Section 10. FUTA CERTIFICATION DATA RECORDS

Correct payment fields identified per Form Indicator (Record Positions 117-155 and 182-207)

Background

The Federal Unemployment Tax Act (FUTA) provides for cooperation between the federal and state governments in the establishment and administration of unemployment insurance. The employer is subject to a payroll tax levied by the federal and state governments

As a result of the Act, the IRS is responsible for receiving and processing the Form 940, Employer’s Annual Federal Unemployment Tax Return and Schedule H, Household Employment Tax, filed with Form 1040, U.S. Individual Tax Return. All revenue associated with these returns is collected for the Department of Labor (DOL). The DOL is responsible for dispensing the revenue deposited in the FUTA Trust Fund. DOL monitors the Unemployment Insurance systems for each state and can withhold funds from a state if it does not comply with federal standards.

The taxpayer is allowed a maximum credit of 5.4% against the Federal tax of 6.0%, provided all payments were made to the state by the due date of the Form 940 or Schedule H. If payments are received in the state after the due date, taxpayers are allowed 90% of the amount that would have been allowable as a credit if the payments were made on or before the Form 940 or Schedule H due date.

The FUTA Certification Program is the method IRS uses to verify with the states that the credit claimed on the Form 940 or Schedule H actually was paid into the states’ unemployment funds.

Credit Reduction - If a state received a loan (advance) from the Federal Unemployment Account in order to be able to pay unemployment benefits, there can be an increase in the net federal tax paid by employers in that state.

States fall under the Credit Reduction criteria when they are unable to repay loans from the Federal Unemployment Fund. Because of this, the employers doing business in such states are required to pay an additional tax on their Form 940. This is accomplished through a reduction of the allowable credit given for timely payments to the states.

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Overview

The employer is subject to a payroll tax levied by the federal and state governments.

The employer is required to file unemployment tax reports with state agencies.

The Form 940 is an annual return filed by employers to report taxable wages and pay the Federal

Unemployment Tax. This return covers the period January 1 thru December 31, and is due to be filed on or before January 31 following the close of the calendar year.

Individuals with household employees (babysitters, housekeepers, etc.) file Schedule H with Form 1040,

U.S. Individual Income Tax Return, or Form 1041, U.S Fiduciary Income Tax Return (for Estates and Trusts) to report Federal employment taxes (Social Security, Medicare, withheld Federal Income and Federal Unemployment).

In September, the IRS creates a FUTA Identification Data File (see Exhibit 3a) of Form 940 or Schedule H filers to send to each state agency. The data will be provided to the state via the IRS Secure Large File Transfer (SLFT).

System (SDT). Secure Large File Transfer is a means of exchanging files electronically and allows your agency to receive your IRS FUTA data extracts via a secure file transfer.

IRS distributes FUTA Identification Data file to the states via SLFT in October.

• The FUTA Identification file records include a field for the State Reporting Number. If the state is unable

to match the data using the Employer Identification Number (EIN), it should try to match with the state reporting number, if provided.

• The state agencies are required to provide their FUTA Certification data (see Exhibit 3b) to the IRS via

SLFT by January 31 of the following year.

• In order to minimize the number of re-certification requests which come from the IRS or from the

employer, state agencies MUST review a sample of the records on their FUTA Certification file before returning it via SLFT.

IRS will run the state agencies’ FUTA Certification data against the federal data to identify employers’ records that show possible discrepancies. IRS will transfer the discrepancy records to the FUTA domain located at the Enterprise Computing Center - Memphis (MEM).

IRS Cincinnati SBSE Campus will access the records through the FUTA Case Processing (FCP) System.

The FCP System is programmed to sort the data into the following categories:

• Zero Certification records

• Potential Adjustment Registers (PARS)

• Records requiring 4010C Letter – Proposed Increase to Tax

• Records requiring 4011C Letter – Proposed Decrease to Tax

Zero Certifications are discrepancy records with no taxable wages or payments made to the state. IRS Cincinnati SBSE Campus sends these records back to the state agency for manual re-certification during the 1st quarter of the fiscal year . The state agency returns all Zero Certification records requests to the IRS Cincinnati SBSE Campus for further processing. (See Exhibit 5 for the address). It is very important that the state agency timely returns the Zero Certification requests. If the re-certification requests are not received the FUTA Unit must issue correspondence to the employer. The state will then have to re-certify the information directly to the employer after the FUTA activity has begun.

Potential Adjustment Registers are discrepancy records for which an automatic determination regarding a proposed increase or decrease tax adjustment cannot be made. Registers are sent to tax examiners for a manual review and issuance of the appropriate letter (4010C, Proposed Increase to Tax, or 4011C, Proposed Decrease to Tax).

