SEC. 2. REQUIREMENTS FOR

SUBSTITUTE FORMS FURNISHED TO EMPLOYEES (COPIES B, C, AND 2 OF FORMS W–2)

.01 All employers (including those who file on magnetic media and do not file a paper Copy A) must furnish employees with at least two copies of the Forms W–2 (three or more for employees required to file a state, city, or local income tax return). The dimensions of these copies (Copies B, C, etc.) but not copy A, may be expanded from the dimensions of the official form to allow space for conveying additional information, such as additional entries required for Boxes 13 or 14, withholding from pay for health insurance, union dues, bonds, charity, etc. The requirement that a maximum of three items are permitted in Box 13 of Form W–2 applies only to the paper Copy A that is filed with SSA. As long as sufficient space is provided on the substitute employee copies, as many items as needed may be placed in Box 13 or box 14. Also, on these copies (Copies B, C, etc.), the size of these boxes may be adjusted. (However, see the minimum sizes for certain boxes, below). This may permit the employer to eliminate other statements or notices that would otherwise be furnished to employees.

1 The MAXIMUM allowable dimensions for employee copies of Forms W–2 are:

(a) depth should be no more than 6.5 inches;

(b) width should be no more than 8.5 inches. 2 The MINIMUM allowable dimensions for employee copies of Forms W–2 are:

(a) 2.67 inches by 5.0 inches. (b) horizontal or vertical format is permitted.

NOTE: These minimum and maximum size specifications are for 1996 only and may change for future years. The maximum width of 8.5 inches is for employee copies of Form W–2 only. The width of the paper Copy A, submitted to SSA, is specified in Part B, section 1.05 above.

.02 Beginning in 1996, a barcode is required for copies B,C, and 2 of Forms W–2. This barcode will be electronically imaged on a Kodak I923 scanner and read by software developed for IRS by Loral Federal Systems. This three digit barcode will identify the form as a 1996 Form W–2. The 5 WA designation is to be shown at the bottom from the left to the center of the form in a 3 of 9 format printed in black ink with a density of 3.9 characters per inch and .4 inch high. Allow at least .125 inch unprinted area on all four sides of the barcode. IRS expects a variation in width of the barcode depending upon the type of output device being used. However, we expect the quality of the output device to produce legible print for both the barcode and the information entered on the forms (see Exhibit E).

.03 The paper for all copies should be white. The substitute Copy B (or its equal), that employees are instructed to attach to their Federal income tax return, must be at least 12 pound paper (basis 17 - 22–500), while the other copies furnished the employee should be at least 9-pound paper (basis 17 22–500). .04 Interleaved carbon and chemical transfer paper for employee copies must meet the following standards:

1 All copies must be CLEARLY LEGIBLE;

2 All copies must have the capability to be photocopied; and

3 Fading must not be of such a degree as to preclude legibility and the ability to photocopy.

In general, black chemical transfer inks are preferred; other colors are permitted only if the above standards are met. ‘‘Spot carbons’’ are NOT permitted (See Part B Sec. 1.15, above, for standards for chemical transfer paper for Copy A.)

.05 The following requirements govern the private printing of employee copies of Forms W–2. All substitutes must be a form, which contains boxes, box numbers, and box titles that, where applicable, match the IRS printed form. The placement, numbering, and size of

certain boxes (the ‘‘core’’ information) is specified as follows:

1 The items and box numbers that constitute the core data are:

Railroad Retirement Tips, and Box 6—Medicare tax withheld/ Railroad Retirement Tax Withheld. NOTE: Railroad employees may not be subject to Social Security coverage but are subject to Railroad Retirement Tax Tier I and II coverage. Railroad Compensation employers may make the above modifications to Forms W–2 but only for substitute Forms W–2 furnished to employees and not for any Copy A forms to be filed with SSA. The ‘‘core’’ boxes must be printed in the exact order on each line as on the IRS printed form (see the Exhibits at the end of this revenue procedure). Boxes 1 and 2 must be next to each other, with Boxes 3 and 4 below on the next line, and Boxes 5 and 6 on the line below Boxes 3 and 4.

2 The block of core data (Boxes 1 through 6) must be placed in the upper right of the form. Substitute employee copies of Form W–2, which are printed using a vertical format with dimensions smaller than the IRS printed form, may have the core data entirely on the top of the form (see Exhibit F). In no instance will boxes or other information be permitted to the right of the core data. Standard margins or a small amount of other blank space may appear to the top or right of this data. The form title, number, or copy (Copy B, C, etc.) may be at the top of the form. Also, a reversed or blocked-out area to accommodate a postal permit number or other postal considerations is permitted at the upper right of the form.

3 Boxes 1 through 6 must each be a minimum of 1 ³ ⁄8 inches wide and ¹ ⁄4 inch deep.

4 Other required boxes:

• Employer identification number (EIN),

Box 1—Wages, tips, other compensation, Box 2—Federal income tax withheld, Box 3—Social Security Wages/

Railroad Retirement Compensation, Box 4—Social Security tax withheld/

Railroad Retirement Tax Withheld, Box 5—Medicare wages and tips/

• Employer’s name, address, and ZIP code,

• Employee’s Social Security number, and

• Employee’s name, address, and ZIP code. These items are required to be present on the form and must be in boxes similar to those on the IRS printed form. However, they may be placed in any location, other than the top or upper right. The lettering system used on the IRS printed form (‘‘a’’ through ‘‘f’’) need not be used. The employer’s EIN may be included in the box for the employer’s name and address. If this is done, a separate box for the EIN is not required. The Control number box (Box ‘‘a’’ on the IRS printed form) is not required.

5 The Tax Year (1996) MUST be clearly printed on all copies of substitute Forms W–2. It is recommended (but not required) that this information be located to the right of the form title on the lower left of the Form W–2.

6 If applicable, Social Security tips MUST be shown separately from Social Security wages. A separate box is not required unless Social Security tips are to be reported.

Boxes 1 and 2 on Copy B are required to be outlined in bold 2-point rule (see Exhibit E) or highlighted in some manner to distinguish these boxes.

7 If a box for Advance EIC (Earned Income Credit) payments (Box 9) is present, the box must be outlined in bold 2-point rule or highlighted in some manner to distinguish this box. However, if no amounts are paid for Advance EIC, this box is not required and may be omitted by printers. Do not use Box 9 for any other purpose than reporting Advance EIC payments.

8 If Allocated tips (Box 8) are being reported for the individual employee (or class of employees that are being provided Forms W–2), it is recommended (but not required) that this box also be outlined in bold 2-point rule or highlighted on Copy B. However, if allocated tips are not being reported, this box may be omitted by printers.

9 If Form W–2 contains additional data concerning payroll deductions ( e.g., saving bonds withholding, retirement withholding, or payroll savings), there should be a special highlighting of the areas pertaining to Federal income tax withheld; wages, tips, and

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other compensation; or Advance EIC (Earned Income Credit) payments that are related to those items.

10 Employers who are required to report or withhold state income tax information are required to include the following boxes on substitute Forms W–2:

information in these instructions (except the EIC explanation) that do not apply to the employee. For example, if none of the employees have dependent care benefits (Box 10), the employer may delete the instructions for that item. Also, if an employer will only be reporting amounts for a 401(k) plan in Box 13, those instructions may be modified to cover only Section 401(k) contributions.

NOTE: Printers are cautioned that the rules set forth here (Part B. Sec. 2) apply to employee copies (Copies B, C, etc.) only. Paper filers who send Copy A of Form W–2 to SSA must follow the requirements in Part B. Sec. 3, below for those paper submissions.