SEC. 2. REQUIREMENTS FOR — Internal Revenue Bulletin 1999-21

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

.01 All employers (including those who file on magnetic media or electronically 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, and 2), but not Copy A, may be expanded from the dimensions of the official form to allow space for conveying additional information, including additional entries required for Boxes 13 or 14, such as withholding from pay for health insurance, union dues, bonds, or charity. The re

quirement 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 the 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, and 2), 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.

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.

The MINIMUM allowable dimensions for employee copies of Forms W-2 are:

(a) 2.67 inches deep by 5.0 inches wide.

(b) horizontal or vertical format is permitted. NOTE: These minimum and maximum size specifications are for 1999 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 the SSA, is specified in Part B, section 1.05 above.

.02 The paper for all copies must be white. The substitute Copy B (or its equal), which 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 must be at least 9-pound paper (basis 17 � 22-500). .03 Interleaved carbon and chemical transfer paper for employee copies must meet the following standards:

All copies must be CLEARLY LEGIBLE;
All copies must have the capability to be photocopied; and
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. 1.14, above, for standards for chemical transfer paper for Copy A.)

.04 The following requirements govern the private printing of employee copies of Forms W-2. All substitutes must be a form, that contains boxes, box numbers, and box titles that, when applicable, match the IRS printed form. The employee copy of Forms W-2 (Copy C) must con- tain the note “ This information is being furnished to the Internal Revenue Ser- vice. If you are required to file a tax re- turn, a negligence penalty or other sanction may be imposed on you if this income is taxable and you fail to report it.” The placement, numbering, and size of certain boxes (the “core” information) is specified as follows:

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

Box 1 – Wages, tips, other compensa tion 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/Rail road retirement tips, and Box 6 – Medicare tax withheld/Rail

May 24, 1999 12 1999–21 I.R.B.

this data. The form title, number, or copy (Copy B, C, or 2) 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.

Boxes 1 through 6 each must be a minimum of 1 3/8 inches wide and 1/4 inch deep.
Other required boxes:

Employer identification number

(EIN),

Employer's name, address, and ZIP

code,

Employee's social security number,

and

Employee's name, address, and ZIP

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.
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 other compensation; or Advance EIC payments that are related to those items.
Employers who are required to report or withhold state income tax information are required to include the following boxes on substitute Forms W-2:

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 identification number 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.

The Tax Year (1999) MUST be clearly printed (in non-reflective black ink) on all copies of substitute Forms W2. 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. The use of 24 pt OCR-A font is recommended but not required.
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.
If a box for “Advance EIC” (Advance Earned Income Credit) payment (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.

Box 16 – State and Employer's state

the same code as assigned by the IRS for that type of item. (See the Reference Guide for Box 13 Codes in the 1999 Instructions for Forms W-2 and W-3. For example, employers reporting elective deferrals to a section 401(k) plan must enter in box 13 “D” and not “A”, even though it is the first or only item to go in this box. Use the codes shown with the dollar amount. On Copy A, Form W-2, do not enter more than three codes in this box. If more than three items need to be reported in box 13, use a separate Form W-2 to report the additional items (see Multiple forms in the 1999 Instructions for Forms W-2 and W-3.) However, employers may enter more than three codes in box 13 of Copies 1, 2, B, C, and D of Form W-2. Do not report in box 13 any items that are not listed as Codes A-T in the Form W-2 instructions. Do not report the same Federal tax data to the SSA on more than one Copy A, Form W-2.

For codes D,E,F,G,H, and S, if any elective deferrals, salary reduction amounts, or non-elective contributions to a section 457(b) plan during the year are make-up amounts under the Uniformed Service Employment and Reemploy- ment Rights Act of 1994 (USERRA) for a prior year, you must enter prior year contributions separately. You must enter the code, the year, and the amount. For example, elective deferrals to a section 401(k) plan are reported in box 13 as follows: D 1997 2250.00, D 1998 1250.00. The 1999 contribution does not require a year designation, enter it as D 7000.00.
If you are a military employer and provide your employee with basic housing, subsistence allowances, and combat zone compensation, report the amount in box 13, Form W-2, using code Q.
Employers contributions to an employees’ Medical Savings Account’s (MSA), must be reported in box 13, Form W-2, using code R.
An employee elective contribution to a salary reduction SIMPLE retirement account must be included in box 13, Form W-2, using code S. However, if the amount is contributed to a SIMPLE retirement that is part of a section 401(k) arrangement, that amount must be reported in box 13, Form W-2, using code D.
Amounts paid or expenses incurred by an employer to or for an employee for

identification number, Box 17 – State wages, tips, etc., and Box 18 – State income tax withheld. 11. Employers who are required to report or withhold local income tax information are required to include the following boxes on substitute Forms W-2:

Box 19 – Locality name Box 20 – Local wages, tips, etc., and Box 21 – Local income tax. 12. If state or local tax information is required, this information is also considered “core data.” The state and local information MUST be placed at the bottom of the form. See the exhibits at the end of this revenue procedure.

