IRS UPDATES PROCEDURE FOR PREPARING ELECTRONIC/MAGNETIC MEDIA SUBMISSIONS FOR TAX YEAR 1994 INFORMATION RETURNS

1Rev. Proc. 94-43 supersedes Rev. Proc. 93-31 which was previously distributed to Institute members. (See Institute Memorandum to Tax Members No. 29-93, Operations Members No. 28- 93, Closed-End Fund Members No. 22-93, Pension Members No. 29-93, Unit Investment Trust Committee No. 33-93, Accounting/Treasurers Committee No. 25-93 and Transfer Agent Advisory Committee No. 41- 93, dated August 13, 1993.) July 15, 1994 TO: ACCOUNTING/TREASURERS COMMITTEE NO. 38-94 CLOSED-END FUND MEMBERS NO. 23-94 OPERATIONS MEMBERS NO. 24-94 PENSION MEMBERS NO. 19-94 TAX MEMBERS NO. 32-94 TRANSFER AGENT ADVISORY COMMITTEE NO. 26-94 UNIT INVESTMENT TRUST COMMITTEE NO. 49-94 RE: IRS UPDATES PROCEDURE FOR PREPARING ELECTRONIC/MAGNETIC MEDIA SUBMISSIONS FOR TAX YEAR 1994 INFORMATION RETURNS __________________________________________________________ The Internal Revenue Service ("IRS") has published Revenue Procedure 94-43, also released as IRS Publication 1220, which updates the requirements for filing IRS Forms 1099 and 5498 for tax year 1994 electronically or on magnetic media.1 This revenue procedure is to be used for electronic filings and for submissions on magnetic media (including 1/2-inch magnet tape); IBM 3480/3490 compatible tape cartridges and 5 1/4-, 3 1/2- and 8-inch diskettes. Other reveneue procedures and publications, listed in Part A, Section 1 of Rev. Proc. 94-43, provide more detailed filing procedures for certain information returns. Section 2 of Part A describes the programming and editorial changes made by the new revenue procedure. However, the IRS expressly recommends that filers read the revenue procedure in its entirety to ensure proper reporting. Among the relevant changes are the following: . a hardcopy file print is not acceptable as a test for approval for the Combined Federal/State Filing Program; . filers who transmit data electronically must send a signed Form 4804 the same day as the electronic transmission; . filers should attach an external label to each piece of media submitted. Form 5064 or a transmitter generated substitute may be used; . filers submitting an electronic request for an extension of time to file to must send a signed Form 8809 the same day as the transmission submission; . filers submitting a magnetically or electronically filed request for an extension of time to file are encouraged to read Part G, Sec. 1 in it entirety for additions or changes in guidelines and format; . transmitters should not to submit tax year 1994 extension of time to file requests magnetically or electronically before January 1, 1995; . if a filer submitted its first request for an extension of time to file magnetically or electronically and additional time to file is needed, a new file must be submitted to request the additional time; . a request for second extension of time to file will only be approved in cases of extreme hardship or catastrophic event; . for Tax Year 1995 (returns due to be filed in 1996), transmitters requesting extensions of time to file for more than 50 payers will be required to file the extension request magnetically or electronically; As in the past, the revenue procedure provides useful information for determining the appropriate name/taxpayer identification number combination for an account. Section 14 of Part A provides guidelines for the appropriate Social Security or employer identification number for different types of accounts. Section 7 of Part B includes information (on pages 61 and 62) regarding the "name control" that can be used to help ensure that the name and corresponding taxpayer identificaton number for an account will "match" and prevent the possible issuance of a backup withholding notice. In addition, payors are encouraged to review Part A, Section 19 (Major Problems Encountered) before submitting data. Anyone interested in receiving a copy of this revenue procedure should call the Institute's Michelle Nasuti at (202) 326- 5836. We will keep you informed of developments. Peter J. Cinquegrani Assistant Counsel - Tax