Section 1. Addresses for Martinsburg Computing Center

Section 2. Telephone Numbers for Contacting IRS/MCC

2001–21 I.R.B. 1199 May 21, 2001

Part A. General

Revenue Procedures are generally revised annually to reflect legislative and form changes. Comments concerning this Revenue Procedure, or suggestions for making it more helpful, can be addressed to:

Internal Revenue Service Martinsburg Computing Center Attn: Information Reporting Program 230 Murall Drive Kearneysville, WV 25430

Sec. 1. Purpose

.01 The purpose of this Revenue Procedure is to provide the specifications for filing Forms 1098, 1099, 5498, and W-2G with IRS magnetically or electronically, using 1/2 -inch 9 track tape, IBM 3480, 3490, 3490E, 3590, 3590E, or AS400 compatible tape cartridges (including 4mm, 8mm & QIC), or 3 1/2-inch diskettes or electronically through the IRS FIRE System. Beginning in cal- endar year 2003 for tax year 2002, IRS/MCC will no longer process 1/2 -inch 9 track magnetic tape. This Revenue Procedure must be used for the preparation of Tax Year 2001 information returns and information returns for tax years prior to 2001 that are required to be filed. This Revenue Procedure must be used to prepare current and prior year information returns filed beginning January 1, 2002, and received by IRS/MCC or postmarked by December 15, 2002. Specifications for filing the following forms are contained in this Revenue Procedure.

(a) Form 1098, Mortgage Interest Statement (b) Form 1098-E, Student Loan Interest Statement (c) Form 1098-T, Tuition Payments Statement (d) Form 1099-A, Acquisition or Abandonment of Secured Property (e) Form 1099-B, Proceeds From Broker and Barter Exchange Transactions (f) Form 1099-C, Cancellation of Debt (g) Form 1099-DIV, Dividends and Distributions (h) Form 1099-G, Certain Government and Qualified State Tuition Program Payments (i) Form 1099-INT, Interest Income (j ) Form 1099-LTC, Long-Term Care and Accelerated Death Benefits (k) Form 1099-MISC, Miscellaneous Income (l) Form 1099-MSA, Distributions From an MSA or Medicare+Choice MSA (m) Form 1099-OID, Original Issue Discount (n) Form 1099-PATR, Taxable Distributions Received From Cooperatives (o) Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. (p) Form 1099-S, Proceeds From Real Estate Transactions (q) Form 5498, IRA Contribution Information (r) Form 5498-MSA, MSA or Medicare+Choice MSA Information (s) Form W-2G, Certain Gambling Winnings .02 Specifications for filing Forms W-2, Wage and Tax Statements, magnetically/electronically are available from the Social Security Administration (SSA) only . Filers can call 1-800-SSA-6270 to obtain the phone number of the SSA Employer Service Liaison Officer for their area.

.03 IRS/MCC does not process Forms W-2. Paper and/or magnetic media for Forms W-2 must be sent to SSA. IRS/MCC does, however, process waiver requests (Form 8508) and extension of time to file requests (Form 8809) for Forms W-2 and requests for an extension of time to provide the employee copies of Forms W-2.

.04 Generally, the box numbers on the paper forms correspond with the amount codes used to file magnetically/electronically; however, if discrepancies occur, the instructions in this Revenue Procedure govern.

.05 This Revenue Procedure also provides the requirements and specifications for magnetic media or electronic filing under the Combined Federal/State Filing Program.

.06 The following Revenue Procedures and publications provide more detailed filing procedures for certain information returns: (a) 2001 “General Instructions for Forms 1099, 1098, 5498, and W-2G” and individual form instructions. (b) Publication 1179, Rules and Specifications for Private Printing of Substitute Forms 1096, 1098, 1099, 5498, and W-2G (c) Publication 1239, Specifications for Filing Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips, Magnetically or Electronically (d) Publication 1187, Specifications for Filing Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding,

Magnetically or Electronically (e) Publication 1245, Specifications for Filing Form W-4, Employee’s Withholding Allowance Certificate, Magnetically or Electronically. .07 This Revenue Procedure supersedes Rev. Proc. 2000–25 published as Publication 1220 (Rev. 7–2000), Specifications for Filing Forms 1098, 1099, 5498, and W-2G Magnetically or Electronically.

