 of this revenue proce-
dure, provided they have first satisfacto-
rily completed the testing described in
section 4.11 of this revenue procedure if
they intend to participate as a Transmitter
or Software Developer. No one may par-
ticipate in the Form 1040 On-Line Filing
Program without the following creden-
tials:
(1) a letter of acceptance into the
Form 1040 On-Line Filing Program;
(2) an EFIN for each applicable ser-
vice center; and
(3) if appropriate, an ETIN for each
applicable service center.
.15 If an On-Line Filer is a Software
Developer that performs no other function
in the Form 1040 On-Line Filing Program
but software development, no Principal or
Responsible Official needs to pass a suit-
ability check.
.16 The Service may reject an applica-
tion to participate in the Form 1040 On-
Line Filing Program for the following
reasons (this list is not all-inclusive).
These reasons apply to any firm, organi-
zation, Principal, or Responsible Official
listed on Form 8633:
(1) conviction of any criminal of-
fense under the revenue laws of the
United States, or of any offense involving
dishonesty or breach of trust;
(2) failure to file timely and accurate
tax returns, including returns indicating
that no tax is due (unless the applicant did
not have a legal filing requirement);
(3) failure to timely pay any tax lia-
bilities;
(4) assessment of any tax penalties;
(5) suspension/disbarment from
practice before the Service;
(6) disreputable conduct or other
facts that would reflect adversely on the
Form 1040 On-Line Filing Program;
(7) misrepresentation on an applica-
tion;
(8) suspension or rejection from ei-
ther the Form 1040 On-Line Filing Pro-
gram, the Form 1040 Electronic Filing
(ELF) Program, or the Form 1040 IRS
e-fileProgram in a prior year;
(9) unethical practices in return
preparation;
(10) stockpiling returns prior to offi-
cial acceptance into the Form 1040 On-
Line Filing Program (see section 5.21 of
this revenue procedure);
(11) knowingly and directly or indi-
rectly employing or accepting assistance
from any firm, organization, or individual
that is prohibited from applying to partici-
pate in the Form 1040 On-Line Filing
Program, the Form 1040 ELF Program, or
the Form 1040 IRS e-fileProgram, or that
is suspended from participating in the
Form 1040 On-Line Filing Program, the
Form 1040 ELF Program, or the Form
1040 IRS e-fileProgram. This includes
any individual whose actions resulted in
the rejection or suspension of a corpora-
tion or a partnership from the Form 1040
On-Line Filing Program, the Form 1040
ELF Program, or the Form 1040 IRS
e-fileProgram; or
(12) knowingly and directly or indi-
rectly accepting employment as an associ-
ate, correspondent, or as a subagent from,
or sharing fees with, any firm, organiza-
tion, or individual that is prohibited from
applying to participate in the Form 1040
On-Line Filing Program, the Form 1040
ELF Program, or the Form 1040 IRS
e-fileProgram, or that is suspended from
participating in the Form 1040 On-Line
Filing Program, the Form 1040 ELF Pro-
gram, or the Form 1040 IRS e-filePro-
gram. This includes any individual
whose actions resulted in the rejection or
suspension of a corporation or a partner-
ship from the Form 1040 On-Line Filing
Program, the Form 1040 ELF Program, or
the Form 1040 IRS e-fileProgram.
SECTION 5. RESPONSIBILITIES OF
AN ON-LINE FILER
.01 To ensure that complete returns are
accurately and efficiently filed, an On-
Line Filer must comply with all the publi-
cations and notices of the Service relating
to the Form 1040 On-Line Filing Pro-
gram. The Service will from time to time
update such publications and notices to
reflect changes to the program. It is the
responsibility of the On-Line Filer to en-
sure that it complies with the latest ver-
sion of all publications and notices. The
publications and notices governing the
Form 1040 On-Line Filing Program in-
clude:
(1) Publication 1345, Handbook for
Electronic Return Originators of Individ-
ual Income Tax Returns, and Publication
1345A;
(2) Publication 1346;
(3) Publication 1436, Test Package
for Electronic Filing of Individual Income
Tax Returns; and
(4) Postings to the Electronic Filing
System Bulletin Board (EFS Bulletin
Board), and the IRS “Digital Daily” web
site at:
http://www.irs.ustreas.gov
on the Internet.
.02 An On-Line Filer must maintain a
high degree of integrity, compliance, and
accuracy.
1998–38 I.R.B.23September 21, 1998
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September 21, 1998241998–38 I.R.B.
.03 An On-Line Filer may accept re-
turns for the Form 1040 On-Line Filing
Program only from the taxpayer filing the
return or from another On-Line Filer.
.04 If an On-Line Filer charges a fee
for the transmission of the electronic por-
tion of a tax return, the fee may not be
based on a percentage of the refund
amount or any other amount from the tax
return.
.05 An On-Line Filer must submit a re-
vised Form 8633 (or a letter as provided
in section 4.04 of this revenue procedure)
to the Application Processing Center
within 30 days of when any of the condi-
tions or changes described in section 4.03
or 4.04 of this revenue procedure occur.
See section 4.06 of this revenue proce-
dure.
.06 An On-Line Filer must notify the
Application Processing Center (at the ad-
dress listed in the instructions for Form
8633) within 30 days of discontinuing its
participation in the Form 1040 On-Line
Filing Program. This does not preclude
reapplication in the future.
.07 An On-Line Filer must ensure that
it promptly processes returns submitted to
it for electronic filing. See sections 5.09,
5.10, and 5.11 of this revenue procedure.
However, an On-Line Filer that receives a
return for electronic filing on or before
the due date of the return must ensure that
the electronic portion of the return is
transmitted on or before that due date (in-
cluding extensions). An electronically
filed return is not considered filed until
the electronic portion of the tax return has
been acknowledged by the Service as ac-
cepted for processing and a completed
and signed Form 8453–OL has been re-
ceived by the Service. However, if the
electronic portion of a return is success-
fully transmitted on or shortly before the
due date and the taxpayer complies with
section 7.01 of this revenue procedure,
the return will be deemed timely filed. If
the electronic portion of a return is trans-
mitted on or shortly before the due date
and is ultimately rejected, but the tax-
payer complies with section 5.18 of this
revenue procedure, the return will be
deemed timely filed. For a balance due
return, see section 10 of this revenue pro-
cedure for instructions on how to make a
timely payment of tax.