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Protecting Confidentiality of Data

The state tax authorities are responsible for safeguarding the confidentiality of tax return data. The states agree to take all necessary precautions not only to prevent unauthorized disclosures, but also to prevent situations that might create the appearance of unauthorized disclosure of information about any taxpayer

General Information

The FUTA Identification Data file will include entities extracted from all Forms 940 and Schedules H posted to IRS Business and Individual Master Files between October 1, 2024 and September 30, 2025 (prior year returns filed in 2023 may be included). The data file potentially includes data from years 2021 through 2022.

The data will be transmitted to all state agencies in September 2025 via SLFT. States will receive an automated notification, sent to their group e-mail address, when the file is available for download on the SLFT server. Data will be available for 10 days and then will be deleted for security reasons. For instructions regarding incomplete, unsuccessful file transmissions or re-transmission of a file, refer to page 9, SLFT Customer Support Procedures .

NOTE: The words “State” or “State Agencies” include the employment agencies in the District of Columbia, Puerto Rico, and the Virgin Islands.

The file must be validity checked once received to determine if the data is readable. If the data cannot be read, contact HQ staff at the e-mail address shown on page 1. Agencies may be asked to submit a SLFT Customer Support Request, requesting a re-transmission of the file. Refer to page 9, SLFT Customer Support Procedures .

1.) Timeliness: Compare the data with your employer accounts and return the data to us by January 31, 2026. If you are unable to provide the certification data by the due date, contact HQ staff at the e-mail address shown on page 1 to let them know when the data will be sent. This deadline is critical; any delay may cause adverse reactions from taxpayers because of delays in receiving letters of proposed tax increase or decreases, refunds for tax decreases, or bills for any tax, penalty, and interest which is determined due.

2.) Your agency will be notified if the transmission is successful; however, if the records are unreadable, in the incorrect format, or incomplete, a re-transmission will be requested. The IRS will not correct any data sent to us from the state agencies.

Reminder: When sending a re-transmission be sure the sequence number is updated on both the data and control file. State agencies must track and use sequence numbers (NNN) for their submissions (refer to the note on page 14, regarding File Sequence Numbers).

3. You may separate the data by year to make your comparison; however, all records must be returned to us as one complete file in proper sequence.

a) Return all records on the file(s) provided by IRS. If the taxpayers are not taxable to your state, return these records with zero in state taxable wage and experience rate fields.

b) If you advise us a taxpayer is exempt under Section 501(c) 3, and our records show the taxpayer is not exempt, we will contact the taxpayer.

4. Prior year or early filed records that cannot be systemically certified must be returned on the certification record with the Rate Indicator “3” (see Section 10, Record Position 156).

It is necessary for states to post all payments for all four quarterly returns, plus any supplemental payments received, before certifying the credits. Do not cut off posting any sooner than three weeks prior to sending us the certification data.

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Prior to certifying the data on the FUTA Identification Data file, it is critical states use the first three Form 940 Quarterly Entity Extract files (see Section 7) to verify and post the Employer Identification Numbers (EIN) to their employer accounts (see Section 6). Do not input any corrections from the fourth quarterly Entity extract file until after the certification match.

The data file IRS sends to the state agencies should be copied and retained for a period of one year. A backup copy of the FUTA Certification Data sent to IRS should be retained by the state agencies for one year. If IRS needs a replacement, we would request it within one year.

If any shipments to the states are necessary, IRS will use the names and addresses shown in Exhibit 6, States’ Information System and Manual Certification Request Contacts. In order to ensure delivery, this address must be a street address – IT CANNOT BE A POST OFFICE BOX . If any contact information is incorrect or changes are made during the year, please contact the HQ Staff so that the records can be corrected.

The IRS will validity check the FUTA Certification Data files submitted by the states for content and format. If the data does not meet IRS specifications, the IRS will request corrected or re-created replacement data in the correct format. IRS will work with the state to perfect the transmission.

Set Fields: The state/agencies cannot change the information received from IRS in the following fields when returning the data to IRS. Refer to Section 9 for the file position for the Identification Data Records (data received from IRS) and Section 10 for the file position for Certification Data Record (data sent to IRS).

• State Code – Sections 9 and 10 Record Position 5-6

• Employer Identification Number (EIN) – Sections 9 and 10 Record Position 7-15

• Document Locator Number (DLN) – The number used by IRS to control the document as shown in Section 9 Record Position 16-29; Section 10 Record Position 16-28

• Tax Period – Section 9 Record Position 30-35; Section 10 Record Position 29-34

• Check Digit – Section 9 Record Position 36-37; Section 10 Record Position 35-36

• Form Indicator – Section 9 Record Position 295; Section 10 Record Position 172. This indicator must be provided to identify the form the information applies to (Form 940, 1040, or 1041).

