SECTION 5. — Internal Revenue Bulletin 1996-25

OF A 1040NR FILER

.01 To ensure that complete returns are accurately and efficiently filed, a 1040NR Filer must comply with all publications and notices of the Service. Currently, these publications and notices include:

(1) Procedures for Magnetic Media Filing of U.S. Nonresident Alien Income Tax Returns, Form 1040NR (available from the Project Office); and

(2) File Specifications and Record Layouts for Magnetic Media Filing of U.S. Nonresident Alien Income Tax Returns, Form 1040NR (available from the Project Office).

.02 A 1040NR Filer must ensure that no other entity uses its assigned Magnetic Tape 1040NR Filer Identification Number (MTFIN). A MTFIN cannot be transferred by sale, loan, gift, or otherwise to another entity.

.03 A 1040NR Filer must maintain a high degree of integrity, compliance, and accuracy.

.04 A 1040NR Filer may only accept a return for transmitted media filing directly from a taxpayer or from a 1040NR Return Originator. .05 If a 1040NR Filer charges a fee for the submission of a transmitted media tax return, the fee may not be based on a percentage of the refund amount or on the amount of taxes saved. A 1040NR Filer may not charge a separate fee for Direct Deposit. See section 9 of this revenue procedure for a discussion of Direct Deposit.

.06 A 1040NR Filer is responsible for ensuring that stockpiling does not occur. Prior to official acceptance of the 1040NR Filer into the 1040NR Program, stockpiling means collecting returns from taxpayers. After official acceptance, stockpiling means:

(1) in the case of a 1040NR Return Originator, waiting for more than three days after receiving the necessary information to submit a return to a Transmitter, or

(2) in the case of a Transmitter, waiting for more than ten days after receiving the necessary information to submit a transmitted media tax return to the Service.

.07 A previously accepted 1040NR Filer must submit a revised Form MAR-8980 to update information when there is any change to:

(1) the Firm name or Doing Business As (DBA) name;

(2) the business mailing address; (3) the contact representative’s name or telephone number; or

(4) the transmitted media filing category.

.08 A 1040NR Filer must notify the Project Office within 14 days of discontinuing its participation in the 1040NR Program. .09 A 1040NR Filer must ensure that a transmitted media return is filed on or before the due date of the tax return. A tax return is not considered filed until the transmitted media portion of the tax return is acknowledged by the Service as accepted for processing and a completed and signed Form 8453–NR is received by the Service. However, if the transmitted media portion of a return is successfully 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 transmitted media portion of a return is initially transmitted on or shortly before the due

date and is ultimately rejected, but the taxpayer complies with section 5.13 of this revenue procedure, the return will be deemed timely filed. In the case of a balance due return, see section 10 of this revenue procedure for instructions on how to make a timely payment of tax.

.10 A 1040NR Filer must ensure that the return for any individual is received by the Service on or before:

(1) April 15 if the individual was an employee and received wages subject to U.S. federal income tax withholding; or

(2) June 15 if the individual did not receive such wages. However, section 2.05 of this revenue procedure provides that a transmitted media return cannot be filed after December 2, 1996.

.11 A 1040NR Return Originator must:

(1) comply with the procedures for completing Form 8453–NR described in section 7 of this revenue procedure;

(2) furnish the taxpayer with a copy of the signed Form 8453–NR and, in the case of a prepared or corrected return, the non-transmitted media portions of the return;

(3) retain the following material until the end of the calendar year in which the transmitted media return was filed, unless otherwise notified by the Service:

(a) a copy of the signed Form 8453–NR, Forms W–2, W–2G, Certain Gambling Winnings, and 1099–R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., and the non-transmitted media portion of the taxpayer’s return;

(b) a complete copy of the magnetically or electronically transmitted portion of the taxpayer’s return (may be retained on computer media) that can be readily and accurately converted into a transmitted media that the Service can process; and

(4) upon request by the Service for the materials described in section 5.11(3) of this revenue procedure, make those materials available to the Service at the business address from which a return was accepted for transmitted media filing; and

(5) identify the paid preparer (if any) in the appropriate field of the

transmitted media return, in addition to ensuring that the paid preparer signed Form 8453–NR. If Form 8453–NR is not signed by the paid preparer, the 1040NR Return Originator must attach a copy of pages one and two of a completed Form 1040NR that includes the paid preparer’s signature. These copies must be marked ‘‘COPY-DO NOT PROCESS’’ to prevent duplicate filings.

.12 A 1040NR Return Originator who is also the paid preparer of a transmitted media return must comply with § 1.6107–1(b). This section of the regulations describes the tax return materials that must be retained and the retention periods for these materials.