.08 An On-Line Filer must ensure
against the unauthorized use of its EFIN
or ETIN. An On-Line Filer must not
transfer its EFIN or ETIN by sale, loan,
gift, or otherwise to another entity.
.09 An On-Line Filer that participates
as an On-Line Service Provider must:
(1) provide assistance to a subscriber
in transmitting the electronic portion of a
tax return;
(2) ensure that no more than five tax
returns are filed electronically by one sub-
scriber;
(3) not provide to a subscriber soft-
ware that has a Service-assigned produc-
tion password built into the software; and
(4) immediately send to a subscriber
the information provided by a Transmitter
under section 5.16 or 5.17 of this revenue
procedure.
.10 An On-Line Filer that participates
as a Software Developer must:
(1) promptly correct any software
error which causes the electronic portion
of a return to be rejected;
(2) promptly distribute any software
correction;
(3) ensure that its software package
cannot be used to transmit more than five
electronic returns;
(4) ensure that its software, if avail-
able for use on an Internet web site, can-
not be used to file more than five elec-
tronic returns from one e-mail address;
(5) ensure that its software contains a
Form 8453–OL format that can be printed
and used by a taxpayer to file with the
Service;
(6) ensure that its software contains a
Form 1040–V, Payment Voucher, that can
be printed and used by a taxpayer to file
with the Service;
(7) ensure that its software contains a
consent to disclosure statement;
(8) not incorporate into its software a
Service-assigned production password;
and
(9) provide a copy of the software
and accompanying documentation (a
demonstration package is sufficient) to
the IRS Headquarters On-Line Filing An-
alyst upon successful completion of the
testing described in section 4.11 of this
revenue procedure.
.11 An On-Line Filer that participates
as a Transmitter must:
(1) assign (as prescribed in Publica-
tion 1346) a Declaration Control Number
(DCN) to the electronic portion of each
return received from a taxpayer;
(2) include the assigned DCN in the
transmission of the electronic portion of a
return;
(3) send all electronic portions of re-
turns within three calendar days of receipt
to the appropriate service center based on
the state code in the taxpayer’s return ad-
dress;
(4) retrieve the acknowledgement
file (in which the Service states whether it
accepts or rejects the electronic portion of
a taxpayer’s return for processing) within
two work days of transmission;
(5) match the acknowledgement file
to the original transmission file and notify
the taxpayer of the status of a transmitted
return as prescribed in section 5.19 of this
revenue procedure;
(6) retain, until the end of the calen-
dar year in which a return was filed, the
acknowledgement file received from the
Service;
(7) retain, until the end of the calen-
dar year in which a return was filed, the
complete copy of the electronic portion of
the return (may be retained on magnetic
media) that can be readily and accurately
converted into an electronic transmission
that the Service can process;
(8) immediately contact the appro-
priate service center for further instruc-
tions if an acknowledgement of accep-
tance for processing has not been received
by the Transmitter within two work days
of transmission or if the Transmitter re-
ceives an acknowledgement for a return
that was not transmitted on the designated
transmission;
(9) promptly correct any transmis-
sion error that causes an electronic trans-
mission to be rejected;
(10) contact the service center that
rejected the electronic portion of the re-
turn for assistance if that portion of the re-
turn has been rejected after three trans-
mission attempts;
(11) ensure the security of all trans-
mitted data;
(12) ensure that it does not transmit
or accept for transmission more than five
electronic returns originating from one
software package or from one e-mail ad-
dress;
(13) ensure that the electronic por-
tion of a return contains a completed con-
sent to disclosure statement; and
(14) ensure that it does not use soft-
ware that has a Service-assigned produc-
tion password built into the software.
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.12 A Transmitter must include an On-
Line Service Provider’s EFIN on each re-
turn that the Transmitter accepts from an
On-Line Service Provider.
.13 A Transmitter must enter the letter
“O” in the Trans Record “A” as the
“Transmission Type Code” when trans-
mitting the electronic portion of an on-
line electronically filed return to the Ser-
vice.
.14 A Transmitter must ensure that it
does not combine, within the same trans-
mission to the Service, the electronic por-
tion of a return filed under the Form 1040
On-Line Filing Program with the elec-
tronic portion of a return filed under any
other electronic filing program.
.15 A Transmitter must ensure that it
does not use an EFIN or ETIN obtained
through the Form 1040 IRS e-filePro-
gram in a transmission of the electronic
portion of a taxpayer’s return as part of
the Form 1040 On-Line Filing Program.
.16 If the Service accepts the elec-
tronic portion of a taxpayer’s return, the
Transmitter must notify the taxpayer (as
prescribed in section 5.19 of this revenue
procedure) of the following:
(1) the date the transmission was ac-
cepted;
(2) the DCN;
(3) where to put the DCN on Form
8453–OL;
(4) the requirement to properly com-
plete and timely submit a Form 8453–OL
with accompanying paper documents (in-
cluding Form W–2, Wage and Tax State-
ment; Form W–2G, Statement for Recipi-
ents of Certain Gambling Winnings; and
Form 1099–R, Distributions From Pen-
sions, Annuities, Retirement or Profit-
Sharing Plans, IRAs, Insurance Contracts,
etc.) within one work day;
(5) the appropriate service center’s
address to which Form 8453–OL with ac-
companying paper documents must be
sent;
(6) that a Form 8453–OL must be re-
ceived by the Service before an on-line
electronically filed return is complete;
and
(7) that the taxpayer’s failure to
timely submit a Form 8453–OL with ac-
companying paper documents could re-
sult in the Service not allowing the tax-
payer to file a tax return through the Form
1040 On-Line Filing Program in the
future.
.17 If the Service informs the Trans-
mitter (in an acknowledgement file) that
the electronic portion of a taxpayer’s re-
turn has been rejected, the Transmitter
must notify the taxpayer, as prescribed in
section 5.19 of this revenue procedure, of
the following:
(1) that the Service rejected the elec-
tronic portion of the taxpayer’s return;
(2) the date of the rejection;
(3) what the reject code(s) means;
(4) what steps the taxpayer needs to
take to correct the error that caused the re-
jection; and
(5) the information contained in sec-
tion 5.18 of this revenue procedure.
.18 If the taxpayer chooses not to have
the electronic portion of the return cor-
rected and transmitted to the Service, or if
the electronic portion of the return cannot
be accepted for processing by the Service,
the taxpayer must file a paper return by
the later of:
(1) the due date of the return; or
(2) ten calendar days after the date
the Service gives notification that the
electronic portion of the return is rejected
or that the electronic portion of the return
cannot be accepted for processing.