• Cross Reference Number – Section 9 Record Position 271-279, Section 10 Record Position 173-181

The FUTA Identification Data records include a field for the State Reporting Number (SRN). This number is an additional research tool to help certify the FUTA data. DO NOT CERTIFY THE RECORD USING THE STATE NUMBER ONLY. If there is no certification data for the EIN provided, return the record as a Zero Certification.

To ensure the state programmer and project coordinator understand the record layouts, we have provided both a core record layout and a descriptive explanation for several of the record layouts. Although the numbering appears to be inconsistent between the two, the core record layouts (Exhibits 3a thru 3c, represent the physical data address on the SDT record which begins with zero, while the descriptive record layouts (found on pages 16-17, 19-21, and 21-24 ) refer to relative data positions.

If state agencies receive both a Form 940 record and a Schedule H for the same EIN, they must provide IRS with the Form 940 Form Indicator 1, Record Position 295, and FUTA Certification Data Record Position 172. Return the Schedule H record as a Zero Certification record.

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FUTA Certification Data:

Rate Indicator - (Record Position 156) - used when the state cannot certify the data during the data

exchange between the state and IRS. States should use the following criteria:

• States will enter Rate Indicator “1” when there are more than 4 experience rates assigned.

• States will enter Rate Indicator “3” when the state cannot provide certification information because they

cannot certify a prior year return or an early filed current year return on their database. NOTE : If more than 10 percent a Rate Indicator of 3, please review for accuracy.

• Otherwise, leave the Rate Indicator “blank”.

Follow the review procedures in Section 11 before submitting the FUTA Certification Data via SLFT.

See the instructions in Section 12 for Manual Certification/Re-certification Request Processing. State agencies initiating amended certifications should prepare a Form 940C or a substitute form and mail to the IRS Cincinnati SBSE campus requesting the certification (see Exhibit 5 for address).

Secure Large File Transfer (SLFT)

FUTA information will only be provided to agencies electronically via IRS Secure Large File Transfer (SLFT). The IRS has chosen Tumbleweed’s “Secure Transport” software product to facilitate the transfer of data.

The IRS will transmit all FUTA extracts via SLFT. Once the extract is complete, IRS will send the data to the SLFT server where it will be available for download by the participating state agency. For support with establishing an SLFT account with IRS, please submit an SLFT Customer Support Request asking to establish an SLFT account. Complete information on establishing an SLFT account is available in the SLFT Handbook. The SLFT Handbook is available from your local GL or from your IRS project manager. In addition to installing the SLFT software, each agency must also have an IdenTrust Certificate installed. After the initial installation, agencies will have to renew their IdenTrust Certificate every two years at a cost of approximately $119. Refer to the ACES (Access Certificates for Electronics Services) IdenTrust website for additional information. Visit the website at http:// www.identrust.com/certificates/buy_aces_business. html . Identrust will no longer issue or renew ACES certificates as IGC (Medium Assurance Affiliated certificates) have replaced ACES. IGC certificates are available for 1,2 or 3 year validity periods at cost between $89 to $179.

SLFT Automatic File Notification Information

Each agency will be notified when an IRS file is available for download from the SLFT server. Agencies are required to set up group e-mail address to which IRS will send notification. Agencies determine who they want within the agency to receive notification. The agency group code e-mail address must start with the agency’s two digit state abbreviation followed by three digit agency code and agency’s e-mail address extension. For instance, if the state code is MA and the agency code is 123, the group code e-mail address would begin “MA123@...” followed by the agency’s e-mail address extension.

The agency’s group code e-mail address will supersede any e-mail addresses previously provided by the agency.

Agencies must allow the e-mail address extension “ .treas.gov ” through the agency e-mail filter in order to receive the SLFT automated file delivery notifications. Any changes to e-mail addresses need to be submitted using the SLFT Customer Support Procedures.

NOTE: The agency has 10 days to download the file before the file is removed from the SLFT server in accordance with IRS security policy.

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Automated Notifications to States

The following automated notifications are sent to inform, provide confirmation, or request information. All automated notifications are sent to a group e-mail address provided by the state agency.

• File Delivery Notification (FDN): Whenever an IRS file is placed on the SLFT server, an automated notification will be sent to the state agency within 6 hours, notifying them that a file is available for download. The agency has 10 days to download the file before the file is removed from the SLFT server in accordance with IRS security policy.

• Successful Agency Download Notification: When the state agency successfully downloads a file from the SLFT server, an automated e-mail notification is sent within 10 minutes con-firming the file was successfully downloaded.