.13 If the transmitted media portion of a taxpayer’s return is acknowledged as rejected by the Service, and the reason for the rejection cannot be rectified by making nonsubstantive changes as described in section 6.02(3) of this revenue procedure, the 1040NR Return Originator must notify the taxpayer within one work day by mail that the taxpayer’s return has not been filed. If the taxpayer chooses to have the rejected return resubmitted on transmitted media, and the 1040NR Return Originator successfully works with the Project Office to correct the problems causing the return to be rejected, the return will be accepted as timely filed. A new Form 8453–NR may be required (see section 7 of this revenue procedure). However, even when no new Form 8453–NR is required, the Transmitter must submit a photocopy of the original Form 8453–NR with the rejected file or return and mark the photocopy ‘‘Retransmitted.’’ If the Project Office determines that a transmitted media return cannot be accepted for processing or the taxpayer chooses not to have the rejected return resubmitted on transmitted media, the taxpayer must file a paper return. If the due date (with regard to any extensions of time to file) of the return has passed, the taxpayer must file a paper return within ten days of the rejection along with an explanation of why the return is being filed after the due date. A paper return filed in good faith under any of these circumstances will be accepted as timely filed.

.14 A 1040NR Return Originator must use the taxpayer’s address in the transmitted media portion of the return. In addition, a 1040NR Return Originator must not put its address as the taxpayer’s address in the transmitted media portion of the return.

(1) transmit all transmitted media returns within ten days of receipt and forward the acknowledgement files to the 1040NR Return Originators or the Service Bureau within five days after receipt of the acknowledgments from the Service;

(2) match the acknowledgement file to the original transmission file and resubmit any return that was not acknowledged as accepted for processing after necessary corrections are made within seven days of receiving the acknowledgement file;

(3) contact the Project Office for assistance if a return has been rejected after three attempts, or if an acknowledgement is received for a return that was not in the original submission;

(4) ensure the security of all transmitted data;

.15 A Service Bureau must:

(1) deliver all transmitted media returns to a Transmitter or to the 1040NR Return Originator who gave the transmitted media returns to the Service Bureau within three days of receipt;

(2) retrieve the acknowledgement file from the Transmitter within one day of being informed of the receipt by the Transmitter;

(3) initiate the communication of the acknowledgement file to the 1040NR Return Originator (whether related or not) within one work day of retrieving the acknowledgement file;

(4) if the Service Bureau processes Form 8453–NR, send back to the 1040NR Return Originator any return and Form 8453–NR that needs correction, unless the correction is described in section 7.02(3) of this revenue procedure;

(5) accept tax return information only from a 1040NR Return Originator who is in good standing in the 1040NR Program;

(6) include its MTFIN and the 1040NR Return Originator’s MTFIN in the transmission of all tax return information;

(7) retain each acknowledgement file received from a Transmitter until the end of the calendar year in which the transmitted media return was filed;

(8) if requested, serve as a contact point between its client 1040NR Return Originator and the Service; and

(9) if requested, provide the Service with a list of each client 1040NR Return Originator.

.16 A Transmitter must:

(5) promptly correct any transmission error that causes a transmitted media return to be rejected; and

(6) retain an acknowledgement file received from the Service until the end of the calendar year in which the transmitted media return was filed.

(7) immediately contact the Project Office for further instructions if an acknowledgement of a transmitted media return’s acceptance for processing has not been received by the Transmitter within 14 days of transmission or if a Transmitter receives an acknowledgement for a return that was not transmitted on the designated transmission.

.17 A Transmitter who provides transmission services to another 1040NR Filer must, in addition to the items covered in section 5.16 of this revenue procedure, also:

(1) only accept a transmitted media return for transmission to the Service from an accepted 1040NR Filer;

(2) provide each client with the acknowledgement file for the transmitted return within five days after receipt of the acknowledgment from the Service; and

(3) use its assigned MTFIN when filing returns.

§ 301.7216–1(a). In general, that regulation provides that any preparer who discloses or uses any tax return information for a purpose other than preparing, assisting in preparing, or obtaining or providing services in connection with the preparation of a tax return is guilty of a misdemeanor. In addition, § 6713 of the Internal Revenue Code provides for civil penalties that may be assessed against a preparer who makes an unauthorized disclosure or use of tax return information.

(2) Under § 301.7216–2(h), disclosure of tax return information among accepted 1040NR Filers for the purpose of preparing a return is permissible. For example, it is permissible for a 1040NR Return Originator to pass on tax return information to a Service Bureau and/or a Transmitter for the purpose of having a transmitted media return formatted and filed with 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 guilty of a misdemeanor as described in paragraph (1) above.

.02 Other Preparer Penalties.

(a) the Total Tax amount, Total Payments amount, Refund amount, or the Amount You Owe shown on Form 8453–NR differs from the corresponding amount on the transmitted media return by no more than $7;

(b) the Total Income amount shown on Form 8453–NR differs from the corresponding amount on the transmitted media return by no more than $25; or

(4) If a 1040NR Return Collector, Service Bureau, or Transmitter alters the return information in a substantive way, rather than having the taxpayer alter the return, the 1040NR Return Collector, Service Bureau, or Transmitter will be considered to be an income tax return preparer for purposes of § 7701(a)(36).

(5) If a 1040NR Return Collector, Service Bureau, Transmitter, or the product of a Software Developer, goes beyond mechanical assistance, any of these parties may be held liable for income tax return preparer penalties. Rev. Rul. 85–189, 1985–2 C.B. 341, describes a situation where a Software Developer was determined to be an income tax return preparer and subject to certain preparer penalties.

.03 In addition to the above specified provisions, the Service reserves the right to assert all appropriate civil and criminal penalties, including preparer, nonpreparer, and disclosure penalties, against a 1040NR Filer as warranted under the circumstances.