The paper return should include an expla-
nation of why the return is being filed
after the due date.
.19 A Transmitter that transmits a re-
turn of a taxpayer who is a subscriber of
an On-Line Service Provider must notify
the taxpayer by sending an electronic
transmission to the On-Line Service
Provider within two work days of retriev-
ing the acknowledgement file. A Trans-
mitter that transmits a return of a taxpayer
who is not a subscriber of an On-Line
Service Provider must notify the taxpayer
by:
(1) sending an electronic transmis-
sion to the taxpayer within two work days
of retrieving the acknowledgement file; or
(2) mailing a written notification to
the taxpayer within one work day of re-
trieving the acknowledgement file.
.20 A Transmitter must make available
to the Service upon request all items re-
quired by this section to be retained until
the end of the calendar year in which a re-
turn was filed. The Transmitter must
make this material available either at the
business address of the Transmitter or
from the contact representative named on
Form 8633.
.21 A Transmitter is responsible for en-
suring that stockpiling does not occur.
Stockpiling means collecting returns from
taxpayers prior to official acceptance into
the Form 1040 On-Line Filing Program,
or, after official acceptance into the Form
1040 On-Line Filing Program, waiting
more than three calendar days to transmit
a return to the Service after receiving the
information necessary for transmission of
the electronic portion of a tax return.
.22 An On-Line Filer may not offer,
nor in any way participate in or facilitate,
a Refund Anticipation Loan (RAL) in
connection with any return filed under the
Form 1040 On-Line Filing Program. A
RAL is money borrowed by a taxpayer
that is based on a taxpayer’s anticipated
income tax refund.
.23 An On-Line Filer may not charge a
separate fee for a Direct Deposit. See
section 9 of this revenue procedure.
.24 In addition to the specific responsi-
bilities described in this section, an On-
Line Filer must meet all the requirements
in this revenue procedure to keep the priv-
ilege of participating in the Form 1040
On-Line Filing Program.
SECTION 6. PENALTIES
.01 Penalties for Disclosure or Use of
Information.
(1) An On-Line Filer, except a Soft-
ware Developer that performs no other
function in the Form 1040 On-Line Filing
Program but software development, is a
tax return preparer (Preparer) under the
definition of § 301.7216–1(b) of the Regu-
lations on Procedure and Administration.
A Preparer is subject to a criminal penalty
for unauthorized disclosure or use of tax
return information. See § 7216 of the In-
ternal Revenue Code and § 301.7216–
1(a). In addition, § 6713 establishes civil
penalties for unauthorized disclosure or
use of tax return information.
(2) Under § 301.7216–2(h), disclo-
sure of tax return information among ac-
cepted On-Line Filers for the purpose of
preparing a return is permissible. For ex-
ample, an On-Line Service Provider may
pass on tax return information to a Trans-
mitter for the purpose of having an on-
line electronic return formatted and trans-
mitted to the Service. However, if the tax
return information is disclosed or used in
any other way, an On- Line Filer may be
1998–38 I.R.B.25September 21, 1998
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subject to the penalties described in sec-
tion 6.01(1) of this revenue procedure.
.02 Other Preparer Penalties.
(1) Preparer penalties may be as-
serted against an individual or firm meet-
ing the definition of an income tax return
preparer under § 7701(a)(36) and
§ 301.7701–15. Preparer penalties that
may be asserted under appropriate cir-
cumstances include, but are not limited to,
those set forth in §§ 6694, 6695, and
6713.
(2) Under § 301.7701–15(d), an On-
Line Filer is not an income tax return pre-
parer for the purpose of assessing most
preparer penalties as long as the On-Line
Filer’s services are limited to “typing, re-
production, or other mechanical assis-
tance in the preparation of a return or
claim for refund.”
(3) If an On-Line Filer alters the re-
turn information in a nonsubstantive way,
this alteration will be considered to come
under the “mechanical assistance” excep-
tion described in § 301.7701–15(d)(1). A
nonsubstantive change is a correction or
change limited to a transposition error,
misplaced entry, spelling error, or arith-
metic correction that falls within the fol-
lowing tolerances:
(a) the amount of “Total tax”,
“Federal income tax withheld”, “Refund”,
or “Amount you owe” on Form 8453–OL
differs from the corresponding amount on
the electronic portion of the tax return by
no more than $7;
(b) the amount of “Total income”
shown on Form 8453–OL differs from the
corresponding amount on the electronic
portion of the tax return by no more than
$25; or
(c) dropping cents and rounding to
whole dollars.
(4) If an On-Line Filer alters the re-
turn information in a substantive way,
rather than having the taxpayer alter the
return, the On-Line Filer will be consid-
ered to be an income tax return preparer
for purposes of § 7701(a)(36).
(5) If an On-Line Filer goes beyond
mechanical assistance, the On-Line Filer
may be held liable for income tax return
preparer penalties. See Rev. Rul. 85–189,
1985–2 C.B. 341 (which describes a situ-
ation where a Software Developer was
determined to be an income tax return
preparer and subject to certain preparer
penalties).
.03 Other Penalties.In addition to the
above specified provisions, the Service
reserves the right to assert all appropriate
preparer, nonpreparer, and disclosure
penalties against an On-Line Filer as war-
ranted under the circumstances.
SECTION 7. FORM 8453-OL, U.S.
INDIVIDUAL INCOME TAX
DECLARATION FOR ON-LINE
FILING
.01 Procedures for Completing Form
8453–OL.
(1) Form 8453–OL must be com-
pleted by the taxpayer in accordance with
the instructions for that form.
(2) The taxpayer(s)’s name, address,
social security number(s), and tax return
information in the electronic transmission
must be identical to the information on
the Form 8453–OL that the taxpayer(s)
signs and will mail to the service center
that acknowledged acceptance of the elec-
tronic portion of the return.
(3) If the electronic portion of a re-
turn was filed as a joint return, both
spouses’ signatures are required on Form
8453–OL.
(4) The taxpayer’s Form 8453–OL
must be sent to the address of the service
center that acknowledged acceptance of
the electronic portion of the return within
one work day after the taxpayer is pro-
vided notification that the electronic por-
tion of the taxpayer’s return has been ac-
cepted for processing.