Other boxes on the IRS printed form (boxes 7 through 15) need not appear on substitute Forms W-2 provided to employees unless an employer has that item of information to report to an employee. For example, if an employee did not have social security tips (box 7), Allocated tips (box 8), or Advance EIC payment (box 9), the form could be printed without those boxes. However, if the employer had provided amounts for dependent care benefits, those amounts would be required to be reported separately and shown in a box labeled “Box 10, Dependent care benefits,” as on the IRS printed form and the exhibits in this revenue procedure.
Employers may provide multiple entries in box 13, but each entry must use

1999–21 I.R.B. 13 May 24, 1999

Coordinator OP:C:A:C:I 5000 Ellin Rd. Lanham, MD 20706 Any questions pertaining to Copy A, Form W-2, and Form W-3 should be forwarded to:

Social Security Administration Data Operations Center 1150 E. Mountain Drive Attn: Program Analyst Office, Room 449 Wilkes-Barre, PA 18702-7997 NOTE: You should allow at least 30 days for the IRS or the SSA to respond.

.02 Forms W-2 and W-3 are subject to annual review and possible change. Employers are cautioned against overstocking supplies of privately printed substitutes.

.03 Copies of the current year’s IRS printed Forms W-2 and W-3 and the in

qualified adoption expenses must be reported in box 13, Form W-2, using code T.

Form W-3 box 13 has been opened to allow third-party payers of sick pay to enter “Third-Party Sick Pay Recap”. This will help identify and expedite processing of those forms.
Employers may use box 14 for any other information they wish to give their employee. Each item must be labeled. Examples are union dues, health insurance premiums deducted, nontaxable income, voluntary after-tax contributions, or educational assistance payments.
If you are reporting prior year payments contributions under USERRA (see item 15 above), you may report box 14 make-up amounts for non-elective employer contributions, voluntary after-tax contributions, required employee contributions, and employer matching contributions. Report such amounts separately for each year.

.05 Substitute form for employees (Copies B, C, and 2 of Forms W-2) must meet the following requirements:

All copies of Form W-2 must clearly show the form number, the form title, and the tax year prominently displayed in one area of the form. The title of Form W-2 is “Wage and Tax Statement.” It is recommended (but not required) that this be located on the bottom left of Form W-2. The reference to the Department of the Treasury - Internal Revenue Service must be on all copies of Form W-2 provided to the employee. It is recommended (but not required) that this be located on the bottom right of Form W-2.
If the substitute forms are not la- beled as to the disposition of the copies, then written notification must be provided to each employee as specified below:

(a) The first copy of the form (Copy B) is filed with the employee's Federal tax return.

(b) The second copy of the form (Copy C) is for the employee's records.

(c) If applicable, the third copy (Copy 2) of the form is filed with the employee's state, city, or local income tax return.

If the substitute forms are labeled, the forms must contain the applicable description:

“Copy B, To Be Filed With Employee's Federal Tax Return,” and “Copy C, for employee's records.” It is recommended

(but not required) that this be located on the lower left of Form W-2. The designation “Form W-2,” is recommended (but not required) to be located on the lower left of Form W-2. “Department of the Treasury - Internal Revenue Service” is recommended (but not required) that this be located on the lower right of Form W-2.

Instructions similar to those contained on the back of Copies B and C of the official Form W-2 must be provided to each employee. Employers may modify or delete certain information in these instructions (such as modification for employees of railroads to cover Railroad Retirement Tier 1 and Tier 2 compensation and taxes). Employers are allowed to delete instructions 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.
You must notify employees who have no income tax withheld that they may be able to claim a tax refund because of the earned income credit (EIC). You will meet this notification requirement if you issue the official IRS Form W-2 with the EIC notice on the back of the employee’s copy (Copy B), or a substitute Form W-2 with the same statement. You may also meet the requirement by providing a substitute Form W-2 without the EIC notice and Notice 797, Possible Federal Tax Refund Due to the Earned Income Credit (EIC), or your own statement that contains the same wording. You also may change the font on Employee Copy C (back page only) so that the EIC notification and W-2 instructions may fit entirely on the back of Copy C. For more information about notification requirements, see Notice 1015 (formerly Pub. 1325), Employers Have You Told Your Employees About the Earned Income Credit (EIC)?.

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 the SSA must follow the requirements in Part B, Sec. 3, below for those paper submissions.