SECTION 2. BACKGROUND AND

CHANGES

.01 Section 1.6012–5 of the Income Tax Regulations provides that the Commissioner may authorize the use, at the option of a person required to make a return, of a composite return in lieu of any form specified in 26 CFR Part 1 (Income Tax), subject to the conditions, limitations, and special rules governing the preparation, execution, filing, and correction thereof as the Commissioner may deem appropriate.

.02 For purposes of this revenue procedure, a magnetically or electronically filed Form 1040NR is a composite return consisting of data transmitted on magnetic tape, floppy disk, or via modem (‘‘transmitted media’’), and certain paper documents. The non-transmitted media paper portion of the return consists of a Form 8453–NR, U.S. Nonresident Alien Income Tax Declaration for Magnetic Media Filing, and other paper documents that cannot be filed on transmitted media. Form 8453–NR must be received by the Service before any composite return is complete. A 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–NR.

.03 The Magnetic Media Project Office (‘‘Project Office’’, see section 17 of this revenue procedure for address and telephone numbers) will periodically issue a list of the forms and schedules that can be magnetically or electronically filed, as well as forms, schedules, and other information that cannot be magnetically or electronically filed.

.04 A tax return with a zero balance, balance due, or refund due may be filed on transmitted media.

.05 A tax return cannot be filed on transmitted media after December 2, 1996, notwithstanding the fact that the taxpayer has been granted an extension to file beyond that date. Form 2688, Application for Additional Extension of Time To File U.S. Individual Income Tax Return, cannot be filed on transmitted media.

.06 An amended tax return cannot be filed on transmitted media. 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.

.07 Upon request, the Project Office will provide technical information ( i.e., file specifications, record layouts, and testing procedures) for transmitted media filing.

.08 This revenue procedure updates Rev. Proc. 95–22, which applied to the 1040NR Program for the 1995 filing season. The updates include changes in the 1040NR Program for the 1996 filing season, clarifications of prior 1040NR Program statements, and additional guidance derived from other Service documents that relate to the 1040NR Program. Some of these updates are:

(1) Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return, may now be filed on transmitted media;

(2) a 1040NR Filer must complete the necessary testing at least 30 days before the 1040NR Filer may submit a tax return (section 4.03);

(3) a 1040NR Filer may not base a fee for submission of transmitted media returns on the amount of taxes saved (section 5.05);

(4) a 1040NR Filer must submit a revised Form MAR–8980, Application for Magnetic Media Filing of Form 1040NR, if there is a change to the 1040NR Filer’s business address (section 5.07);

(5) a 1040NR Filer must notify the Service when it discontinues participation in the 1040NR Program (section 5.08);

(6) additions are provided to the responsibilities of a 1040NR Return Originator (sections 5.11(5) and 5.13);

(7) a Software Developer may not incorporate into its software a Serviceassigned production password (section 5.18);

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(4) TRANSMITTER. A ‘‘Transmitter’’ accepts a transmitted media tax return from a 1040NR Filer and submits the return directly to the Service.

.03 The 1040NR Filer categories are not mutually exclusive. For example, a 1040NR Return Originator can, at the same time, be considered a Transmitter, Software Developer, or Service Bureau depending on the function(s) performed.