Sec. 6 Accuracy of Data and Common — 0925 Publ 1187 (PDF)

.01 Accuracy of Data

Review the following information below along with the record layout information found in Part C. Record Format Specifications and Record Layouts to ensure the data contained in the required fields is accurate:

If a qualified intermediary (QI), withholding foreign partnership (WP), or withholding foreign trust (WT) is acting as such, either as a withholding agent or as a recipient, the TIN reported must be a QI-EIN, WP-EIN, or WT-EIN and must begin with “98.” See the definition of a QI in Part A. Sec. 11, Definition of Terms or in the Instructions for Form 1042-S.
Country Codes used must be valid codes taken from the Country Code Table at Foreign Country Code Listing for Modernized e-File . If a recipient is claiming treaty benefits, the Country Code can never be “OC” or blank. Also, DO NOT use “UC” to indicate unknown country. Country code “UC” should only be used when the Recipient’s country of residence is Curacao.
If a recipient is an “UNKNOWN RECIPIENT” or “WITHHOLDING RATE POOL,” no address should be present. These are the only two situations where a street address is not required.
All income, withholding, and repayment fields must be reported in whole dollars only. Don’t enter cents in amount fields. To round amounts to the nearest whole dollar, drop amounts under 50 cents and increase amounts from 50 to 99 cents to the next dollar. For example, $1.39 becomes $1 and $2.50 becomes $3.00. If you must add amounts to figure the amount to enter on a line include cents when adding and only round off the total.

Apply the following formulas to determine U.S. Federal Tax Withheld, Q record (359-370). Applying the formulas will determine what the correct amount of withholding should be. If a different amount was withheld, enter the amount that was actually withheld in whole dollars only. The U.S. Federal Tax Withheld, Q record (359-370) plus Withholding by Other Agents, Q record (371-382) less Amount Repaid, Q record (60-71) should equal the Total Withholding Credit, Q record (383-394). For example, if the total amount reported as withheld by you is $600, total amount withheld by other withholding agent is $120, and the amount reported as repaid to recipient is $50, the total withholding credit amount will equal $670. All field positions described below are in the Recipient “Q” Record.

Income Codes (16, 17, 18, 19, 20, and 42) Gross Income (positions 6-17)	All Other Income Codes Gross Income (positions 6-17)
– Withholding Allowance (positions 18-29)	X Tax Rate (positions 42-45)
= Net Income (positions 30-41)	= U.S. Federal Tax Withheld (positions 359-370)
X Tax Rate (positions 42-45)
= U.S. Federal Tax Withheld (positions 359-370)

To correctly report an Unknown Recipient under Chapter 3, enter the following in the Recipient “Q” Record:

a. Chapter 3 Tax Rate (positions 42-45) must be 3000

b. Chapter 3 Exemption Code (positions 46-47) is 00

c. Chapter Indicator (position 784) is 3

d. Recipient’s Chapter 3 Status Code (positions 786-787) is 21

e. Recipient’s Country of Residence for Tax Purposes Code (positions 48-49) must be blank

f. Recipient’s Name Line-1 (positions 94-133) must have “UNKNOWN RECIPIENT”

g. Recipient’s Name Line-2 (positions 134-173) must be blank

h. Recipient’s Address (positions 214-337) must be blank

i. Recipient’s Country Code (positions 338-339) must be blank

When making a payment to an international organization (such as, United Nations), use Country Code “OC”; blank fill when there is an “UNKNOWN RECIPIENT.” If withholding agent is making a payment to a QI, WP, or WT’s withholding rate pool, enter the Country Code of the QI, WP, or WT. Also, when making a payment to a participating FFI or registered deemed-compliant FFI’s Chapter 4 reporting pool, enter the Country Code of the participating FFI or registered deemed-compliant FFI or branch of a disregarded entity owned by such FFI receiving the withholdable payment.

When using Chapter 3 Exemption Code 4 (Exempt under tax treaty), the Recipient’s Country of Residence for Tax Purposes MUST be a VALID treaty country. For example, if the recipient is a tax resident of Northern Ireland, use the applicable country code for United Kingdom. Don’t use Chapter 3 Exemption Code 4 unless the exemption of tax is based on a treaty claim. If the tax treaty reduces the tax rate but does not exempt the payment, enter 00 or blanks for the exemption code as indicated in the “Q” Record instructions for positions 46-47.

