SEC. 7. APPROVAL

.01 Basic Requirements. Preparers who desire to file substitute privately designed and printed tax forms and/or computer-generated and computerprepared tax forms must develop such substitutes using these guidelines. These substitutes, unless excepted by revenue procedure, must be approved by the Service before being filed. A software developer who wants to market, distribute, or use for its own clientele, a tax preparation package featuring the 1040PC tax return format, must first file an application to participate in the program. Only after successfully fulfilling test requirements will a developer’s software package be accepted by the Service to produce 1040PC tax returns.

.02 Requests for Approval 1 The Service cannot grant final approval of your substitute form until the official form has been published. However, the Service usually releases advance proof copies of selected major tax forms that are subject to further changes and OMB approval before their release in final format for printing and distribution to the public. We encourage submission of proposed substitutes of these advance proof forms, and will grant conditional approval based solely on these early proofs. These advance proofs are subject to significant change before forms are finalized. If these advance proofs are used as the basis for your substitute forms, you will be responsible for subsequently updating your final forms to agree with the final official version before use. These revisions need not be submitted for further approval. Conditional approval will not be granted after the final version of an official form is published.

2 Submission of substitute forms must be based on the appropriate rev

enue procedures. There is a list in Part A, Section 15. Any alteration of forms must be within the limits acceptable to the Service. It is possible that, from one filing period to another, a change in law or a change in internal need (processing, audit, compliance, etc.) may change the allowable limits for the alteration of the official form.

3 When specific approval of any substitute form (other than those specified in 7.02.4 and 7.02.5 below, or forms for which different instructions are published in other revenue procedures) is desired, a sample of the proposed substitute should be forwarded for consideration by letter to the Internal Revenue Service, Attention: Substitute Forms Program Coordinator, T:FP:S, Room 2712, 1111 Constitution Ave. NW, Washington, DC 20224. To expedite multiple forms approval, we prefer that your proposed forms be submitted in separate sets by return. For example, Forms 1040 and their normally related schedules or attachments should be submitted separately from Forms 1120, 1065, 5500 Series, etc., if at all possible. Schedules and forms (e.g., Forms 3468, 4136, etc.) that can be used with more than one type of return (e.g., 1040, 1041, 1120, etc.) should be submitted only once for approval, regardless of the number of different tax returns with which they may be ultimately associated. In addition, all pages of a multipage form or return should be submitted in the same package.

4 The following forms should not be submitted to IRS (or the Social Security Administration, if applicable) for specific approval: W–2, W–3, 1096, 1098, 1099 Series, 5498, and W–2G. If you are uncertain of any specification set forth in the appropriate revenue procedures and want that specification clarified, you may submit a letter citing the specification in question, your interpretation of that specification, and an example of the form to the following addresses:

Forms W–2 and W–3: Internal Revenue Service Attn: Substitute Form W–2 Coordinator,

CP:CO:SC:A 1111 Constitution Avenue, NW, Room 7238 Washington, DC 20224

1111 Constitution Avenue, NW Washington, DC 20224

5 For Form 1040PC approval, see Part B, Section 14. For approval of OCR scannable application forms for Employee Plans, see Part B, Section 21.

6 As no Service office except the ones specified in this procedure are authorized to approve substitute forms, unnecessary delay may result if forms are sent elsewhere for approval. All forms submitted to any other office must be forwarded to the appropriate office for formal control, review, and official approval. No IRS office is authorized to allow deviations from this revenue procedure.

7 The Service does not review or approve the logic of specific software programs, nor confirm the calculations entered on forms output from these programs that are submitted for approval. The accuracy of the program itself remains the responsibility of the software package developer, distributor, or user. The Substitute Forms Program is primarily concerned with the prefiling quality review of the final forms output, produced by whatever means, that are expected to be processed by IRS field offices. For the above reasons, it is suggested that you submit forms without including any ‘‘taxpayer’’ information such as names, addresses, monetary amounts, etc.

.03 When to Send Proposed Substitutes. Proposed substitutes which are required to be submitted per this Revenue Procedure should be sent to the address listed in .02 above, as much in advance of the filing period for the form as possible. This is to allow adequate time for analysis and response.

.04 Accompanying Statement. When the sample substitute is submitted, there should be an accompanying statement that lists the form number of each substitute requested and detail those items that deviate from the official form in position, arrangement, appearance, line numbers, additions, deletions, etc. Included with each of the items should be a detailed reason or justification for the change and an approximation of the number of forms expected to be filed.