• Notification Of File Receipt: An automated notification will be sent to the state agency within 10 minutes of a successful file upload to the SLFT server, confirming IRS receipt of the file. The agency will receive this notification for all files that are uploaded successfully even if the file is named incorrectly (thus preventing the file from being processed).

  • Incorrectly Named File: State agencies will receive an automated notification from IRS when a file is submitted with an incorrect or unrecognizable file name. The incorrectly named file will then be deleted from the IRS systems. The state agency must re-submit the file with the correct file name using the next sequential number.

  • Control File Needed: State agencies will now receive an automated notification when they fail to upload a control file with a data file to the SLFT server.

SLFT Customer Support Procedures for State Agencies

To submit an SLFT Customer Support request to retransmit a file, follow Steps 1-3 below:

Step 1:

If a state agency is requesting a retransmission of their file they will contact their GL and the GL will contact the HQ Analyst to contact the Enterprise Service Desk (ESD) at (866) 743-5748, Information Technology Services (Option 2) to speak to an Information Technology Specialist to open a help desk ticket. State the issue (i.e. replacement file needed for State Agency ).*

Step 2:

Advise the ESD Information Technology Specialist that you have an a problem description document to include as an attachment to the ticket. Cut and paste the problem description text below into the body of an e-mail. Before emailing the problem description, you must complete items 4-7. Do not change items 1-3; they have been completed for you. The ESD Information Technology Specialist will provide you with the appropriate email address for use in forwarding the problem description.

1. Customer Directory Record: CD62946

NOTE: IRS ESD, please attach this email to the KISAM ticket and assign to “Operations SVCS File Transfer Support”

2. Last Name: STATE (do not change to the name of your state; leave the word STATE in this field. IRS does not identify your state from this field)

3. First Name: AGENCY (do not change to the name of your agency; leave the word AGENCY in this field. IRS does not identify your agency from this field)

4. SDT Agency Code (SS###)*: (this field must be completed; IRS identifies your agency from this field)

5. State the question or describe the issue needing resolution:

6. IRS File Name (if applicable)**:

7. Requestor’s Name & Contact Info:

IRS ESD: Please attach this problem description to the KISAM ticket and assign to: Operations SVCS File Transfer Support.

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Step 3: The Information Technology Specialist will provide you with a ticket number. Keep this number accessible as it will be needed for any future inquiries or investigation. mail to: uns.enterprise.service.desk@ irs.gov

To submit a request for testing the validity of state data, follow steps 1-3 below:

1. The states should make any test requests to their GL. The GL will contact the HQ Analyst to open a ticket to the FUTA Tier 1 developers, “CP-RESEARCH-MFR&A-COMPSUPT” if this is a data test (they do not test transmission conductivity, these tickets should be opened to “OPERATIONS SVCS FILE TRANSFER SUPPORT”). The ticket needs to include the requesting state and date the state will send us the data for testing. Once the data is received and the test is complete, this ticket will be updated with the test outcome.

2. The state must use the following naming convention when sending in test data: SS###FUTAYYYY99999. txt, SS###FUTAYYYY99999.cntl.txt (where SS = state abbreviation, ### = state code, YYYY = year). The 99999

signifies that this is a test file, and will keep the data separate from Production. Any deviation from this test file name will cause unpredictable results and a delay in testing.

3. If the state wants to test both the conductivity and the data, then the ticket should be opened first to “OPERATIONS SVCS FILE TRANSFER SUPPORT”. Once the connectivity is confirmed/corrected, the ticket should be reassigned to “CP-RESEARCH-MFR&A-COMPSUPT” for the data validity checks.

The SDT Customer Support Procedures above should be used only for technical issues related to file transfers or to SDT account issues. Examples are:

• questions on how to upload or download a file using SLFT

• questions about slow, interrupted or incomplete file transmissions

• requests for the re-transmission of a file (must be within 60 days of original transmission)

• requests to change a group e-mail address to receive automated notifications

• requests for a format change

• questions about whether or not a state file was received by IRS

• requests to install an IdenTrust digital certificate

Requests for support of non-technical issues and issues not related to an agency’s SLFT account should be sent to the HQ staff contact or other Relationship Manager for the specific project. Examples of nontechnical, nonaccount related issues are:

• extract content issues (what data elements are in a file)

• file record layout issues

• all spec book issues

• delivery schedules for IRS files

• due dates for tickler/input files

• questions about creating new or ad hoc extracts

• safeguard issues (may also be sent to: safeguardreports@irs.gov )

NOTE: For those agencies that incur a problem downloading a file, downloading the file in binary may be the solution

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SLFT Dataset Names for FUTA files sent from IRS to State Agency

FUTA State Identification Data (yearly):

PDJEY.J18063.FSS###.F202639.txt

Control File:|

PDJEY.J18063.FSS###.2026.cntl.txt

SS - two alpha State Abbreviation

### - three digit assigned Agency Code

YYYY - four digit year

CC - two digit cycle (39)

Dataset Names for FUTA Quarterly Entity Update File from IRS to State Agency

The Quarterly Entity Update file is transmitted the month following the close of each quarter. (Quarterly cycle numbers will be different from the yearly transmission.)