.02 Missing Form 8453–OL.If the
Service determines that a Form 8453–OL
is missing, the taxpayer must provide the
Service with a replacement. A taxpayer
must also provide a copy of any Form(s)
W–2, W–2G, 1099–R, and all other at-
tachments to Form 8453–OL.
.03 Substitute Form 8453–OL.If a
substitute Form 8453–OL is used, it must
be approved by the Service prior to use.
SECTION 8. INFORMATION AN
ON-LINE FILER MUST FURNISH TO
THE TAXPAYER
.01 The Transmitter must advise a tax-
payer to retain a complete copy of the re-
turn and any supporting material.
.02 The Transmitter must advise the
taxpayer that an amended return, if
needed, must be filed as a paper return
and mailed to the service center that
would handle the taxpayer’s paper return.
.03 The Transmitter must give the tax-
payer the DCN for the taxpayer’s Form
8453–OL and instructions to the taxpayer
for entering the DCN on Form 8453–OL.
.04 If a taxpayer inquires about the sta-
tus of a refund, the Transmitter, or On-
Line Service Provider if the taxpayer is a
subscriber, must advise the taxpayer of
the appropriate IRS TeleTax number to in-
quire about the status of the taxpayer’s re-
fund. The Transmitter or On-Line Service
Provider should also advise the taxpayer
to wait at least three weeks from the date
the Service acknowledged that the elec-
tronic portion of the taxpayer’s return was
accepted for processing before calling the
TeleTax number.
.05 The Transmitter must inform the
taxpayer that the address on the electronic
portion of the return, once processed, will
be used to update the taxpayer’s address
of record. The Service uses the tax-
payer’s address of record for various no-
tices that are required to be sent to a tax-
payer’s “last known address” under the
Internal Revenue Code and for refunds of
overpayments of tax (unless otherwise
specifically directed by the taxpayer, such
as by Direct Deposit).
SECTION 9. DIRECT DEPOSIT OF
REFUNDS
.01 The Service will ordinarily process
a request for Direct Deposit but reserves
the right to issue a paper refund check.
.02 The Service does not guarantee a
specific date by which a refund will be di-
rectly deposited into the taxpayer’s finan-
cial institution account.
.03 Neither the Service nor Financial
Management Service (FMS) is responsi-
ble for the misapplication of a Direct De-
posit that is caused by error, negligence,
or malfeasance on the part of the tax-
payer, On-Line Filer, financial institution,
or any of their agents.
SECTION 10. BALANCE DUE
RETURNS
.01 An on-line electronically filed bal-
ance due return is transmitted to the ap-
propriate service center in the same man-
ner that a refund or zero balance return is
filed. A balance due return is not com-
plete unless and until the Service receives
Form 8453–OL completed and signed by
the taxpayer.
September 21, 1998261998–38 I.R.B.
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.02 Taxpayers who file balance due re-
turns under the Form 1040 On-Line Filing
Program for any taxable year are respon-
sible for making full and timely payment
of any tax that is due. Failure to make full
payment on or before the due date of the
return (determined without regard to ex-
tensions) will result in the imposition of
interest and may result in the imposition
of penalties.
.03 Taxpayers have several options for
paying balances due, including the fol-
lowing:
(1) DIRECT DEBIT. Taxpayers
may authorize the Service to debit their
checking or savings account for the
amount of the balance due;
(2) PAY BY CHECK. Taxpayers
may pay any balance due by sending a
check, along with Form 1040–V, Payment
Voucher, to the Service. The Form 1040–
V is contained in all software approved
for use in the Form 1040 On-Line Filing
Program (see section 5.10(6) of this rev-
enue procedure); and
(3) INSTALLMENT AGREE-
MENT. Taxpayers who cannot pay the
balance due with the return may request
an installment payment arrangement by
filing Form 9465, Installment Agreement
Request, with their return.
SECTION 11. ADVERTISING
STANDARDS FOR ON-LINE FILERS
.01 An On-Line Filer must comply with
the advertising and solicitation provisions
of 31 C.F.R. Part 10 (Treasury Department
Circular No. 230). This circular prohibits
the use or participation in the use of any
form of public communication containing
a false, fraudulent, misleading, deceptive,
unduly influencing, coercive, or unfair
statement or claim. Any claims concerning
faster refunds by virtue of electronic filing
must be consistent with the language in of-
ficial Service publications.
.02 An On-Line Filer must adhere to
all relevant federal, state, and local con-
sumer protection laws that relate to adver-
tising and soliciting.
.03 An On-Line Filer must not use the
Service’s name, “Internal Revenue Ser-
vice” or “IRS”, within a firm’s name.
.04 An On-Line Filer must not use im-
proper or misleading advertising in rela-
tion to the Form 1040 On-Line Filing Pro-
gram (including the time frames for
refunds).
.05 An On-Line Filer using electronic
filing promotional materials or logos pro-
vided by the Service must comply with all
Service instructions pertaining to the pro-
motional materials or logos.
.06 An On-Line Filer using the Direct
Deposit name and logo must comply with
the following:
(1) The name “Direct Deposit” will
be used with initial capital letters or all
capital letters;
(2) The logo/graphic for Direct De-
posit will be used whenever feasible in
advertising copy; and
(3) The color or size of the Direct
Deposit logo/graphic may be changed
when used in advertising pieces.
.07 Advertising materials must not
carry the FMS, IRS, or other Treasury
Seals.
.08 Advertising for a cooperative elec-
tronic return filing project (public/private
sector) must clearly state the names of all
cooperating parties.
.09 If an On-Line Filer uses radio or
television broadcasting to advertise, the
broadcast must be pre-recorded. The On-
Line Filer must keep a copy of the pre-
recorded advertisement for a period of at
least 36 months from the date of the last
transmission or use.
.10 If an On-Line Filer uses direct mail
or fax communications to advertise, the
On-Line Filer must retain a copy of the
actual mailing or fax, along with a list or
other description of firms, organizations,
or individuals to whom the communica-
tion was mailed, faxed, or otherwise dis-
tributed for a period of at least 36 months
from the date of the last mailing, fax, or
distribution.
.11 Acceptance to participate in the
Form 1040 On-Line Filing Program does
not imply endorsement by the Service,
FMS, or the Treasury Department of the
software or quality of services provided.
