IRS UPDATES PROCEDURE FOR PREPARING ELECTRONIC/MAGNETIC MEDIA SUBMISSIONS FOR TAX YEAR 1995 INFORMATION RETURNS

1Rev. Proc. 95-29 supersedes Rev. Proc. 93-31 which was previously distributed to Institute members. (See Institute Memorandum to Tax Members No. 32-94, Operations Members No. 24-94, Closed-End Fund Members No. 23-94, Pension Members No. 19-94, Unit Investment Trust Committee No. 49-94, Accounting/Treasurers Committee No. 38-94 and Transfer Agent Advisory Committee No. 26-94, dated July 15, 1994.) June 27, 1995 TO: ACCOUNTING/TREASURERS COMMITTEE No. 23-95 CLOSED-END FUND MEMBERS No. 23-95 OPERATIONS MEMBERS No. 32-95 PENSION MEMBERS No. 34-95 TAX MEMBERS No. 33-95 TRANSFER AGENT ADVISORY COMMITTEE No. 36-95 UNIT INVESTMENT TRUST COMMITTEE No. 51-95 RE: IRS UPDATES PROCEDURE FOR PREPARING ELECTRONIC/MAGNETIC MEDIA SUBMISSIONS FOR TAX YEAR 1995 INFORMATION RETURNS ______________________________________________________________________________ The Internal Revenue Service ("IRS") has published Revenue Procedure 95-29, also released as IRS Publication 1220, which updates the requirements for filing IRS Forms 1099 and 5498 for tax year 1995 electronically or on magnetic media.1 This revenue procedure is 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 revenue procedures and publications, listed in Part A, Section 1 of Rev. Proc. 95-29, 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. The most significant new item in the revenue procedure is the announcement that tax year 1995 is the last year for which the IRS will accept filings made on 8-inch diskettes. Among the other relevant changes are the following: ! Filers submitting media to the IRS by means other than U.S. Postal Service are instructed that for purposes of meeting due dates the date of receipt will be the actual date received by the IRS rather than the mailing date. ! Transmitters requesting extensions of time to file for more than 50 payers are required to file the extension request magnetically or electronically. ! Specific addresses that include "Attn: Extension of Time Coordinator," are provided for magnetically filed requests for extension of time to file. ! Filers requesting an additional extension of time are advised to submit a second Form 8809, Request for Extension of Time to File Information Returns, before the end of the initial extension. ! Information has been added to the instructions for requesting an extension of time to furnish statements to recipients. The list of forms for which an extension may be requested has been expanded to include Forms 1042S. In the letter requesting the extension, the filer must specify that the request is for providing statements to recipients. ! A statement has been added to advise filers that a late-filing penalty will be assessed if returned files are not corrected and returned to the IRS within 45 days or if incorrect files are returned more than two times for replacement. If a replacement file is not submitted, a failure-to-file penalty will be assessed. ! Statements have been added to clarify that corrections filed after August 1 may be subject to the maximum penalty and corrections filed prior to August 1 may be subject to a lesser penalties. ! A note has been added to the instructions regarding Form 1099-R to advise filers that state and local income tax withheld may be reported in the Special Data Entries Field of the "B" Record. ! A note has been added advising filers to mail or send Form 4804, Transmittal of Information Returns, in lieu of faxing due to the increased volume of electronic filing. ! Electronic filers are advised that routine maintenance and backup are performed on the IRS computers at 4:00 a.m. Eastern time. 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. 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 Theresa Brice at (202) 326-5833. We will keep you informed of developments. Peter J. Cinquegrani Assistant Counsel - Tax