FUTA Quarterly Entity Update File:

PDBEK.B1805E.FSS###.BYYYYCC.txt

Control File:

PDBEK.B1805E.FSS###.BYYYYCC.cntl.txt

SS - two alpha State Abbreviation

### - three-digit assigned Agency Code

YYYY - four-digit year

CC - two-digit cycle

The control file sent from IRS to the state has a different format than the required control file sent from the state to IRS. Both control files are in ASCII format and the IRS control file sent to the state contains the following information:

1. file name

2. record count and

3. the agency’s user identification (two digit state abbreviation followed by three digit numeric agency code)

Secure Large File Transfer (SLFT) Transmissions to the IRS

States will transmit FUTA return information to IRS using SLFT. Whenever an agency submits data to IRS using SLFT, the agency will need to send two separate files, a data file and a control file.

• The data file contains the agency data to be run against IRS systems; this was previously sent on cartridge, tape, or CD.

• The control file contains information about the data file. It must be in ASCII format. Refer to the record layout in Exhibit 3d, FUTA Certification Control File Record Layout.

It is important that the agencies use the file names provided below:

• All data files should have a “.txt” extension after the file name.

• All control files should have a “.cntl.txt” extension after the file name.

NOTE: Do not use upper case letters (caps) for these extension names.

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SLFT File Name for files sent from State Agency to IRS: Data File Name: SS###FUTA202605NNN.txt Control File Name: SS###FUTAYYYYCCNNN.cntl.txt SS - State Abbreviation ### - State Agency Code assigned by the IRS Program - FUTA YYYY - Processing Year* CC - Cycle (05) NNN - agency 3 digit sequence number (use 001 for the initial submission) *FUTA processing year 2026 will be for FUTA tax year 2024. NOTE: State agencies must track and use sequence numbers (NNN) for their submissions. If IRS requests a re-transmission, the next sequence number to use would be 002, then 003, etc. IRS will not track the sequence numbers received. States must track the sequence numbers used in order not to overwrite a previously sent transmission. States must return two files, one data file, and one control file. If the Control File is not in the correct format or contains errors, the IRS will request a re-transmission for both the data and control files. How to Subscribe to SLFT Updates SLFT Updates are sent to state agency personnel via the FTA Extract Listserv periodically. Subscribing to the FTA Extract Listserv will ensure your receipt of SLFT updates. To subscribe, follow the step below.

1. Go to the FTA web site at: https://www.taxadmin.org . Instructions for opening an account are included in the above link.

Prior Year Certification Problems

The following were problems noted last year:

• Agencies are notified via e-mail when the Annual FUTA Certifications are sent via SLFT. Agencies have only 10 days in which to download the data from Tumbleweed.

• The number of records returned to IRS was either greater or fewer, than originally sent to the state agencies.

• Data returned past the January 31st deadline.

• Incorrect file names on the transmissions sent to IRS.

• IdenTrust Certificates expired.

• Payment fields containing letters and non-numeric characters in the rightmost position, i.e., decimal points (.), minus signs (-), and plus signs (+) are invalid and result in dropped records

• Form records were input into incorrect Form fields and Form field amounts.

• File indicated Rate Indicator 3 on almost all of the records causing the file to not be able to be processed.

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Programming Conventions and Definitions

1. Programming systems or equipment used by the state agency must adhere to the following conventions:

Programming Conventions:

Definitions:

2. The FUTA State Certification Data (see Exhibit 3b) prescribed in the specifications should be fixed block, (each record containing 326 characters – UNSIGNED ZONED DECIMAL).

Employer Identification Number (EIN)

1. The EIN was selected as the number which could be used by all state agencies to match the federal data with the state accounts. The EIN is assigned uniformly by the IRS and validity checked for authenticity before it will pass to our Business Master File (BMF). We recognize human errors occur; we try to minimize these errors and correct them as soon as possible.

2. EIN updates are forwarded to those states that are interested in the information on a quarterly basis (see Section 7). This data will normally arrive in the middle of the month following the end of a quarter.

a) Any state agency that finds more than one EIN has been assigned to the same employer should forward a copy of both records to the IRS Cincinnati SBSE Campus FUTA Coordinator (see Exhibit 5 for address).

b) If the IRS Cincinnati SBSE Campus determines an employer has more than one State Reporting Number (SRN), the campus will forward this information to the state on a Form 940B or substitute form.