SECTION 12. MONITORING AND
SUSPENSION OF AN ON-LINE FILER
.01 The Service will monitor an On-
Line Filer for conformity with this rev-
enue procedure. Before suspending an
On-Line Filer, the Service may issue a
warning letter that describes specific cor-
rective action for deviations from this rev-
enue procedure. However, the Service
can immediately suspend, without notice,
an On-Line Filer from the Form 1040 On-
Line Filing Program. In most circum-
stances, a suspension from participation
in the Form 1040 On-Line Filing Program
is effective as of the date of the letter in-
forming the On-Line Filer of the suspen-
sion.
.02 If a Principal or Responsible Offi-
cial is suspended from the Form 1040 On-
Line Filing Program, every entity that
listed the suspended Principal or Respon-
sible Official on its Form 8633 may also
be suspended.
.03 The Service will monitor the
timely receipt of Forms 8453–OL.
.04 The Service will monitor the qual-
ity of an On-Line Filer’s transmissions
throughout the filing season. The Service
will also monitor the electronic portion of
returns and tabulate rejections, errors, and
other defects. If quality deteriorates, the
On-Line Filer will receive a warning from
the Service.
.05 The Service will monitor com-
plaints about an On-Line Filer and issue a
warning or suspension letter as appropri-
ate.
.06 The Service reserves the right to
suspend an On-Line Filer from participa-
tion in the Form 1040 On-Line Filing Pro-
gram for violating any provision of this
revenue procedure. Generally, the Ser-
vice will advise a suspended On-Line
Filer concerning the requirements for
reacceptance into the Form 1040 On-Line
Filing Program. The following reasons
may lead to a warning letter and/or sus-
pension of an On-Line Filer from the
Form 1040 On-Line Filing Program (this
list is not all-inclusive):
(1) the reasons listed in section 4.16
of this revenue procedure;
(2) deterioration in the format of in-
dividual transmissions;
(3) unacceptable cumulative error or
rejection rate;
(4) stockpiling returns at any time
while participating in the Form 1040 On-
Line Filing Program;
(5) failure on the part of a Transmit-
ter to retrieve acknowledgement files
within two work days of transmission by
the Service;
(6) failure on the part of a Transmit-
ter to notify the taxpayer, as prescribed in
section 5.19 of this revenue procedure, of
the status of a transmitted return within
two work days of receipt of the acknowl-
edgement files from the Service;
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(7) failure on the part of an On-Line
Service Provider to ensure that no more
than five tax returns are filed electroni-
cally by one subscriber;
(8) failure on the part of a Transmit-
ter to ensure that it does not transmit or
accept for transmission more than five
electronic returns originating from one
software package or one e-mail address;
(9) significant complaints about an
On-Line Filer;
(10) failure on the part of an On-Line
Filer to ensure against the unauthorized
use of its EFIN and/or ETIN;
(11) failure on the part of an On-Line
Filer to cooperate with the Service’s ef-
forts to investigate electronic filing abuse;
(12) violation of the advertising stan-
dards described in section 11 of this rev-
enue procedure;
(13) failure to maintain and make
available records as described in section
5.20 of this revenue procedure;
(14) failure to supply a taxpayer with
an accurate DCN;
(15) failure to give effective instruc-
tions to a taxpayer concerning the entry of
the DCN on Form 8453–OL;
(16) failure to timely submit a re-
vised Form 8633 (or a letter containing
the same information contained in a re-
vised Form 8633) notifying the Service of
changes described in section 4.03 or 4.04
of this revenue procedure; or
(17) failure to comply with a provi-
sion of an implementing document for
any pilot program in which the On-Line
Filer is a participant (see section 15 of this
revenue procedure).
.07 The Service may list in the Inter-
nal Revenue Bulletin, district office list-
ings, district office newsletters, and on the
EFS Bulletin Board the name and
owner(s) of any entity suspended from the
Form 1040 On-Line Filing Program and
the effective date of the suspension.
.08 If a participant is suspended from
participating in the Form 1040 On-Line
Filing Program, the period of suspension
includes the remainder of the calendar
year in which the suspension occurs plus
the next two calendar years. A suspended
participant may submit a new application
for the application period immediately
preceding the end of the suspension.
SECTION 13. ADMINISTRATIVE
REVIEW PROCESS FOR DENIAL OF
PARTICIPATION IN THE FORM 1040
ON-LINE FILING PROGRAM
.01 An applicant that has been denied
participation in the Form 1040 On-Line
Filing Program has the right to an admin-
istrative review. During the administra-
tive review process, the denial of partici-
pation remains in effect.
.02 In response to the submission of a
Form 8633, the Application Processing
Center will either (1) accept an applicant
into the Form 1040 On-Line Filing Pro-
gram, or (2) issue a proposed letter of de-
nial that explains to the applicant why the
Application Processing Center proposes
to reject the application to participate in
the Form 1040 On-Line Filing Program.
.03 An applicant who receives a pro-
posed letter of denial may mail or deliver,
within 30 calendar days of the date of the
proposed letter of denial, a written re-
sponse to the Application Processing Cen-
ter. The applicant’s response must ad-
dress the Application Processing Center’s
reason(s) for proposing the denial to par-
ticipate.
.04 Upon receipt of an applicant’s
written response, the Application Process-
ing Center will reconsider its proposed
letter of denial. The Application Process-
ing Center may either (1) withdraw its
proposed letter of denial and accept the
applicant into the Form 1040 On-Line Fil-
ing Program, or (2) finalize the proposed
denial letter.
.05 If an applicant receives a final de-
nial letter from the Application Process-
ing Center, the applicant is entitled to an
appeal, in writing, to the Director of Prac-
tice.
.06 The appeal must be mailed or de-
livered to the Application Processing
Center within 30 calendar days of the date
of the final denial letter. An applicant’s
written appeal must contain a detailed ex-
planation, with supporting documenta-
tion, of why the denial should be re-
versed.
.07 The Application Processing Center
will, upon receipt of a written appeal to
the Director of Practice, forward to the
Director of Practice its file on the appli-
cant and the material described in section
13.06 of this revenue procedure. The Ap-
plication Processing Center will forward
these materials to the Director of Practice
within 15 calendar days of receipt of the
applicant’s written appeal.
.08 Failure to respond within either of
the 30-day periods described in sections
13.03 and 13.06 of this revenue procedure
irrevocably terminates an applicant’s right
to an administrative review or appeal.
.09 If an application for participation in
the Form 1040 On-Line Filing Program is
denied, the applicant is ineligible to sub-
mit a new application for two years from
the application date of the denied applica-
tion.