May 21, 2001 1200 2001–21 I.R.B.

.08 Refer to Part A, Sec. 17, for definitions of terms used in this publication.

Sec. 2. Nature of Changes—Current Year (Tax Year 2001 )

.01 In this publication, all pertinent changes for Tax Year 2001 are emphasized by the use of italics . Portions of text that require special attention have been bolded. Filers are always encouraged to read the publication in its entirety.

.02 Programming Changes

a. General

(1) The state of Connecticut has been added to the Combined Federal State Filing Program. See Part A, Sec. 16, Table 1 for a list of all participating states and their filing codes. (2) The state of Tennessee has withdrawn from the Combined Federal State Filing Program. (3) IRS/MCC is accepting 3590 and 3590E tape cartridges for the filing of information returns. (4) Beginning in calendar year 2003 for Tax Year 2002, 9 track magnetic tape will no longer be an acceptable type of media for submitting Information Returns to IRS/MCC.

b. Programming Changes - Transmitter “T” Record

(1) For all forms, Payment Year, Field Positions 2-5, must be incremented to update the four-digit report year (2000 to 2001 ),

unless reporting prior year data. (2) A Vendor Indicator was added in Field Position 376 to indicate whether software was purchased from an outside source or

produced in-house. (3) A Vendor Name field was added to Field Positions 377-416. (4) A Vendor Mailing Address field was added to Field Positions 417-456. (5) A Vendor City field was added to Field Positions 457-496. (6) A Vendor State field was added to positions 497-498. (7) A Vendor ZIP Code field was added to Field Positions 499-507. (8) A Vendor Contact Name field was added to Field Positions 508-547. (9) A Vendor Contact Phone Number and Extension field was added to Field Positions 548-562 (10) A Vendor Contact Email Address was added to Field Positions 563-582.

c. Programming Changes - Payer “A” Record

(1) For all forms, Payment Year, Field Positions 2-5, must be incremented to update the four-digit report year (2000 to 2001 ),

unless reporting prior year data. (2) Form 1098-T – Tuition Payments Statement, Field Positions 28-39: Amount Code 1 has been renamed Qualified tuition and

related expenses. (3) Form 1098-T – Tuition Payments Statement, Field Positions 28-39: Amount Code 2 has been renamed Reimbursements or

refunds. (4) Form 1098-T – Tuition Payments Statement, Field Positions 28-39: Amount Code 3 was added for Scholarships and grants. (5) Form 1099-DIV – Dividends and Distributions, Field Positions 28-39: Amount Code 4 was changed to Qualified 5-year gain. (6) Form 1099-DIV – Dividends and Distributions, Field Positions 28-39: Amount Code 5 was changed to Unrecaptured section

1250 gain. (7) Form 1099-DIV – Dividends and Distributions, Field Positions 28-39: Amount Code 6 was changed to Section 1202 gain. (8) Form 1099-DIV – Dividends and Distributions, Field Positions 28-39: Amount Code 7 was changed to Nontaxable distributions. (9) Form 1099-DIV – Dividends and Distributions, Field Positions 28-39: Amount Code 8 was changed to Federal income tax withheld. (10) Form 1099-DIV – Dividends and Distributions, Field Positions 28-39: Amount Code 9 was changed to Investment expenses. (11) Form 1099-DIV – Dividends and Distributions, Field Positions 28-39: Amount Code A was changed to Foreign tax paid. (12) Form 1099-DIV – Dividends and Distributions, Field Positions 28-39: Amount Code B was changed to Cash liquidation dis tribution. (13) Form 1099-DIV – Dividends and Distributions, Field Positions 28-39: Amount Code C was added for Noncash liquidation

distribution. (14) Form 5498 – IRA Contribution Information, Field Positions 28-39: Amount Code 4 was changed to Recharacterized contri butions. (15 Form 5498 – IRA Contribution Information, Field Positions 28-39: Amount Code 5 was changed to Fair market value of

account. (16) Form 5498 – IRA Contribution Information, Field Positions 28-39: Amount Code 6 was changed to Life insurance cost

included in Amount Code 1.