.05 Approval/Non-Approval Letter. The Service will send either a formal letter of approval/non-approval or, when provided by the originator, a checksheet for the forms included in the package, provided no lengthy explanations are required. Approval letters may contain qualifications for use of the substitutes.

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Non-approval letters may specify the changes required for approval, but also may require resubmission for approval. Telephone contact is used when possible.

.06 Duration of Approval 1 Most signature tax returns and many of their schedules and related forms have the tax (liability) year printed in the upper right hand corner. Approvals for these forms are usually good for one calendar year (January through December of the year of filing) or, in the case of corporation tax forms (with the exception noted below), for the remainder of the quarters in the calendar year. Quarterly tax forms in the 94X series require approval for any quarter in which the form has been revised.

2 If the preprinted year is the only change made to a form described in 1 above, the form for the upcoming year is not subject to review. Otherwise each new filing season requires a new approval. Limited continued use of a change approved for one tax year may be allowed for the same form in the following tax year. See .07 below for the limitations and for other requirements. Examples of such changes are the use of abbreviated words, revised form spacing, compressed text lines, shortened captions, etc., which do not change the consistency of lines or text on the official forms.

3 Other forms may have expiration dates displayed in the upper right hand corner. Approval of these forms is usually valid through the expiration date. Occasionally, these forms or their instructions will be revised before the expiration date. If substantial change is made to the form, new substitutes must be submitted for approval. If the expiration date changes due to revisions to the instructions, minor editorial changes to the form or to extend the date without revision to the form, it is not subject to review.

.07 Limited Continued Use of an Approved Change

1 If you received written approval of a previous tax year substitute form governed by this revenue procedure and continue to use the approved change on your current tax year substitute form, you may revise your form to include this change and, without additional written approval, use it as a current tax year substitute form, provided you comply with the requirements in this revenue procedure. See exception in 3 below.

Forms 1096, 1098, 1099 Series, 5498,

and W–2G: Internal Revenue Service Attn: IRP Coordinator, T:S:P:S

(Salubria Building)

2 If you received written approval for a specific change on a specific form last year, such as deleting the vertical lines used to separate dollars and cents on some forms and schedules e.g., Schedules A & B of Form 1040, you may again make the same change on the same form this year if the item changed is present on this year’s official form. Thus, the change allowed in last year’s approved substitute Schedule A, for example, can be continued in your new substitute for this year. The new substitute does not have to be sent to the IRS and written approval is not required. However, the new substitute must conform to the official current year IRS form in other respects: date, Office of Management and Budget (OMB) approval number, attachment sequence number, Paperwork Reduction Act Notice Statement, arrangement, item caption, line number, line reference, data sequence, etc. It must also comply with this revenue procedure—which may have eliminated, added to, or otherwise changed the guideline(s) which affected the change approved last year. Additionally, you will be bound by the ‘‘Agreement’’ in Section 21.

3 Exception: Those written approvals which state that the approved change or form would not be allowed in any other tax year, or for a temporary, limited, or interim approval pending resolution of a failure to meet one or more Serviceprescribed requirements.

4 This authorization for continued use of an approved change is limited to the continuation of design logic from an immediately prior tax year substitute form to a current tax year substitute form.

.08 Requested Copies. Generally, you must send us one copy of each form being submitted for approval. However if you are producing forms for different computer systems (e.g., IBM (or compatible) vs. MacIntosh) or different types of printers (laser vs. dot matrix), and these forms differ significantly in appearance, submit one copy for each type of system or printer.

.09 Responsibility. Following the receipt of initial approval for a substitute forms package, or of a software output program to print substitute forms, it is the responsibility of the originator (designer or distributor) to provide each subsequent client firm or individual with the pertinent Service forms requirements which must be met for continuing acceptability. Examples of this responsibility include the use of prescribed print

paper, font size, legibility, state tax data deletion, the legal requirements of the Paperwork Reduction Act Notice for informing all users of substitute forms of the official use and collection requirements stated in the instructions for the official IRS forms, completion of documents, etc.

.10 Source code (formerly) Forms Approval Number. The Substitute Forms Program Coordinator Office, T:FP:S, will assign a unique source code to each firm that submits substitute paper forms for approval. This will be a permanently assigned control number that should be used on every form created by a particular firm.

1 This number should be printed at the bottom left margin area on the first page of every approved substitute paper form.

2 The source code for paper returns consists of three alpha characters.

3 This number should not be used on optically scanned (OCR) forms, except for certain specified Forms 1040–ES.