SECTION 14. ADMINISTRATIVE
REVIEW PROCESS FOR
SUSPENSION FROM THE FORM 1040
ON-LINE FILING PROGRAM
.01 An On-Line Filer that has been
suspended from participation in the Form
1040 On-Line Filing Program has the
right to an administrative review. During
the administrative review process, the
suspension remains in effect.
.02 If an On-Line Filer receives a sus-
pension letter, the On-Line Filer may mail
or deliver, within 30 calendar days of the
date of the suspension letter, a detailed
written explanation, with supporting doc-
umentation, of why the suspension letter
should be withdrawn. This written re-
sponse should be sent to the district office
or service center that issued the suspen-
sion letter.
.03 Upon receipt of the On-Line
Filer’s written response, the district office
or service center will reconsider its sus-
pension of the On-Line Filer. The district
office or service center may either (1)
withdraw its suspension letter, or (2) af-
firm the suspension.
.04 If the On-Line Filer receives a let-
ter affirming the suspension, the On-Line
Filer is entitled to an appeal, in writing, to
the Director of Practice.
.05 The appeal must be mailed or de-
livered to the district office or service
center that issued the suspension letter
within 30 calendar days of the date of the
letter affirming the suspension. The On-
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Line Filer’s written appeal must contain
detailed reasons, with supporting docu-
mentation, for reversal of the suspension.
.06 The district office or service center
whose decision to suspend is being ap-
pealed will, upon receipt of a written ap-
peal to the Director of Practice, forward
its file on the On-Line Filer to the Direc-
tor of Practice. The district office or ser-
vice center will also forward to the Direc-
tor of Practice the material described in
section 14.05 of this revenue procedure.
The district office or the service center
will forward these materials within 15
calendar days of the receipt of an On-Line
Filer’s written request for appeal.
.07 Failure to appeal within either of
the 30-day periods described in sections
14.02 and 14.05 of this revenue procedure
irrevocably terminates an On-Line Filer’s
right to an appeal.
SECTION 15. PILOT PROGRAMS
.01 The Service regularly conducts
pilot programs to introduce new technol-
ogy into the Form 1040 On-Line Filing
Program. These pilot programs are usu-
ally conducted within a limited geo-
graphic area or within a limited taxpayer
or On-Line Filer community. The Service
establishes rules for participating in these
pilot programs and embodies these rules
in an implementing document typically
referred to as a “Memorandum of Under-
standing” (MOU) or “Memorandum of
Agreement” (MOA). Pilot participants
must agree to the provisions of the imple-
menting document in order to participate
in the pilot program.
.02 An implementing document sup-
plements this revenue procedure, but does
not supersede it. Participants in a pilot
program remain subject to the provisions
of this revenue procedure unless the im-
plementing document specifically pro-
vides otherwise.
.03 A violation of a provision of an im-
plementing document is considered a vio-
lation of this revenue procedure and may
subject the participant to penalties and/or
suspension as provided in this revenue
procedure. See section 12.06(17) of this
revenue procedure.
SECTION 16. EFFECT ON OTHER
DOCUMENTS
Rev. Proc. 97–61, 1997–52 I.R.B. 50,
is superseded.
SECTION 17. EFFECTIVE DATE
This revenue procedure is effective
September 21, 1998.
SECTION 18. INTERNAL REVENUE
SERVICE OFFICE CONTACT
All questions regarding this revenue
procedure and the on-line filing aspects of
this program should be directed to the IRS
Headquarters Form 1040 On-Line Filing
Program Analyst. The telephone number
for this purpose is (202) 283-0265 (not a
toll-free number). The address for the
IRS Headquarters Form 1040 On-Line
Filing Program Analyst is OP:ETA:O:P,
5000 Ellin Road, Lanham, MD 20706.
SECTION 19. PAPERWORK
REDUCTION ACT
The collections of information con-
tained in this revenue procedure have
been reviewed and approved by the Of-
fice of Management and Budget in accor-
dance with the Paperwork Reduction Act
(44 U.S.C. 3507) under control number
1545–1513.
An agency may not conduct or sponsor,
and a person is not required to respond to,
a collection of information unless the col-
lection of information displays a valid
control number.
The collections of information in this
revenue procedure are in sections 4, 5, 8,
and 11 of the revenue procedure. This in-
formation is required by the IRS to imple-
ment the Form 1040 On- Line Filing Pro-
gram and to enable taxpayers to file their
individual income tax returns electroni-
cally through the Form 1040 On-Line Fil-
ing Program. The information will be
used to ensure that taxpayers receive ac-
curate and essential information regarding
the filing of their return through the Form
1040 On-Line Filing Program and to
identify the persons involved in the filing
of a return through the Form 1040 On-
Line Filing Program. The collections of
information are required to retain the ben-
efit of participating in the Form 1040 On-
Line Filing Program. The likely respon-
dents are business or other for-profit
institutions.
The estimated total annual reporting
and recordkeeping burden is 5,926 hours.
The estimated annual burden per re-
spondent/recordkeeper varies from eight
(8) minutes to 455 hours, depending on
individual circumstances, with an esti-
mated average of 423 hours (or approxi-
mately two (2) minutes per on-line elec-
tronically filed return). The estimated
number of respondents and recordkeepers
is 14.
The estimated annual frequency of re-
sponses is on occasion.
Books or records relating to a collec-
tion of information must be retained as
long as their contents may become mater-
ial in the administration of any internal
revenue law. Generally, tax returns and
tax return information are confidential, as
required by 26 U.S.C. § 6103.
1998–38 I.R.B.29September 21, 1998
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September 21, 1998301998–38 I.R.B.
Changes to Forms W–2 and W–3 Delayed Until Tax Year 2000
Announcement 98–84
BackgroundIn Announcement 98-–55, 1998–26 I.R.B. 41, the IRS asked for comments on proposed changes to Form
W–2, Wage and Tax Statement, and Form W–3, Transmittal of Wage and Tax Statements. These changes
had been proposed for the 1999 forms to be filed in 2000.
Changes Will Be Based on comments and suggestions received in response to Announcement 98–55, the IRS will postpone
Delayedmaking major revisions to Forms W–2 and W–3 until tax year 2000; that is, the year 2000 forms filed in
2001. However, see the changes to the 1999 forms noted below.
The Service is delaying implementation to adequately consider all comments received and to give the pay-
roll industry sufficient time to prepare for the changes. Many employers voiced concerns that changes to
Forms W-2 and W-3 would hinder efforts to update systems for the year 2000 date change.