If withholding agent makes a withholdable payment to an NQI or a flow-through entity that is a PFFI or a registered deemed-compliant FFI that is allocable to a Chapter 4 withholding rate pool as indicated in the FFI withholding statement, treat the FFI as the recipient. Enter one of the Chapter 4 pooled reporting codes (4249) as the Recipient Code based on the Chapter 4 withholding rate pool information indicated in the FFI withholding statement.

.02 Income Codes

Only use the income codes listed on Form 1042-S and the Instructions for Form 1042-S. All of the information reported on Form 1042-S, including income codes, recipient’s country codes, and exemption codes must be consistent. For example, if indicating that the recipient is exempt from withholding under tax treaty, the country code reported for the recipient should be a treaty country. See Instructions for Form 1042- S and Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, for additional information on the income codes.

.03 Common Formatting Errors

Item	Issue	Resolution
2.	Blank or invalid information in the Withholding Agent’s name and address fields	The IRS error amendment process requires that the “W” Record be checked for validity before the “Q” Record can be amended. Ensure that the withholding agent’s Name, EIN, Street Address, City, and State or Country is present along with the appropriate Postal or ZIP Code. The Withholding Agent’s Name Line-1 must contain the withholding agent’s name.
3.	Missing Recipient TIN in the “Q” Record	A Recipient TIN must generally be present to allow a reduction or exemption from withholding at the 30% tax rate; however, certain exceptions do apply (for example, payments of portfolio interest or certain payments of interest, dividends, or royalties on actively traded or publicly offered instruments). If the recipient doesn’t have a TIN, one must be applied for and provided to the withholding agent before a reduction or exemption of withholding is allowed. See alsoInstructions for Form 1042- S for when a foreign TIN is allowed in lieu of a U.S. TIN.
4.	Invalid Recipient’s name and address information	• The Recipient’s Name Line-1 (field positions 94-133 of the Recipient ‘Q’ record) must be the same recipient’s name shown on the withholding certification document provided to and retained by the withholding agent. • Recipient Street Line-1(field positions 214-253 of the Recipient ‘Q’ record) should only show the official street address. • Recipient Street Line-2(field positions 254-293 of the Recipient ‘Q’ record) should be used for additional internal information, such as mail stop numbers, or attention information. • Recipient’s City(field positions 294-333 of the Recipient ‘Q’ record) should be used to enter the city, town, or other locality name. If applicable enter APO or FPO. Don’t enter Recipient’s State, Province Code, Country Code, or foreign postal codes in this field. Follow the instructions for each of these field positions and enter the information in the appropriate fields with the appropriate codes. Enter information in all fields using valid characters.
5.	Incorrect use of Recipient’s Chapter 3 Status Code 21 or Chapter 4 Status Code 29 (Unknown Recipient)	Recipient’s Chapter 3 Status Code 21 may be used only if no valid withholding certification document has been provided to and retained by the withholding agent, or the withholding certification document provided to and retained has been determined by the withholding agent to be incomplete or otherwise unreliable. Use Chapter 4 Status Code 29 only if you have not received a withholding certificate or other documentation with respect to a withholdable payment from an intermediary or flow- through entity. Only use this code if you also used Chapter 3 Status Code 21 as the Recipient’s Chapter 3 Status Code. If Chapter 3 Status Code 21 or Chapter 4 Status Code 29 is used, the Recipient Name Line 1 must contain the words “UNKNOWN RECIPIENT” and the other name and fields must be blank.
6.	Incorrect use of Recipient’s Chapter 3 Status Code 21 and the Tax Rate and U.S. Tax Withheld fields	If Chapter 3 Status code 21 is used, the Tax Rate and the U.S. Tax Withheld must always be 30% if the amounts reported are amounts subject to Chapter 3 withholding. For example, exemption Code 04 (treaty exemption) is not allowed when using Recipient’s Chapter 3 Status code 21.