3. The state agency should input the new EIN(s) or corrections in a timely manner. Do not input the corrections for the fourth quarter until after the certification match .

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Quarterly EIN Update Data

1. The Quarterly Entity Update file will be transmitted to the states via SLFT the month following the close of each quarter. The file contains data on newly assigned EINs or employers who have changed their name during the previous quarter. This data is referred to as the Quarterly EIN Update Data. To determine the type of change that has occurred, refer to Position 257-259 in the following record element chart.

Name change records will have entries in the Former Name Control field. The name control consists of four alpha/numeric characters. The ampersand (&) and hyphen (-) are the only special characters allowed in the name control. The name control can have fewer than but no more than four characters. Blanks may be present only as the last two positions of the name control.

2. To ensure the state programmer and project coordinator understand the layouts, we have provided a core record layout (see Exhibit 3c) and the following chart providing a descriptive explanation of each record element. Although the numbering appears to be inconsistent, the core record layout represents the physical data address on the SLFT record that begins with zero, while the descriptive record layout refers to relative data position.

Quarterly EIN Update Data Schedule

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Certification Requirements

1. FUTA Identification Data File (see Exhibit 3a).

a) The file will be sent to the state agency for each employer who claimed a credit or liability on Form 940 or Schedule H for unemployment tax paid to the state. The file provides those elements needed to locate the employer’s account. The FUTA Identification data will be transmitted to the states via SLFT (Tumbleweed System).

b) The State Reporting Number (SRN) is shown in Record Positions 280 thru 294 of the FUTA Identification File in Section 9. If the displayed SRN does not agree with your records, please enter the correct number in positions 157 – 171 of the FUTA Certification Record (see Section 10).

NOTE: The state reporting number is provided as an additional research tool you can use to certify data on the FUTA Identification file. DO NOT CERTIFY THE RECORD USING THE STATE REPORTING NUMBER ONLY . If there is no certification data on the EIN provided, return the record as a Zero Certification.

c) The state agency will compare the records on the file with their employer accounts and report the following to IRS by January 31st:

1. For each record located, provide:

(a) Total taxable state wages reported for each experience rate

(b) Experience rate(s) assigned by the state

(c) Total payments made to the state. Break this amount into three time periods for Form 940 filers and into two time periods for Form 1040 and 1041 filers. The Form Indicator is shown in Record

Position 295 of the FUTA Identification File in Section 9 .

NOTE: State agencies must enter these money fields correctly, i.e., for 940 records enter 940 payments and for Schedule H records enter Schedule H payments.

Forms 940 (Form Indicators 1 & 4):

1 – Payments made before 2/1

2 – Payments made 2/1 thru 2/10

3 – Payments made after 2/10

Schedule H (Form Indicators 2 & 3):

1 – Payments made on or before 4/15

2 – Payments made after 4/15

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2. Indicate each record requiring manual verification (enter Rate Indicator “1” or “3” in position 156).

Enter a “ 1 ” to indicate more than four experience rates are assigned. Enter a “ 3 ” if the information is a prior year or early filed current year record and cannot be certified during the FUTA data exchange.

3. Return all other unmatched records (Use Rate Indicator of blank – HEX 40).

(a) Voluntary contributions and payments made as surcharge for interest must not be considered when reporting payments.

(b) No tolerances or other drop criteria will be applied by the state.

ALL FEDERAL RECORDS MUST BE RETURNED!

(c) Certain records will not contain a Taxable Wage figure, but instead show

F0F0F0F0F0F0F0F0F0F0F0F0F1 in the Taxable Wages field. This will denote a multi-state filer.

(d) The Taxable Wages field is for state information only and should not be returned on the matched and unmatched records.

2. The state agencies will return their FUTA Certification data via the IRS SLFT System (Tumbleweed).

3. The data specifications in the following sections must be adhered to without deviation. If your agency cannot adhere to the specifications, contact HQ staff at the e-mail address shown on page 1 immediately.

Identification Data Records

1. The FUTA Identification Data Files will be transmitted to the states via the IRS SLFT System (Tumbleweed). The files are furnished to the 50 states, District of Columbia, Puerto Rico and the Virgin Islands. There are 28 records to a block.

To ensure the state programmer and project coordinator understand the record layouts, we have provided a core record layout (see Exhibit 3a) and the following chart providing a descriptive explanation of each record element. Although the numbering appears inconsistent, the core layout represents the physical data address on the SLFT transmission record, while the descriptive record layout refers to relative data positions.