1999 FormsThe 1999 Forms W–2 and W–3 will remain the same size and retain the same format as the 1998 forms.
W–2 and W–3However, the following changes will be made:
• The use of Form W–2, box 12, “Benefits included in box 1,” will be optional. However, employers must
continue to report the lease value of a vehicle provided to an employee either in box 12 or in a separate
statement to the employee.
• Form W–3 will be a single copy with separate instructions provided in the “Instructions for Forms W–2
and W–3.” The second page, “YOUR COPY,” is eliminated.
2000 Forms The IRS plans to announce and request comments on proposed changes to the year 2000 Forms W–2 and
W–2 and W–3W–3 early in 1999.
Part IV. Items of General Interest
Announcement 98–85
The application forms used to request
determination letters for ongoing quali-
fied employee benefit plans have been re-
vised. The revised forms are Forms 5300,
5303, 5307, and 6406. The new revision
date for all forms is July 1998 (7/98). Ex-
cept for the revision date, no significant
changes have been made. Therefore, the
current version of each form may con-
tinue to be used until further notice.
Schedule Q (Form 5300) has also been
revised as of July 1998 to incorporate the
changes made to IRC 401(a)(26) by the
Small Business Job Protection Act of
1996, and to clarify that item 5 of Sched-
ule Q, relating to coverage information,
must be completed for nonstandardized
safe harbor plans. Because of these modi-
fications, the July 1998 version of Sched-
ule Q must be used for applications sub-
mitted after December 31, 1998. Further,
effective immediately, Schedule Q is not
required to be filed for governmental
plans.
The revised forms and instructions will
be available after October 1, 1998, and
may be obtained from IRS distribution
centers by calling 1-800-TAX FORM after
that date. Except for Schedule Q (Form
5300), one copy of page one of the Form
5300 series applications is in scannable
format and printed in special red ink. For
these reasons, the Internet version of this
page may not be used instead of the origi-
nal. However, the forms may be computer
generated as described in Notice 90–38.
Notice 90–38 provides instructions for
generating an “OCR Data Sheet” that may
be substituted for the pink shaded copy of
page one of each application.
The Internet address is:http://www.irs.
ustreas.gov
Software developers having approval
to computer generate these forms need
not request reapproval if they choose to
update the revision date for the applica-
tion forms identified above. However,
Schedule Q (Form 5300) and the related
instructions must be changed to be word-
for-word identical to the revised schedule.
Because Schedule Q is not scannable, ad-
vance approval after making this modifi-
cation is not required.
The revision dates that are currently ac-
ceptable are:
Form NumberRevision date
53001/96 & 7/98
53031/96 & 7/98
53073/96 & 7/98
64061/96 & 7/98
Not revised at this time:
53101/96 & 6/97 (see Announce-
ment 97–81)
5310A6/97 (see Announce-
ment 97–81)
IRB 1998-38 9/16/98 11:49 AM Page 30

Deletions From Cumulative List
of Organizations Contributions
to Which Are Deductible Under
Section 170 of the Code
Announcement 98–86
The names of organizations that no
longer qualify as organizations described
in section 170(c)(2) of the Internal Rev-
enue Code of 1986 are listed below.
Generally, the Service will not disallow
deductions for contributions made to a
listed organization on or before the date
of announcement in the Internal Revenue
Bulletin that an organization no longer
qualifies. However, the Service is not
precluded from disallowing a deduction
for any contributions made after an orga-
nization ceases to qualify under section
170(c)(2) if the organization has not
timely filed a suit for declaratory judg-
ment under section 7428 and if the con-
tributor (1) had knowledge of the revoca-
tion of the ruling or determination letter,
(2) was aware that such revocation was
imminent, or (3) was in part responsible
for or was aware of the activities or omis-
sions of the organization that brought
about this revocation.
If on the other hand a suit for declara-
tory judgment has been timely filed, con-
tributions from individuals and organiza-
tions described in section 170(c)(2) that
are otherwise allowable will continue to
be deductible. Protection under section
7428(c) would begin on September 21,
1998, and would end on the date the court
first determines that the organization is
not described in section 170(c)(2) as more
particularly set forth in section
7428(c)(1).
For individual contributors, the maxi-
mum deduction protected is $1,000, with
a husband and wife treated as one contrib-
utor. This benefit is not extended to any
individual who was responsible, in whole
or in part, for the acts or omissions of the
organization that were the basis for revo-
cation.
Center for Affordable Housing
Baltimore, MD
Charlotte Chamber Foundation, Inc.
Charlotte, NC
Professional Football Alumni, Inc.
Metairie, LA
St. Matthew Publishing, Inc.,
f/k/a Church and Bible Study in the Home
by Mail, Inc.
Los Angeles, CA
Virginia Association of Non-Profit
Homes for the Aging
Glen Allen, VA
Section 7428(c) Validation of
Certain Contributions Made
During Pendency of Declaratory
Judgment Proceedings
This announcement serves notice to po-
tential donors that the organization listed
below has recently filed a timely declara-
tory judgment suit under section 7428 of
the Code, challenging revocation of its
status as an eligible donee under section
170(c)(2).
Protection under section 7428(c) of the
Code begins on the date that the notice of
revocation is published in the Internal
Revenue Bulletin and ends on the date on
which a court first determines that an or-
ganization is not described in section
170(c)(2), as more particularly set forth in
section 7428(c)(1). In the case of individ-
ual contributors, the maximum amount of
contributions protected during this period
is limited to $1,000.00, with a husband
and wife being treated as one contributor.
This protection is not extended to any in-
dividual who was responsible, in whole or
in part, for the acts or omissions of the or-
ganization that were the basis for the re-
vocation. This protection also applies
(but without limitation as to amount) to
organizations described in section
170(c)(2) which are exempt from tax
under section 501(a). If the organization
ultimately prevails in its declaratory judg-
ment suit, deductibility of contributions
would be subject to the normal limitations
set forth under section 170.
Larry Lea Ministries, Inc.
Sherman, TX
1998–38 I.R.B.31September 21, 1998
IRB 1998-38 9/16/98 11:49 AM Page 31

September 21, 1998321998–38 I.R.B.
