☛ Note: Filers should never send anything to IRS/MCC marked “Replacement” unless…

replacement file in writing or via the FIRE System .

.02 Magnetic Media filers will receive a Media Tracking Slip (Form 9267), listing, and letter detailing the reason(s) their media could not be processed. It is imperative that filers maintain backup copies and/or recreate capabilities for their information return files. Open all correspondence from IRS/MCC immediately .

.03 When possible, sample records identifying errors encountered will be provided with the returned information. It is the responsibility of the transmitter to check the entire file for similar errors .

.04 Before sending replacement media make certain the following items are in place :

(a) Make the required changes noted in the enclosed correspondence and check entire file for other errors. (b) Code Transmitter “T” record, in positions 21–22 for replacement. See Part D, Sec. 3. (c) Code Payer “A” record in position 49 with “1” for replacement file. See Part D, Sec. 4. (d) Enclose the Form 9267, Media Tracking Slip, with your replacement media. (e) Label your Media “Replacement Data” and indicate the appropriate Tax Year. (f) Complete a new Form 4804 if any of your information has changed. .05 Replacement files must be corrected and returned to IRS/MCC within 45 days from the date of the letter. Refer to Part B, Sec. 5 .05, for procedures for files submitted electronically. A penalty for failure to return a replacement file by the due date will be assessed if the files are not corrected and returned within the 45 days or if filers are notified by IRS/MCC of the need for a replacement file more than two times . A penalty for intentional disregard of filing requirements will be assessed if a replacement file is not received. (For penalty information, refer to the Penalty section of the 2002 General Instructions for Forms 1099, 1098, 5498, and W–2G.)

Sec. 11. Corrected Returns

• A correction is an information return submitted by the transmitter to correct an information return that was previously submitted to and processed by IRS/MCC, but contained erroneous information.

• While we encourage you to file your corrections electronically/magnetically, you may file up to 249 paper corrections even though your originals were filed electronically or magnetically.

• DO NOT SEND YOUR ENTIRE FILE AGAIN . Only send the information returns in need of correction.

• Information returns omitted from the original file must not be coded as corrections. Submit them under a separate Payer “A” Record as original returns.

• Before creating your correction file, review the following guidelines chart carefully.

.01 The magnetic media filing requirement of information returns of 250 or more applies separately to both original and corrected returns.

E X A M P L E

If a payer has 100 Forms 1099–A to be corrected, they can be filed on paper because they fall under the 250 threshold. However, if the payer has 300 Forms 1099–B to be corrected, they must be filed electronically or magnetically because they meet the 250 threshold. If for some reason a payer cannot file the 300 corrections electronically or magnetically, to avoid penalties, a request for a waiver must be submitted before filing on paper. If a waiver is approved for original documents, any corrections for the same type of return will be covered under this waiver.

.02 Corrections should be filed as soon as possible . Corrections filed after August 1 may be subject to the maximum penalty of $50 per return. Corrections filed by August 1 may be subject to a lesser penalty. (For information on penalties, refer to the Penalty Section of the 2002 General Instructions for Forms 1099, 1098, 5498, and W–2G. ) However, if payers discover errors after August 1, they should file corrections, as prompt correction is a factor considered in determining whether the intentional disregard penalty should be assessed or whether a waiver of the penalty for reasonable cause may be granted. All fields must be completed with the correct information, not just the data fields needing correction. Submit corrections only for the returns filed in error, not the entire file. Furnish corrected statements to recipients as soon as possible.