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Certification Data Record

1. The specifications outlined in these instructions prescribe the required format and content of the records to be included in the file, but not the method used in their preparation.

2. An acceptable SLFT transmission will be in ASCII Format using the record layout provided. Use fixed length and fixed block (see Exhibit 3b).

3. The state agency will compare the records on the FUTA Identification Data file with their employer accounts. ALL RECORDS PRESENT ON THE FUTA IDENTIFICATION DATA FILE MUST BE INCLUDED ON THE FUTA CERTIFICATION SDT TRANSMISSION.

To ensure the state programmer and project coordinator understand the record layouts, we have provided a core record layout in Exhibit 3b and the following brief descriptive explanation of each record element below. Although the numbering appears inconsistent, the core record layout represents the physical data address for your transmission beginning with zero, while the descriptive record layout below refers to relative data positions.

NOTE: All money fields must be dollars and cents, right justified, zero filled and unsigned zone decimals.

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*** Form Indicator “2” or “3” payment fields Rate Indicator**

4. Form 940C must be completed by the state agency when the Rate Indicator (Record Position 156) “1” (more than four experience rates are assigned) or “ 3 ” (prior year or early filed current year record that cannot be certified systemically) is entered. The FUTA Certification Data File generated by the state will contain a certification record for the employer in question. The data required in record positions 1 thru 36 is to be entered and a “1” or “3” is to be entered in Position 156. The Form 940C will be sent to the IRS Cincinnati SBSE Campus (see Exhibit 5 for address) to be input onto the FUTA Case Processing (FCP) systems’ 940C file.

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NOTE : State agencies may order a supply of Forms 940C, Employer Account Abstract, directly from an IRS Distribution Centers by calling 1-800-TAX-FORM (1-800-829-3676).

5. The records on the SLFT data file must be in fixed length format and in EIN sequence. Care must be taken to copy, without error, the EIN, Check Digits, State Code, and Form Indicator furnished by IRS; the data is unusable if it does not contain these items without error.

6. For purposes of determining timely payments, we request you use the date payments were received by your agency, not the date they were deposited or posted to your database. This will prevent payments made on or before the proper due date appearing to be late.

Review Procedures

After the FUTA Certification Data has been prepared and before transmission, the state MUST review the quality of the data. This review will minimize the number of re-transmission requests from the HQ staff.

Follow these review procedures:

1. Print two copies of the first 50 Zero Certification records (records where the total state wages are zero) and of the first 50 Non-Zero Certification records (records where the total state wages are other than zero). Use one copy to verify the format and components of the records against the specifications in this Publication.

2. With the second copy, using the EIN, request manual certification of these records from your appropriate state function. Compare the manual certifications with the print of the computer certifications to verify the data is the same. Remember the state reporting number provided is an additional research tool to help find the certification data for the EIN.

3. Compare money amounts for proper placement of decimals. Verify that the experience rate has been correctly converted from a percent to decimal.

4. Review both the data and control file ensuring the number of records returned to the IRS is the same number sent to the state agency.

5. Check for non-numeric characters in the payment fields.

When the results of these reviews are satisfactory, transmit your data and control file via SLFT to the IRS. Do not transmit the results of your review to the IRS. Save them for future reference.

Manual Certification/Re-certification Requests

When the IRS Cincinnati SBSE Campus determines it needs a re-certification, (except for Zero Certs), it will prepare a request on a Form 940B or substitute form.

1. The campus will send manual requests to the addresses shown in Exhibit 6, in the Manual Certification Contact/Address column.

2. States should work these requests as quickly as possible. Many of these may have statute deadlines or other problems that require expedite handling. If you cannot research and return them within 60 days, contact the IRS Cincinnati SB/SE Campus FUTA coordinator.

State agencies should prepare supplemental and/or amended certifications on Forms 940C or a substitute form and send to the IRS Cincinnati SB/SE Campus (see Exhibit 5 for address). The forms must show a complete record of the account including any data previously provided to the IRS manually, by CD or SLFT transmission and should be marked AMENDED DATA, OR SUPPLEMENTAL DATA.

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1. State agencies will initiate supplemental certifications when there is activity on accounts previously certified to the IRS.

2. State agencies will initiate amended certifications whenever delinquent returns are secured by the state agency through an audit or delinquency investigation and there is a possibility no federal return was filed.

The state agency and the IRS Cincinnati SB/SE Campus can agree to the IRS accepting the employers’ proof of credit without having to suspend the case 45 days for state re-certification. If an agreement is not made,

1. If the employer returns photocopies of canceled checks or other pertinent data, the Campus will:

a) Prepare a Form 940B.

b) Photocopy all data returned by the employer.

c) Send Form 940B and attachments to the state agency.

d) Suspend the photocopied data and a copy of the Form 940B for 45 days.