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 1998-38 9/16/98 11:49 AM Page 32

1998–38 I.R.B.33September 21, 1998
Numerical Finding List
1
Bulletins 1998–29 through 37
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
98–76, 1998–32 I.R.B.64
98–77, 1998–34 I.R.B.30
98–78, 1998–34 I.R.B.30
98–79, 1998–34 I.R.B.31
98–80, 1998–34 I.R.B.32
98–81, 1998–36 I.R.B.35
98–82, 1998–35 I.R.B. 17
98–83, 1998–36 I.R.B. 36
Court Decisions:
2063, 1998–36 I.R.B. 13
2064, 1998–37 I.R.B. 4
Notices:
98–36, 1998–29 I.R.B. 8
98–37, 1998–30 I.R.B.13
98–38, 1998–34 I.R.B.7
98–39, 1998–33 I.R.B.11
98–40, 1998–35 I.R.B. 7
98–41, 1998–33 I.R.B.12
98–42, 1998–33 I.R.B.12
98–43, 1998–33 I.R.B.13
98–44, 1998–34 I.R.B.7
98–45, 1998–35 I.R.B.7
98–46, 1998–36 I.R.B. 21
98–47, 1998–37 I.R.B. 8
Railroad Retirement Quarterly Rate:
1998–31 I.R.B. 7
Proposed Regulations:
REG–209446–82, 1998–36 I.R.B. 24
REG–209813–96, 1998–35 I.R.B. 9
REG–246256–96, 1998–34 I.R.B.9
REG–104641–97, 1998–29 I.R.B. 9
REG–106177–97, 1998–37 I.R.B.33
REG–115446–97, 1998–36 I.R.B. 23
REG–116608–97, 1998–29 I.R.B. 12
REG–119227–97, 1998–30 I.R.B. 13
REG–110332–98, 1998–33 I.R.B.18
REG–110403–98, 1998–29 I.R.B.11
Revenue Procedures:
98–40, 1998–32 I.R.B. 6
98–41, 1998–32 I.R.B. 7
98–42, 1998–28 I.R.B. 9
98–43, 1998–29 I.R.B. 8
98–44, 1998–32 I.R.B. 11
98–45, 1998–34 I.R.B.8
98–46, 1998–36 I.R.B. 21
98–47, 1998–37 I.R.B. 8
98–49, 1998–37 I.R.B. 9
98–52, 1998–37 I.R.B. 12
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
98–37, 1998–32 I.R.B.5
98–38, 1998–32 I.R.B.4
98–39, 1998–33 I.R.B.4
98–40, 1998–33 I.R.B.4
98–41, 1998–35 I.R.B.6
98–42, 1998–35 I.R.B. 5
98–43, 1998–36 I.R.B. 9
98–44, 1998–37 I.R.B.4
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
8776, 1998–33 I.R.B.6
8777, 1998–34 I.R.B.4
8778, 1998–36 I.R.B. 4
8779, 1998–36 I.R.B. 11
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 1998-38 9/16/98 11:49 AM Page 33

September 21, 1998341998–38 I.R.B.
Finding List of Current Action on
Previously Published Items
1
Bulletins 1998–29 through 37
*Denotes entry since last publication
Revenue Procedures:
83–58
Obsoleted by
98–37, 1998–32 I.R.B. 5
Revenue Rulings:
57–271
Obsoleted by
98–37, 1998–32 I.R.B. 5
67–301
Modified by
98–41, 1998–35 I.R.B. 6
70–225
Obsoleted by
98–44, 1998–37 I.R.B. 4
71–277
Obsoleted by
98–37, 1998–32 I.R.B. 5
71–434
Obsoleted by
98–37, 1998–32 I.R.B. 5
71–574
Obsoleted by
98–37, 1998–32 I.R.B. 5
72–75
Obsoleted by
98–37, 1998–32 I.R.B. 5
72–120
Obsoleted by
98–37, 1998–32 I.R.B. 5
72–121
Obsoleted by
98–37, 1998–32 I.R.B. 5
72–122
Obsoleted by
98–37, 1998–32 I.R.B. 5
74–77
Obsoleted by
98–37, 1998–32 I.R.B. 5
75–19
Obsoleted by
98–37, 1998–32 I.R.B. 5
76–562
Obsoleted by
98–37, 1998–32 I.R.B. 5
77–214
Obsoleted by
98–37, 1998–32 I.R.B. 5
79–106
Obsoleted by
98–37, 1998–32 I.R.B. 5
83–113
Obsoleted by
98–37, 1998–32 I.R.B. 5
85–143
Obsoleted by
98–37, 1998–32 I.R.B. 5
Revenue Rulings—Continued
88–8
Obsoleted by
98–37, 1998–32 I.R.B. 5
88–76
Obsoleted by
98–37, 1998–32 I.R.B. 5
88–79
Obsoleted by
98–37, 1998–32 I.R.B. 5
93–4
Obsoleted by
98–37, 1998–32 I.R.B. 5
93–5
Obsoleted by
98–37, 1998–32 I.R.B. 5
93–6
Obsoleted by
98–37, 1998–32 I.R.B. 5
93–30
Obsoleted by
98–37, 1998–32 I.R.B. 5
93–38
Obsoleted by
98–37, 1998–32 I.R.B. 5
93–49
Obsoleted by
98–37, 1998–32 I.R.B. 5
93–50
Obsoleted by
98–37, 1998–32 I.R.B. 5
93–53
Obsoleted by
98–37, 1998–32 I.R.B. 5
93–81
Obsoleted by
98–37, 1998–32 I.R.B. 5
93–91
Obsoleted by
98–37, 1998–32 I.R.B. 5
93–92
Obsoleted by
98–37, 1998–32 I.R.B. 5
93–93
Obsoleted by
98–37, 1998–32 I.R.B. 5
94–5
Obsoleted by
98–37, 1998–32 I.R.B. 5
94–6
Obsoleted by
98–37, 1998–32 I.R.B. 5
94–30
Obsoleted by
98–37, 1998–32 I.R.B. 5
94–51
Obsoleted by
98–37, 1998–32 I.R.B. 5
94–79
Obsoleted by
98–37, 1998–32 I.R.B. 5
Revenue Rulings—Continued
95–2
Obsoleted by
98–37, 1998–32 I.R.B. 5
95–9
Obsoleted by
98–37, 1998–32 I.R.B. 5
97–37
Obsoleted by
98–39, 1998–33 I.R.B. 4
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 1998-38 9/16/98 11:49 AM Page 34

IRB 1998-38 9/16/98 11:50 AM Page 35

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 1998-38 9/16/98 11:50 AM Page 36