Item	Issue	Resolution
7.	Incorrect use of Country Codes in the “Q” Record	There are three places in the “Q” Record where country information must be entered. Generally, the information entered in these three fields should be consistent. The country list in theForeign Country Code List for Modernized e-Fileis comprehensive. Don’t use any code that is not on the list. Read theInstructions for Form 1042-Sregarding the use of “OC” and if unknown country blank fill. Don’t use these two codes under any other circumstances than those specifically indicated in the instructions.
8.	Incorrect reporting of Tax Rates in the “Q” Recipient Record	A valid Tax Rate Table is included atAbout Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding. Please refer to the table and only use the tax rates listed. “Blended rates” are not allowed. If a tax rate for a given recipient changes during the year, two “Q” Records must be submitted.
9.	Total amounts reported in the “C” Reconciliation Record don’t equal the total amounts reported in the “Q” Recipient Records	The total Gross Income (field positions 6-17) and Total Withholding Credit (field positions 383-394) reported in the “Q” Records must equal the Total Gross Amount Paid (field positions 16-30) and Total Withholding Credit (field positions 31-45) reported in the corresponding “C” Record.
10.	The following are other major errors associated with electronic filing:	• Invalid characters. The only valid characters are those characters listed in Record Format Part C. Sec. 1. • “Q” Record Positions 383-394 (Total Withholding Credit) must equal the amounts in Positions 359-370 (U.S. Federal Tax Withheld) and Positions 371-382 (Withholding by Other Agents) less Positions 60- 71 (Amount Repaid). • “C” Record Positions 31-45 (Total Withholding Credit) must reflect the aggregate of the preceding “Q” records, positions 383-394 (Total Withholding Credit). • “Q” Record Positions 42-45 (Chapter 3 Tax Rate) must reflect a valid tax rate. "Blended rates" are not allowed. • “Q” Record Positions 46-47 (Chapter 3 Exemption Code) must reflect a valid code, and the exemption code must be compatible with the tax rate. For example, if a zero tax (0000) rate is entered in positions 42- 45 (Chapter 3 Tax Rate), the appropriate exemption code of 01- 12 must be used in positions 46-47.

.04 Common Submission Errors

Item 1.	Issue SPAM filters are not set to receive email from fire@irs.gov and irs.e- helpmail@irs.gov.	Resolution To receive emails concerning files, processing results, reminders and notices, set the SPAM filter to receive email from fire@irs.gov and irs.e- helpmail@irs.gov. Turn off any email auto replies to these email addresses.
2.	Incorrect email address provided.	When the “Verify Your Filing Information” screen is displayed, make sure the correct email address is displayed. If not, please update with the correct email address.
3.	Transmitter does not check the FIRE System to determine file acceptability.	Generally, the results of file transfers are posted to the FIRE System within five calendar days. If the correct email address was provided on the “Verify Your Filing Information” screen when the file was sent, an email will be sent regarding the file status. • If the results in the email indicate “Good” and the “Count of Payees” is correct, the filer is finished with this file. • If any other results are received, follow the instructions in the “Check File Status” option. • If the file contains errors, get an online listing of the errors. • If the file status is good, but the file should not be processed, filers should contact the IRS.
4.	Replacement file is not submitted timely.	If a file is bad make necessary changes and resubmit timely as a replacement file within 60 days from the date the original file was transmitted.
5.	Transmitter compresses several files into one.	Only compress one file at a time. For example, if there are ten uncompressed files to send, compress each file separately and send ten separate compressed files.
6.	Transmitter sends an original file that is good and then sends an amended file for the entire file even though there are only a few changes.	Contact TSO Monday through Friday 8:30 a.m. - 5:30 p.m. ET. Listen to all options before making your selection. • 866-455-7438 (toll-free) • 304-263-8700 (International) (Not toll-free) • Deaf or hard of hearing customers may call any of our toll-free numbers using their choice of relay service
7.	File is formatted as EBCDIC.	All files submitted electronically must be in standard ASCII code.

8.	Transmitter has one TCC and is unsure which TIN should be used when logging into the FIRE System to send a file.	The TIN of the company assigned to the TCC should be used when sending a file electronically.
9.	Transmitter sent the wrong file.	Contact TSO Monday through Friday 8:30 a.m. - 5:30 p.m. ET. Listen to all options before making your selection. • 866-455-7438 (toll-free) • 304-263-8700 (International) (Not toll-free) • Deaf or hard of hearing customers may call any of our toll-free numbers using their choice of relay service
10.	Transmitter sends a file and “CHECK FILE STATUS” indicates that the file is good, but the transmitter wants to send another file containing the same information.	Contact TSO Monday through Friday 8:30 a.m. - 5:30 p.m. ET. Listen to all options before making your selection. • 866-455-7438 (toll-free) • 304-263-8700 (International) (Not toll-free) • Deaf or hard of hearing customers may call any of our toll-free numbers using their choice of relay service
11.	Transmitter uses the TCC assigned for filing 1098, 1099, 5498 or W-2G forms.	To transmit Form 1042-S, filers must use the correct TCC, which begins with “22.” Call the IRS at 866-455-7438 to close file submitted under incorrect TCC.