2. If a reply is not received from the state agency within 45 days, the IRS CincinnatiSBSE Campus will accept the employers proof and make the necessary correction.

IRS Assignment of Employer Identification Number (EIN)

1. Every employer who is required to file a Business Federal Tax return or who pays wages to one or more employees must be assigned an EIN.

2. When a Form SS-4 (Application for an EIN) is received, research to determine if a new number should be assigned. When a taxpayer opens a new business or changes the name of his business, the taxpayer must notify the IRS.

3. When a new number is assigned, IRS sends a letter to the taxpayer providing the new number. The taxpayer should:

a) Keep a copy of the letter as a permanent record.

b) Use the number and name exactly as shown on the letter.

c) Use this number on all tax payments and tax related correspondence or documents.

Any variation used when filing tax returns making FTD payments or subsequent payments may result in improper or delayed posting of payments to an account and/or the assignment of more than one EIN.

4. Only one number may be assigned to an employer as long as the type of organization does not change. If the employer moves the business to a new location, or operates two or more businesses, still only one number is assigned. For example, John Smith who operates a jewelry store in California and a department store in New York needs only one EIN as long as he is the proprietor of both businesses. However, if Mr. Smith sells his department store, the new owner would have to apply for a new EIN if he had not been previously assigned one (even if the trade name remains the same).

5. A number assigned to one type of organization may not be used by another. For example, if an EIN is assigned to a sole proprietor and the proprietor decides to incorporate the business, a new number must be assigned to the corporation. If a partnership changes to a sole proprietor, once again there has been a change to an organization and a new number is needed.

6. The types of organizations receiving EINs are partnerships, sole proprietorships, corporations, trusts, estates, governmental and non-profit organizations. The EINs are assigned in the legal name of the organization.

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For example:

Individual Owner’s full name (Proprietor)

Corporation Corporate name

Partnership Full name of all partners

Estate Name of the decedent

Trust Name of maker or grantor of trust

A new EIN is assigned if there is a change in ownership.

For example:

Individual owner to partnership

Individual owner to corporation

Individual owner to another individual owner

Partnership to individual owner

Partnership to corporation

Corporation to individual owner

Corporation to partnership

Bankruptcy Receivership

The original EIN can be retained in the following organizational changes:

a) Corporation - When the structure of the corporation remains the same. For example, if the corporate charter has been amended to show a name change only, the corporate structure is not changing.

b) Individual - When the name or trade name is changed without a change of ownership. Only one number is needed regardless of the number of businesses owned.

c) Partnership - If the partnership declares bankruptcy, the name changes, the location of the partnership changes or locations are added.

State agencies must be careful to transfer the EIN when transferring credit from one state account number to another. If a partnership converts to a corporation in mid-year, two Forms 940 will be filed, one for the partnership and one for the corporation. If the state credits for the partnership are transferred to the corporation, then the EIN for the partnership must be transferred with the respective money amounts for this one year. The partnership number may be deleted after certification has been completed.

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Exhibits

Exhibit 1 - Example of a Transmittal Letter for Forms 940-C

Exhibit 2 - External Label for Form 940-C (From State)

1. Name of State

2. Type of Document - Form 940-C

3. Tax Period

4. Number of boxes

5. Sequence Number of boxes

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Exhibit 3a - FUTA Identification Data File

Core Record Layout

Pns Packed Decimal, n=No. of Dec., s=sign Zns Zoned Decimal, n=No. of Dec., s=sign G Packed W/O Sign C Character X Hexadecimal B Binary

Exhibit 3b - FUTA State Certification Data

Core Record Layout

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Pns Packed Decimal, n=No. of Dec., s=sign C Character Zns Zoned Decimal, n=No. of Dec., s=sign X Hexadecimal G Packed W/O Sign B Binary

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Exhibit 3c - Reformatted FUTA Quarterly Entity Extract Data

Core Record Layout

Pns Packed Decimal, n=No. of Dec., s=sign C Character Zns Zoned Decimal, n=No. of Dec., s=sign X Hexadecimal G Packed W/O Sign B Binary

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Exhibit 3d - FUTA Certification Control File Record Layout (State Agency to IRS)

The control record should be formatted into one line with an LRECL of 80.

NOTE: This file record layout is different from that of the control file received from the IRS.

The record layout for the “cntl.txt” file is shown below:

FUTA Certification Control File Record Layout

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Exhibit 4 - List of State Abbreviations and State Agency Codes:

Exhibit 5 - SBSE CAMPUS CONTACT ADDRESSES

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Exhibit 6 - States’ Information System and Manual Certification Request Contacts

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