2001–21 I.R.B. 1201 May 21, 2001

(17) Form 5498 – IRA Contribution Information, Field Positions 28-39: Amount Code 8 was changed to SEP contributions. (18) Form 5498 – IRA Contribution Information, Field Positions 28-39: Amount Code 9 was changed to SIMPLE contributions. (19) Form 5498 – IRA Contribution Information, Field Positions 28-39: Amount Code A was changed to Roth IRA contributions. (20) Form 5498 – IRA Contribution Information, Field Positions 28-39: Amount Code B added for Education IRA contributions.

d. Programming Changes — Payee “B” Record

(1) For all forms, Payment Year, Field Positions 2-5, must be incremented to update the four-digit report year (2000 to 2001 ),

unless reporting prior year data. (2) Form 1098-E – Student Loan Interest – Field Position 547 was added to indicate if Amount Code 1 includes loan origination

fees and/or capitalized interest. (3) Form 1099-LTC – Long-Term Care and Accelerated Death Benefits – Field Position 697 was added to indicate whether ben efits were from a qualified long-term care insurance contract. (4) Form 1099-R – Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.

• Field Positions 545-546 – The following codes have been added: (a) Code N – Recharacterized IRA contribution made for 2001. (b) Code T – Roth IRA distribution, exception applies. The following codes have been changed : (a) Code J – Early distribution from a Roth IRA, no known exception. (b) Code R - Recharacterized IRA contribution made for 2000.

.03 Editorial Changes

a. Form 4804, Transmittal of Information Returns Reported Magnetically, has undergone a major revision. Due to the revision,

Form 4802, the continuation form, is no longer needed and is now obsolete. b. The Form 4804 is not required for Electronic filing. Electronic filers will be prompted to create a PIN when they first logon

to transmit their information returns. See Part C, Sec. 7, for additional details. Form 4804 is still required for magnetic media filers (tape, tape cartridge and diskette). FILERS OF MAGNETIC MEDIA MUST SEND THE FORM 4804 WITH THEIR MEDIA. c. IRS/MCC no longer returns media in need of replacement. All references to returning media for replacement were deleted. Revised

language informs filers that IRS/MCC will send correspondence requesting replacement files. The correspondence includes Form 9267, Media Tracking Slip, a listing of sample errors and a letter detailing the problem(s) encountered during processing. d. The MCC Information Reporting Program (IRP) Call Site now has email service. Filers can email technical tax law questions

relative to information returns and magnetic media/electronic filing and receive written responses. (Do not submit confidential information, such as employer identification numbers, in your correspondence.) This service is accessed through mccirp@irs.gov . For more information, contact the MCC/IRP Call Site at 304-263-8700. e. Additional common problems were added to Part C, Sec. 12, .03 and .04. The items detail some of the more frequently asked

technical questions concerning dialing into the FIRE System. Filers are urged to refer to this area, if they experience difficulties before calling IRS/MCC. f. Forms 1099-MSA and 5498-MSA were affected by Public Law 106-554, enacted on December 21, 2000, which changed the

name of medical savings accounts to Archer MSAs. The 2001 forms and instructions do not reflect this change. These products were released for print prior to enactment of the new law. g. For special rules for reporting payments made through foreign intermediaries and foreign flow-through entities on Form 1099,

see 2001 “General Instructions for Forms 1099, 1098, 5498, and W-2G” page GEN-12.

Sec. 3. Where To File and How to Contact the IRS, Martinsburg Computing Center

.01 All information returns filed magnetically or electronically are processed at IRS/MCC. Files containing information returns and requests for IRS magnetic media and electronic filing information should be sent to the following address:

IRS-Martinsburg Computing Center Information Reporting Program 230 Murall Drive Kearneysville, WV 25430

.02 All requests for an extension of time to file information returns with IRS/MCC or to the recipients, and requests for undue hardship waivers filed on Form 8508 should be sent to the following address:

IRS-Martinsburg Computing Center Information Reporting Program Attn: Extension of Time Coordinator 240 Murall Drive Kearneysville, WV 25430

May 21, 2001 1202 2001–21 I.R.B.

.03 The telephone numbers for magnetic media inquiries or electronic submissions are: