Part 21. Customer Account Services

Chapter 3. Taxpayer Contacts

Section 11. Information Returns Reporting Procedures (Cont. 1)

21.3.11  Information Returns Reporting Procedures (Cont. 1)

21.3.11.23 
Forms Used to Report Information Pertaining to Educational Funds and Payments

21.3.11.23.1  (05-01-2010)
Form 1098-E, Student Loan Interest Statement

  1. Treas. Reg. 1.6050S-3 requires lenders/recipients who receive $600 or more in student loan interest from an individual during the year in the course of their trade or business to report that interest on Form 1098-E.

  2. The form is filed by financial institutions, governmental units, educational institutions, or any other persons who received qualified student loan interest during a calendar year.

  3. The qualified student loan interest must be reported in box 1.

  4. Mark the checkbox in box 2 if loan origination fees and/or capitalized interest are not reported in box 1 for loans made before September 1, 2004.

21.3.11.23.2  (05-01-2010)
Form 1098-T, Tuition Statement

  1. Eligible educational institutions must file Form 1098-T, Tuition Statement. Eligible educational institutions are colleges, universities, vocational schools, or other post-secondary educational institutions that are described in Section 481 of the Higher Education Act of 1965 as in effect on August 5, 1997.

  2. Eligible educational institutions may choose to report payments received, or amounts billed, for qualified tuition and related expenses.

  3. Qualified tuition and related expenses are tuition and fees a student must pay to be enrolled at or attend an eligible educational institution.

  4. The following information is reported on the form.

    • Box 1 is used to report payments received for qualified tuition and related expenses if this is the method being used by the institution.

    • Box 2 is used to report amounts billed for qualified tuition and related expenses if this is the method being used by the institution.

    • Box 3 is a checkbox that indicates the institution has changed their method of reporting (either box 1 or box 2).

    • Box 4 is used to report adjustments made for a prior year.

    • Box 5 is used to report the total amount of any scholarships or grants that the institution administered and processed during the calendar year for the payment of the student's costs of attendance.

    • Box 6 is used to report adjustments to scholarships or grants for a prior year.

    • Box 7 is a checkbox for amounts for an academic period beginning in January through March.

    • Box 8 is a checkbox used to indicate if the student was at least a half-time student.

    • Box 9 is a checkbox used to indicate if the student is a graduate student.

    • Box 10 is used by insurers to report the total amount of reimbursements or refunds of qualified tuition and related expenses.

21.3.11.23.3  (05-01-2010)
Form 1099-Q, Payments From Qualified Education Programs (Under Sections 529 and 530)

  1. Payers and trustees of qualified education programs under IRC 529 and 530 are required to report distributions from those programs on Form 1099-Q, Payments From Qualified Education Programs (Under Sections 529 and 530).

  2. Payers and trustees are required to report the following:

    • The gross distribution in box 1.

    • The earnings on the gross distribution in box 2.

    • If determinable, the basis must be reported in box 3. (Box 3 must equal box 1 minus box 2.)

    • A check mark in box 4 if the distribution was made directly in a trustee to trustee transfer from one Qualified Tuition Program (QTP) to another.

    • A check mark in box 5 if the distribution is from a QTP established by one or more private eligible educational institutions or check the "State" box if the distribution is from a QTP established by a state. Otherwise, check the "Coverdell ESA" box.

    • Check box 6 if the recipient is not the designated beneficiary.

    • A distribution code may be entered in the blank box below boxes 5 and 6.

21.3.11.23.4  (01-01-2013)
Form 5498-ESA, Coverdell ESA Contribution Information

  1. A Coverdell Education Savings Account is a trust or custodial account created or organized in the U.S. exclusively for the purpose of paying qualified educational expenses for the designated beneficiary of the trust or custodial account.

  2. Trustees are required to report contributions, including rollover contributions, to any Coverdell ESA.

  3. Regular contributions are reported in box 1.

  4. Rollover contributions are reported in box 2.

21.3.11.24  (05-01-2010)
Forms Used to Report Debt Instruments

  1. The following forms are used to report the forgiveness or cancellation of debt or the acquisition of property held through a debt instrument.

21.3.11.24.1  (05-01-2010)
Form 1099-A, Acquisition or Abandonment of Secured Property

  1. If a business lends money in the course of its trade or business and in full, or partial satisfaction of the debt, the lender acquires an interest in property that is security for the debt or has reason to know that the property has been abandoned, the lender is required to report the acquisition or abandonment on Form 1099-A, Acquisition or Abandonment of Secured Property.

  2. The lender must report:

    • The acquisition date or knowledge of abandonment date in box 1.

    • The balance of the principal outstanding in box 2.

    • The fair market value of the property in box 4.

    • An "X" to indicate if the borrower was liable for the debt in box 5.

    • A description of the property in box 6.

21.3.11.24.2  (01-01-2013)
Form 1099-C, Cancellation of Debt

  1. Form 1099-C, Cancellation of Debt, must be filed for each debtor for whom a lender canceled a debt owed to them of $600 or more. See the Specific Instructions for Form 1099-C for a list of who must file.

  2. A debt is any amount owed to a lender including stated principal, stated interest, fees, penalties, administrative costs, and fines. The amount of debt canceled may be all or part of the total amount owed.

  3. The lender must report:

    • The date of the identifiable event in box 1.

    • The amount of debt discharged in box 2.

    • Interest that was included in the discharged debt in box 2 in box 3.

    • A description of the debt in box 4.

    • An "X" in the box to indicate whether the borrower was personally liable for repayment of the debt in box 5.

    • The identifiable event code in box 6.

    • Either the fair market value if filing a combined Form 1099-C and Form 1099-A for a foreclosure or similar sale or the appraised value of the property in the case of abandonment or voluntary conveyance in lieu of foreclosure in box 7.

  4. Form 1099-C, Cancellation of Debt, can be coordinated with the reporting requirements for Form 1099-A, Acquisition or Abandonment of Secured Property, if in the same calendar year a lender cancels a debt in connection with a foreclosure or abandonment of secured property. The filing requirement for Form 1099-A, Acquisition or Abandonment of Secured Property, will be met if Form 1099-C, Cancellation of Debt, is filed with boxes 4, 5 and 7 completed.

21.3.11.25  (05-01-2010)
Forms Used to Report Stock Transactions

  1. The following group of forms are used to report transactions concerning sales and exchanges of stock and employer securities.

21.3.11.25.1  (01-01-2013)
Form 1099-B, Proceeds From Broker and Barter Exchange Transactions

  1. A broker or barter exchange must file Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, for each person:

    • For whom the broker has sold stocks, bonds, commodities, regulated futures contracts, foreign currency contracts, forward contracts, debt instruments, etc.

    • Who received cash, stock, or other property from a corporation that the broker knows or has reason to know has undergone a change in control or substantial change in capital structure.

    • Who exchanged property or services through a barter exchange.

    • For whom there is federal income tax withheld under the backup withholding rules.

  2. A broker is any person, U.S. or foreign, who, in the ordinary course of a trade or business, stands ready to effect sales to be made by others.

  3. A barter exchange is any person or organization with members or clients that contract with each other, or with other barter exchanges, to jointly trade or barter property or services.

  4. The following information is reported on the form.

    • The date of sale or exchange in box 1a.

    • The date of acquisition in box 1b.

    • The type of gain or loss in box 1c.

    • Stock or other symbol in box 1d.

    • The quantity sold in box 1e.

    • The aggregate cash proceeds from transactions involving stocks, bonds, other debt obligations, commodities, or forward contracts in box 2a.

    • A checkmark to indicate that a loss cannot be taken based on the amount in box 2a in box 2b.

    • The cost or other basis of securities sold in box 3.

    • Any federal income tax withheld in box 4.

    • The wash sale loss disallowed in box 5.

    • A checkmark if reporting the sale of a noncovered security in box 6a.

    • A checkmark to indicate that the basis was reported to the IRS in box 6b.

    • The cash or FMV received in a barter exchange transaction in Box 7.

    • A description of the item or service for which the proceeds or bartering income is being reported in box 8.

    • The profit or (loss) realized on regulated futures or foreign currency contracts closed during 2012 in box 9.

    • The year end adjustment to the profit or (loss) shown in box 9 in box 10.

    • The unrealized profit or (loss) on open contracts held in the account on December 31, 2012 in box 11.

    • The aggregate profit or (loss) for the year from regulated futures or foreign currency contracts in box 12.

    • State information and state tax withheld in boxes 13-15.

    Note:

    Form 1099-B, Proceeds from Broker and Barter Exchange Transactions, has been revised for tax year 2012.

21.3.11.25.2  (05-01-2010)
Form 1099-CAP, Changes in Corporate Control and Capital Structure

  1. This form must be filed by domestic corporations that are also required to file Form 8806, Information Return for Acquisition of Control or Substantial Change in Capital Structure. Any broker that holds shares on behalf of a customer in a corporation that, the broker knows or has reason to know based on readily available information, has engaged in a transaction of acquisition of control or substantial change in capital structure must file Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, not Form 1099-CAP, Changes in Corporate Control and Capital Structure, unless the customer is an exempt recipient.

  2. The following information is reported on the form.

    • The date of sale or exchange in box 1.

    • The aggregate amount of cash and the fair market value of stock and other property received in exchange for the number of shares exchanged in the reporting corporation in box 2.

    • The number of shares the shareholder exchanged in the reporting corporation for cash or other property received in box 3.

    • The class or classes of stock exchanged in the reporting corporation for cash or other property received in box 4.

21.3.11.25.3  (05-01-2010)
Form 3921, Exercise of an Incentive Stock Option Under Section 422(b)

  1. Form 3921, Exercise of an Incentive Stock Option Under Section 422(b), is designed to comply with Treas. Reg. 1.6039-1(a), which requires corporations to file the form to record the transfer of stock pursuant to an employee's exercise of an incentive stock option described in IRC 422(b). Form 3921, Exercise of an Incentive Stock Option Under Section 422(b) is required to be filed for transfers occurring after 2009.

  2. Information is to be reported as follows.

    • The name, address, and employer identification number of the corporation transferring the stock.

    • The name, address, and identifying number of the employee to whom the share(s) of stock were transferred pursuant to the exercise of the option.

    • The date the option was granted to the employee, box 1.

    • The date the option was exercised by the employee, box 2.

    • The exercise price per share, box 3.

    • The fair market value of a share of stock on the date the option was exercised by the employee, box 4.

    • The number of shares transferred to the employee pursuant to the exercise of the option, box 5.

    • If other than the corporation identified above, the name, address and employer identification number of the corporation whose stock is being transferred in box 6.

21.3.11.25.4  (05-01-2010)
Form 3922, Transfer of Stock Acquired Through an Employee Stock Purchase Plan Under Section 423(c)

  1. Form 3922, Transfer of Stock Acquired Through an Employee Stock Purchase Plan Under Section 423(c), is used to comply with Treas. Reg. 1.6039-1(b), which requires corporations to file the form to record a transfer of the legal title of a share of stock acquired by the employee where the stock was acquired pursuant to the exercise of an option described in IRC 423(c). Form 3922, Transfer of Stock Acquired Through an Employee Stock Purchase Plan Under Section 423(c), is required to be filed for stock transfers occurring after 2009.

  2. Information is to be reported as follows:

    • The name, address, and identifying number of the employee.

    • The name, address, and employer identification number of the corporation whose stock is being transferred.

    • The date the option was granted to the employee in box 1.

    • The date the option was exercised by the employee in box 2.

    • The fair market value per share of the stock on the date the option was granted in box 3.

    • The fair market value per share of the stock on the date the option was exercised by the employee in box 4.

    • The exercise price per share in box 5.

    • The number of shares to which legal title was transferred by the employee in box 6.

    • The date the legal title of the share(s) was transferred in box 7.

    • Box 8 lists the exercise price per share determined as if the option was exercised on the date in Box 1, if the exercise price per share was not fixed or determined on the date in Box 1.

21.3.11.26  (05-01-2010)
Forms Used to Report Government Payments

  1. The following form is used to report several types of payments that are made by federal, state or local government entities.

21.3.11.26.1  (01-01-2012)
Form 1099-G, Certain Government Payments

  1. The designated officer or employee of a federal, state or local government must file Form 1099–G, Certain Government Payments, if payments were made for:

    • Unemployment compensation and Governmental Paid Family Leave reportable in box 1.

    • State or local income tax refunds, credits, or offsets reportable in box 2.

    • Alternative trade adjustment assistance (ATAA) payments reportable in box 5.

    • Taxable grants reportable in box 6.

    • Agricultural payments reportable in box 7.

  2. Other boxes on the form that are required to be completed are:

    • Box 3, the tax year the refund, credit, or offset was made

    • Box 4, any Federal income tax withheld

    • Box 8, checkbox, if the amount in box 2 is attributable to the income of a trade or business

    • Box 9, market gain associated with the repayment of a Commodity Credit Corporation (CCC) loan whether repaid using cash or CCC certificates

  3. Other boxes on the form that allow optional reporting are:

    • Box 10a, the two letter state abbreviation of the state for which income taxes are being withheld.

    • Box 10b, the identification number of the state in Box 10a.

    • Box 11, the amount of state income tax withheld from the amount in Box 1.

21.3.11.27  (05-01-2010)
Forms Used to Report Payments, Contributions To, and Distributions From Certain Medical Accounts

  1. The following group of forms are used to report payments for Health Coverage Tax Credits, Long Term Care Insurance plans, and Contributions to and Distributions from HSAs, Archer Medical Savings Accounts (MSAs), and Medicare Advantage MSAs.

21.3.11.27.1  (05-01-2010)
Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments

  1. IRC 6050T requires that if a provider of qualified health insurance coverage receives advance payments from the Department of The Treasury on behalf of eligible individuals during the calendar year, must file Form 1099–H, Health Coverage Tax Credit (HCTC) Advance Payments. However, Notice 2004-47 provides that the HCTC Transaction Center will file the required returns and furnish statements to the recipients unless the provider elects to file and furnish the information returns themselves.

  2. The following must be reported.

    • The total amount of HCTC Advance Payments must be reported in box 1.

    • The number of months for which the payments were received in box 2.

    • The amount of the advanced payment received for each month boxes (3-14).

  3. For more complete information, refer to the Instructions for Form 1099-H.

21.3.11.27.2  (01-01-2012)
Form 1099-LTC, Long-Term Care and Accelerated Death Benefits

  1. Payers who paid any long-term care benefits, including accelerated death benefits, must file Form 1099-LTC, Long-Term Care and Accelerated Death Benefits. This includes insurance companies, governmental units, and viatical settlement providers.

  2. Long-term Care benefits is defined as:

    • Any payments made under a product that is advertised, marketed, or offered as long-term care insurance, whether qualified or not.

    • Accelerated death benefits paid under a life insurance contract or paid by a viatical settlement provider (as defined in section 101(g)(1)(B).

    • Payments made to an insured individual who is terminally or chronically ill.

  3. A terminally ill individual is someone who has been certified by a physician as having an illness or physical condition that can reasonably be expected to result in death in 24 months or less after the date of the certification.

  4. A chronically ill individual is someone who has been certified (at least annually) by a licensed heath care practitioner as:

    • Being unable to perform, without substantial assistance from another individual, at least two daily living activities for at least 90 days due to a loss of functional capacity.

    • Requiring substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment.

  5. The following must be reported.

    • The gross long-term care benefits paid during the year are reported in box 1.

    • The gross accelerated death benefits paid under a life insurance contract during the year to or on behalf of an insured who has been certified as terminally or chronically ill are reported in box 2.

    • Place an "X" in box 3 to indicate whether the payments were made on a per diem or other periodic basis or on a reimbursed basis.

    • Place an "X" in box 4 to indicate whether long-term care insurance benefits are paid from a qualified long-term care insurance contract.

    • Place an "X " in box 5 to indicate whether the insured was chronically or terminally ill. Also, enter the latest date certified.

  6. For more detailed information, definitions, and box by box instruction, refer the customer to the Instructions for Form 1099-LTC.

21.3.11.27.3  (05-01-2010)
Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA

  1. Trustees and custodians of these plans are required to file the forms to report distributions made from a Health Savings Account (HSA), Archer Medical Savings Account (MSA), and Medicare Advantage MSA. The distribution may have been paid directly to a medical service provider or to the account holder.

  2. Trustees and custodians of these plans are not required to determine whether these distributions are used for medical expenses. They must report the following:

    • The gross distribution in box 1.

    • Earnings on any excess contributions in box 2.

    • A distribution code that shows the type of distribution from the following table in box 3.

      Code Explanation
      1 - Normal distributions Use this code for normal distributions to the account holder and any direct payments to a medical service provider. Use this code if no other code applies.
      2 - Excess contributions Use this code for distributions of excess HSA or Archer MSA contributions. Do not use this code for excess MA MSA contributions returned to the Secretary of Health and Human Services or his or her representative.
      3 - Disability Use this code if a distribution was made after the account holder was disabled under IRC 72(m)(7).
      4 - Death distribution other than code 6 Use this code for payments to a decedent's estate in the year of death. Also use this code for payments to an estate after the year of death. Do not use with code 6.
      5 - Prohibited transaction See IRC 220(e)(2) and IRC 223(e)(2)
      6 - Death distribution after year of death to a nonspouse beneficiary Use this code for payments to a decedent's nonspouse beneficiary, other than an estate, after the year of death. Do not use with code 4.

    • The fair market value of the account on the date of death of the account holder in box 4.

    • Check mark to indicate if the distribution was from an HSA, Archer MSA, or MA MSA in box 5.

  3. For additional information and examples, refer to the Specific Instructions for Form 1099-SA.

21.3.11.27.4  (05-01-2010)
Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information

  1. Trustees and custodians of HSA, Archer MSA, and MA MSA accounts are required to report regular employee contributions, rollover contributions, employer contributions, and other contributions made during the year on Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information.

  2. Generally, if a total distribution was made from an HSA, MSA, MA MSA during the year and no contributions were made for that year, a form is not required.

  3. If an individual owns two MSA accounts, one an Archer MSA and the other an MA MSA, contributions must be reported on a separate Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information

  4. The following boxes must be completed.

    • Box 1 is used to report an employee's or self-employed persons regular contributions to an Archer MSA made during the calendar year being reported and up to April 15 of the following year that are designated for the prior year.

    • Box 2 is used to report the total HSA or Archer MSA contributions made during the calendar year being reported. Also include contributions made during the calendar year for the previous calendar year.

    • Box 3 is used to report the total HSA or Archer MSA contributions made in an upcoming year for the previous year.

    • Box 4 is used to report rollover contributions to the HSA or Archer MSA received during the calendar year being reported.

    • Box 5 is used to report the Fair Market Value of the account as of December 31 of the calendar year being reported.

    • Box 6 is a checkbox to indicate if the account is an HSA, MSA or MA MSA.

  5. For complete box by box reporting information, refer the customer to the Specific Instructions for Form 5498-SA.

21.3.11.28  (01-01-2013)
Forms Used to Report Miscellaneous Payments

  1. IRC 6041 requires all persons making payments in the course of their trade or business to another person of rents, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable gains, profits and income of $600 or more in any calendar year to file an information return to report the payments. The following forms are used to report these types of payments.

21.3.11.28.1  (01-01-2013)
Form 1099-MISC, Miscellaneous Income

  1. Form 1099-MISC, Miscellaneous Income, must be filed if a payer makes the following payments:

    • At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest

    • At least $600 in rents, services (including parts and materials), prizes and awards, other income payments, medical and health care payments, crop insurance proceeds, cash payments for fish purchases from someone engaged in the trade or business of catching fish, or, generally, the cash paid from a notional principal contract to an individual, partnership, or estate

    • Any fishing boat proceeds

    • Gross proceeds paid to an attorney

    • In addition, payers/filers must report if they made direct sales of at least $5000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment

    • Any payments made that were subject to the backup withholding rules

  2. Payments must be reported as follows:

    • Box 1 - Rents

    • Box 2 - Royalties

    • Box 3 - Other Income (prizes and awards, punitive damages, payments to an H-2A agricultural worker, etc.)

      Note:

      Wages paid to foreign agricultural workers on H-2A visas were reported in box 3 rather than on Form W-2, Wage and Tax Statement, for tax years prior to 2011 (some employers had a delayed transition until tax year 2012). This compensation is considered wages and must be reported on Form W-2, Wage and Tax Statement, if a TIN is provided. If a TIN is not provided, amounts must be reported on Form 1099-MISC, Miscellaneous Income, in box 3. The payments are not subject to self-employment tax, but are subject to backup withholding when reported on Form 1099-MISC, Miscellaneous Income.

    • Box 4 - Federal Income Tax Withheld

    • Box 5 - Fishing Boat Proceeds

    • Box 6 - Medical and Health Care Payments for services

    • Box 7 - Nonemployee Compensation

    • Box 8 - Substitute Payments in Lieu of Dividends or Interest

    • Box 9 - Payer Made Direct Sales of $5000 or More

    • Box 10 - Crop Insurance Proceeds

    • Box 11 - Reserved

    • Box 12 - Reserved

    • Box 13 - Excess Golden Parachute Payments

    • Box 14 - Gross Proceeds Paid to an Attorney

    • Box 15a - Section 409A Deferrals

    • Box 15b - Section 409A Income

    • Boxes 16-18 - State Information

  3. Payers must file this form for whom federal income tax was withheld under the backup withholding rules.

  4. There are exceptions to the general filing information above. Form 1099-MISC, is a complicated form that will require filers to read the detailed instructions.

  5. Refer to the Instructions for Form 1099-MISC, Miscellaneous Income, for complete information about filing this form.

21.3.11.28.2  (01-01-2013)
Form 1099-K, Payment Card and Third Party Network Transactions

  1. A payment settlement entity (PSE) must file form 1099–K, Payment Card and Third Party Network Transactions, for payments made in settlement of reportable payment transactions for each calendar year.

  2. A PSE is a domestic or foreign entity that is a merchant acquiring entity, that is, a bank or other organization that has the contractual obligation to make payment to participating payees in settlement of payment card transactions; or a third party settlement organization, that is, the central organization that has the contractual obligation to make payments to participating payees of third party network transactions.

  3. A participating payee is any person, including any governmental unit (and any agency or instrumentality of a governmental unit) who accepts a payment card, or any account number or other indicia associated with a payment card, as payment or accepts payment from a third party settlement organization in settlement of a third party network transaction.

  4. The following information must be reported on the form:

    • Box 1 - The gross amount of the total reportable payment card/third party network transactions for the calendar year

    • Box 2- The four-digit Merchant Category Code (MCC) that best identifies the type of business of the recipient of the Form 1099-K

    • Box 3 - Number of purchase transactions (optional)

    • Box 4 - Reserved

    • Boxes 5a - 5l - The gross amount of the total reportable payment transactions for each month of the calendar year

    • Boxes 6-8 - Reserved

  5. This was a new form for 2011. Refer to the Instructions for Form 1099-K for additional information about the filing requirements and exceptions.

21.3.11.29  (05-01-2010)
Retirement Plan Reporting

  1. This section provides information pertaining to forms used to report information about retirement accounts, life insurance contracts, profit sharing plans, etc.

21.3.11.29.1  (01-01-2012)
Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.

  1. Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, must be filed by trustees or plan administrators for each person to whom they have made a designated distribution or are treated as having made a distribution of $10 or more from profit-sharing or retirement plans, any individual retirement arrangements, annuities, pensions, insurance contracts, survivor income benefit plans, permanent and total disability payments under life insurance contracts, charitable gift annuities, etc.

  2. Distributions must be reported as follows:

    • Box 1, Gross Distribution - This is the total amount of the distribution before income tax or other deductions were withheld.

    • Box 2a, Taxable Amount - This is the taxable part of the distribution reported in Box 1. If the taxable amount cannot be determined, this box may be left blank. There are special instructions for this box for SEP IRA and SIMPLE IRA distributions.

    • Box 2b, Taxable Amount Not Determined - If box 2a is left blank, the filer must check this box; Total Distribution - If the amount in box 1 is a total distribution, this box must be checked.

    • Box 3, Capital Gain - (Included in box 2a), If there is any amount taxable as capital gain, it must be reported in this box.

    • Box 4, Federal Income Tax Withheld - Report any federal income tax withheld and deposited with IRS.

    • Box 5, Employee Contributions/Designated Roth Contributions or Insurance Premiums - This box is used to report employee contributions to a profit-sharing or retirement plan, or insurance premiums that the employee may recover tax free.

    • Box 6, Net Unrealized Appreciation (NUA) in Employer's Securities - This box should be used if a distribution includes securities of the employer corporation and the payer can compute the net unrealized appreciation in the employer's securities.

    • Box 7, Distribution Code(s) - Refer to the Guide to Distribution Codes in the Instructions for detailed information about which codes to report in this box depending on the type of plan and distribution. Filers must enter an "X" in the IRA/SEP/SIMPLE checkbox if the distribution is from a traditional IRA, SEP IRA, or SIMPLE IRA. It is not necessary to check the box for a distribution from a Roth IRA or for an IRA recharacterization .

    • Box 8, Other - The current actuarial value of an annuity contract that is part of a lump-sum distribution should be entered in this box. This amount should not be included in boxes 1 and 2a. If an annuity contract is part of a multiple recipient lump-sum distribution, enter in box 8, along with the current actuarial value, the percentage of the total annuity contract each Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., represents. Box 8 also includes the amount of the reduction in the cash value of an annuity contract or the cash surrender value of a life insurance contract due to charges or payments for qualified long-term care insurance contracts.

    • Box 9a, Your Percentage of Total Distribution - If this is a total distribution and it is made to more than one person, enter the percentage received by the person whose name appears on Form 1099-R. The payer is not required to complete this box for any IRA distributions or for a direct rollover.

    • Box 9b, Total Employee Contributions - In prior years, payers were required to report this information to the IRS. Because of a tax law change, this is no longer required information; however, the information can be useful to the recipient and the plan trustee may choose to report. If the trustee chooses to report the total employee contributions, he must not include any amounts recovered tax free in prior years. Refer to box 9b in the instructions for further information.

    • Box 10, Amount Allocable to IRR within 5 years - Enter the amount of the distribution allocable to an IRR made within the 5 year period beginning with the first day of the year in which the rollover was made.

    • Box 11, 1st year of designation Roth Contributions - Enter the year in which the designated Roth account was first established by the recipient.

    • Boxes 12-17, State and Local Information - These boxes are provided for the payer's convenience only and need not be completed for the IRS.

  3. Refer to the Specific Instructions for Form 1099-R for detailed information.

21.3.11.29.2  (01-01-2013)
Form 5498, IRA Contribution Information

  1. Form 5498, IRA Contribution Information, is used by trustees and plan administrators to report contributions and the Fair Market Value (FMV) of IRA accounts, including those deemed IRA under IRC 408(q).

  2. The types of IRAs that are reported on Form 5498, IRA Contribution Information, are:

    • Traditional Individual Retirement Accounts (IRAs)

    • Roth IRAs

    • Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) IRAs

    • Simplified Employee Pensions (SEPs)

    • Salary Reduction Simplified Employee Pensions (SARSEPs)

    • Conduit IRAs.

  3. Participants can make contributions to their traditional IRAs for a year at any time during the year or by the due date for filing their income tax return for that year, not including extensions. For contributions made between January 1 and April 15, trustees should obtain the participant's designation of the year for which the contributions are made.

  4. Contributions must be reported as follows.

    • Box 1, IRA Contributions (Other Than Amounts in Boxes 2-4, 8-10, 13a, and 14a) - Trustees must enter contributions to a traditional IRA made during the current year and through April 15 of the filing year, that are designated for the current year.

    • Box 2, Rollover Contributions - Trustees must enter any rollover contributions, or contributions treated as rollovers, to any IRA received during the current year.

    • Box 3, Roth IRA Conversion Amount - Trustees must enter the amount converted or reconverted from a traditional IRA, SEP IRA, or SIMPLE IRA to a Roth IRA during the current year.

    • Box 4, Recharacterized Contributions - Trustees must enter any amounts recharacterized plus earnings from one type of IRA to another.

    • Box 5, Fair Market Value (FMV) of Account - Trustees must enter the FMV of the account as of December 31.

    • Box 6, Life Insurance Cost Included in Box 1 - For endowment contracts only, trustees must enter the amount included in box 1 allocable to the cost of life insurance.

    • Box 7, Checkboxes, IRA, SEP, SIMPLE, Roth IRA - The appropriate box must be checked depending on the type of account being reported.

    • Box 8, SEP Contributions - Trustees must report employer contributions made to a SEP or salary deferrals under a SARSEP during the current year and contributions made during the current year for the prior year. They must also include SEP contributions made by a self-employed person to his or her own account.

    • Box 9, SIMPLE Contributions - Trustees must report any contribution made to a SIMPLE IRA during the current year.

    • Box 10, Roth IRA Contributions - Trustees must enter any contribution made to a Roth IRA during the current year through April 15 of the filing year that are designated for the current year.

    • Box 11, Check if RMD - Trustees must check this box if the participant is required to take a Required Minimum Distribution (RMD) for the upcoming year (filing year).

    • Box 12a, RMD Date - If the trustee is using Form 5498, IRA Contribution Information, to report additional information about the RMD, they should enter the RMD date here.

    • Box 12b, RMD Amount - If the trustee is using Form 5498, IRA Contribution Information, to report additional information about the RMD, they should enter the amount of RMD here.

    • Box 13a, Postponed Contribution - Trustees must report the amount of any postponed contribution made in the current year for a prior year.

    • Box 13b, Year - Trustees must enter the year for which the postponed contribution in box 13a was made.

    • Box 13c, Code - Trustees must enter a code to establish the reason for the postponed contribution.

    • Box 14a, Repayments - Trustees must enter the amount of any repayment of a qualified reservist distribution or a designated disaster distribution repayment.

    • Box 14b, Code - Trustees must enter "QR" for the repayment of a qualified reservist distribution, or "DD" for repayment of a federally designated disaster distribution.

  5. Form 5498, IRA Contribution Information, is a very complicated form. Refer to the Specific Instructions for Form 5498 for detailed information.

21.3.11.29.3  (01-01-2013)
Form 8955-SSA, Annual Registration Statement Identifying Separated Participants With Deferred Vested Benefits

  1. Form 8955-SSA, Annual Registration Statement Identifying Separated Participants With Deferred Vested Benefits, is a form that is required to be reported by pension plan administrators and/or sponsors.

  2. Administrators of retirement plans are required to report any participants who:

    • Have not previously been reported, or

    • Have previously been reported under another plan, but who will be receiving benefits from the plan listed above instead, or

    • Have previously been reported under this plan but have been paid out or are no longer entitled to those deferred vested benefits, or

    • Have previously been reported under this plan but whose information is being revised.

  3. The information reported on Form 8955-SSA, Annual Registration Statement Identifying Separated Participants With Deferred Vested Benefits, is given to the Social Security Administration(SSA). The SSA provides the reported information to separated participants when they file for social security benefits.

  4. If a call is received by assistors in CSS or QCS pertaining to the electronic filing of these forms, transfer the call to the Special Projects application (#92486).

  5. If a call is received pertaining to tax law or the paper filing requirements for these forms, refer the customer to the IRS Tax Exempt/Government Entities Help Line at 1-877-829-5500.

21.3.11.30  (05-01-2010)
Forms Associated with Real Estate Transactions

  1. The following form is used to report the sale or exchange of real estate.

21.3.11.30.1  (05-01-2010)
Form 1099-S, Proceeds From Real Estate Transactions

  1. IRC 6045 requires that the gross proceeds from certain real estate transactions be reported to the IRS. Information identifying the transfer or (seller) of real property and the amount of money received from the transferee (buyer) is used by the IRS to compare to the seller's basis (investment in the property) to calculate whether any taxable profit has been generated by the sale or exchange of the real estate.

  2. Reportable real estate consists of the following:

    1. Improved or unimproved land, including air space

    2. Inherently permanent structures, including any residential commercial, or industrial building

    3. A condominium unit and its appurtenant fixtures and common elements, including land

    4. Stock in a cooperative housing corporation (as defined in IRC 216)

  3. Generally, the person responsible for closing the transaction is responsible for filing Form 1099-S, Proceeds From Real Estate Transactions.

  4. The information required to be reported is:

    • Box 1 - Date of Closing

    • Box 2 - Gross Proceeds

    • Box 3 - Address or legal description of the property

    • Box 4 - A checkbox if the transferor received or will receive property or services as part of the consideration

    • Box 5 - Buyer's Part of Real Estate Tax

  5. Refer to the Instructions for Form 1099-S for more complete information about the reporting requirements and exceptions to those requirements.

21.3.11.31  (05-01-2010)
Reporting of Airline Payments

  1. The following form is used by airlines that have made certain distributions to employees due to a Federal order of bankruptcy.

21.3.11.31.1  (05-01-2010)
Form 8935, Airline Payments Report

  1. Commercial passenger airline carriers that pay one or more airline payment amounts are required to file Form 8935, Airline Payments Report.

  2. Reportable Airline payment amounts are defined as, "Any money or other property paid by a commercial passenger airline carrier to a qualified airline employee under the approval of an order of a Federal bankruptcy court in a case filed after September 11, 2001 and before January 1, 2007 for the employee's interest in a bankruptcy claim against the carrier, any note of the carrier (or amount paid in lieu of a note being issued), or any other fixed obligation of the carrier to pay a lump sum amount."

  3. The information required to be reported is:

    • Box 1 - Report the total airline payment amount paid to the recipient.

    • Boxes 2a - 6a - Report the year(s) in which the payment(s) were made.

    • Boxes 2b - 6b - Report the annual amount(s) paid.

  4. An Interaction must be created for every call received pertaining to Form 8935, Airline Payments Report.

  5. Refer to the Instructions for Form 8935 for more detailed information about filing this form.

21.3.11.32  (05-01-2010)
Forms Used to Report Gambling and Wagering Transactions

  1. The following forms are used to report amounts won and withholding from wagering or gambling transactions.

21.3.11.32.1  (05-01-2010)
Form W-2G, Certain Gambling Winnings

  1. Form W-2G, Certain Gambling Winnings, is an information return used to report specific wagering payoffs as required by IRC 6041. The information is used by the IRS to determine the tax liability of the winner. Some of the payments may be subject to withholding.

  2. Form W-2G, Certain Gambling Winnings, must be filed by each entity conducting gambling activities if specific wagering and payoff criteria are met.

  3. There are two types of withholding on gambling winnings:

    1. Regular gambling withholding at 25 percent (33.33 percent for certain noncash payments)

    2. Backup withholding at 28 percent

    3. If a payment is subject to regular gambling withholding, it is not subject to backup withholding

  4. The information required to be reported is:

    • Box 1, Gross winnings

    • Box 2, Federal income tax withheld

    • Box 3, Type of wager

    • Box 4, Date won

    • Box 5, Transaction

    • Box 6, Race

    • Box 7, Winnings from identical wagers

    • Box 8, Cashier

    • Box 9, Winner's taxpayer identification number

    • Box 10, Window

    • Box 11, First ID

    • Box 12, Second ID

    • Box 13, State/Payer's state identification number

    • Box 14, State income tax withheld

  5. Payers must file Form W-2G, Certain Gambling Winnings, for whom federal income tax was withheld under the backup withholding rules.

  6. Reporting requirements on Form W-2G, Certain Gambling Winnings, are different depending on the type of gambling activity.

  7. Refer to the Specific Instructions for Form W-2G for detailed information about the reporting and withholding requirements.

21.3.11.32.2  (05-01-2010)
Form 5754, Statement by Person(s) Receiving Gambling Winnings

  1. Form 5754, Statement by Person(s) Receiving Gambling Winnings, is used by the winner of gambling or wagering proceeds to furnish all information required to the payer about additional winners of the prize.

  2. The payer is required to file Form W-2G, Certain Gambling Winnings, based on the information provided on Form 5754, Statement by Person(s) Receiving Gambling Winnings. Payers must keep Form 5754, Statement by Person(s) Receiving Gambling Winnings in their records. It is not filed with the IRS.

  3. The following information is required:

    • Part I lists the identification of the person to whom the winnings are paid.

    • Part II lists the actual winners' names, their respective shares of the winnings, their TINs, addresses, and any additional winnings from identical wagers.

    • If regular gambling withholding is required, the form must be signed, under penalties of perjury, and dated by the person receiving the winnings.

  4. Refer to the Specific Instructions for Form 5754 for more complete information.

21.3.11.33  (05-01-2010)
Forms Used to Report Wages and Certain Benefits

  1. The following forms are used to report wages and certain fringe benefits paid to U.S. employees and resident aliens.

21.3.11.33.1  (01-01-2013)
Form W-2, Wage and Tax Statement

  1. Employers must file Form W-2, Wage and Tax Statement, for wages paid to each employee from whom:

    • Income, social security, or Medicare tax was withheld, or

    • Income tax would have been withheld if the employee had claimed no more than one withholding allowance or had not claimed exemption from withholding on Form W-4, Employee's Withholding Allowance Certificate.

  2. Also, every employer engaged in a trade or business who pays remuneration for services performed by an employee, including noncash payments, must file a Form W-2, Wage and Tax Statement, for each employee even if the employee is related to the employer.

  3. For additional information on "Who Are Employees?" , see Publication 15-A,Employer's Supplemental Tax Guide.

  4. The information required to be reported is:

    • Box 1, Wages, Tips and Other Compensation - Employers must show the total taxable wages, tips, and other compensation (before payroll deductions) that they paid to an employee.

    • Box 2, Federal Income Tax Withheld - Employers must show the total amount of all federal income tax withheld from the employee's wages for the year. For information about withholding requirements, see Publication 15,(Circular E) Employer's Tax Guide.

    • Box 3, Social Security Wages - Employers must show the total wages paid (before payroll deductions) that are subject to employee social security tax, but not including social security tips and allocated tips.

    • Box 4, Social Security Tax Withheld - Employers must show the total employee social security tax (not the employer's share) withheld, including social security tax on tips.

    • Box 5, Medicare Wages and Tips - The wages and tips subject to Medicare tax are the same as those subject to social security tax, except that there is no wage base limit for Medicare tax.

    • Box 6, Medicare Tax Withheld - Employers must enter the total employee Medicare tax (not the employer's share) that was withheld.

    • Box 7, Social Security Tips - Employers must show the tips that were reported to them even if they did not have enough employee funds to collect the social security tax for the tips.

    • Box 8, Allocated Tips - Employers for large food and beverage establishments must show the tips allocated to each employee. This amount is not included in boxes 1, 3, 5 or 7. See IRM 21.3.11.33.5 for information about computing allocated tips on Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips.

    • Box 9, Reserved.

    • Box 10, Dependent Care Benefits - Employers must show the total of dependent care benefits under a dependent care assistance program paid or incurred for the employee.

    • Box 11, Nonqualified Plans - Employers must report distributions to employees from nonqualified plans or a nongovernmental IRC 457(b) plan. If no distributions were made during the year, the employer must report the amount of deferrals (plus earnings) that were made to a nonqualified plan or IRC 457(b) governmental plan that became taxable for social security and Medicare taxes during the year but were for prior year services that are no longer subject to a substantial risk of forfeiture.

    • Box 12, Codes - Employers must complete and code this box with various types of payments, such as, uncollected taxes, fringe benefits, other income and deferrals. Employers must use the codes supplied in the Specific Instructions for Form W-2. For information about taxable and nontaxable fringe benefits, see Publication 15-B,Employer's Tax Guide to Fringe Benefits.

    • Box 13, Checkboxes - Employers must check all boxes that apply; Statutory Employee, Retirement Plan, and Third-party sick pay. See the Instructions for Box 13 for additional information.

    • Box 14, Other - This box may be used by employers to report other information that they would like to provide to the employee. Each item should be labeled. Employers are required to report the lease value of a vehicle provided to an employee in this box, as well as in box 1.

    • Boxes 15-20, State and Local Income Tax Information - These boxes are furnished as a convenience to the employer to report state and local wages and tax withheld to the employee. The IRS does not require the use of these boxes.

  5. For detailed information, refer to the Specific Instructions for Form W-2.

21.3.11.33.2  (01-01-2012)
Form W-3, Transmittal of Wage and Tax Statements

  1. Form W-3, Transmittal of Wage and Tax Statements, is used to transmit/send Copies A of Form W-2, Wage and Tax Statement, to the Social Security Administration.

  2. The mailing address is:

    Social Security Administration

    Data Operations Center

    Wilkes-Barre, PA 18769-0001

  3. Box b has been expanded to include a new section, "Kind of Employer," which contains five new checkboxes. Filers are required to check one of these new checkboxes. If none of the other checkboxes apply, the "None Apply" checkbox must be checked.

  4. Information required to be reported is:

    • Boxes 1 - 11, Employers must enter the totals reported in Boxes 1 through 11 on the accompanying Form W-2, Wage and Tax Statement.

    • Box 12a, Deferred Compensation - Employers must enter the total of all amounts reported with codes D-H, S, Y, AA, and BB. They should enter money amounts only, no codes.

    • Box 12b, Reserved.

    • Box 13, For Third-Party Sick Pay Use Only - Third-party payers of sick pay (or employers using the optional rule for Form W-2, Wage and Tax Statement.

    • Box 14, Income Tax Withheld by Payer of Third-Party Sick Pay - Employers who have employees that had federal income tax withheld by a third party must report the withheld amounts in this box.

    • Box 15, State/Employer's State ID Number - If employers reported state wages and income tax withheld on Form W-2, Wage and Tax Statement, complete this box with the state abbreviation and tax ID number.

    • Boxes 16-19, If employers reported state and local wages on Form W-2, Wage and Tax Statement, they should report the totals in these boxes.

  5. For complete information, see the Specific Instructions for Form W-3.

21.3.11.33.3  (05-01-2010)
Form W-2c, Corrected Wage and Tax Statement

  1. Form W-2c, Corrected Wage and Tax Statement, is used to correct errors on Form W-2, Wage and Tax Statement, Form W-2AS, American Samoa Wage and Tax Statement, Form W-2GU, Guam Wage and Tax Statement, Form W-2VI, U.S. Virgin Islands Wage and Tax Statement, or Form W-2c, Corrected Wage and Tax Statement, filed with the Social Security Administration.

  2. Form W-2c, Corrected Wage and Tax Statement, should be filed with SSA as soon as possible after the employer discovers an error with a filed Form W-2, Wage and Tax Statement, or Form W-2c, Corrected Wage and Tax Statement.

  3. Advise employers to complete the money amount boxes on Form W-2c, Corrected Wage and Tax Statement, as follows:

    • Boxes 1 - 20, For the items being changed, enter under "Previously reported" the amount reported on the original forms. Enter the correct amount under "Correct information" .

    • Box 2, Federal Income tax withheld - Use this box only to make corrections because of an administrative error.

    • Boxes 3 and 4, Complete these boxes to correct social security wages and social security tax withheld.

    • Boxes 5 and 6, Complete these boxes to correct Medicare wages and tips and Medicare tax withheld.

    • Box 7, Complete this box to correct social security tips.

    • Boxes 8 - 11, Use these boxes to correct allocated tips, dependent care benefits, or deferrals and distributions relating to nonqualified plans.

    • Box 12, Codes - Complete these boxes to correct any of the coded items shown on Form W-2, Wage and Tax Statement. Employers should enter both the code and amounts for both fields on Form W-2c, Corrected Wage and Tax Statement.

    • Box 13, Check the box under "Previously reported" as they were checked on the original Form W-2, Wage and Tax Statement, under "Correct information" , check the box as they should have been checked.

    • Box 14, Use this box to correct items reported in box 14 of the original Form W-2, Wage and Tax Statement. Advise the employer not to file Form W-2c, Corrected Wage and Tax Statement, with SSA if box 14 corrections are the only changes being reported on the form.

    • Boxes 15 - 20, The employer must contact the state or locality for specific reporting information in these boxes. Advise the employer not to file with SSA if these are the only changes being reported on the form.

  4. To correct an employee's name and/or SSN, employers must complete box d through box i, as appropriate. Tell the employer to make sure the incorrect information is reported in boxes f and/or g. Do not complete boxes 1 through 20.

  5. For additional information, refer to Instructions for Form W-2c.

21.3.11.33.4  (01-01-2011)
Form W-3c, Transmittal of Corrected Wage and Tax Statements

  1. Form W-3c, Transmittal of Corrected Wage and Tax Statements, is used as a transmittal form for Form W-2c, Corrected Wage and Tax Statement, being sent to the Social Security Administration.

  2. Form W-3c, Transmittal of Corrected Wage and Tax Statements can be filed alone to correct an Employer Identification Number on a previously filed Form W-3c, Transmittal of Corrected Wage and Tax Statements.

  3. The following information must be reported in the money amount boxes.

    • Boxes 1 - 12b, Enter the totals of each box and each column from Form W-2c, Corrected Wage and Tax Statement. For box 12a, enter only the total of codes D-H, S, Y, AA, and BB. For box 12b, enter the total amounts coded with CC on Form(s) W-2c, Corrected Wage and Tax Statement.

    • Box 14, Enter the amount previously reported and corrected amount of income tax withheld on third-party payments of sick pay.

    • Boxes 16 -19, If this is the only information being reported, do not send Form W-2c, Corrected Wage and Tax Statement, and Form W-3c, Transmittal of Corrected Wage and Tax Statements to SSA. Advise the employer to contact the state or locality for address information.

    • Explain decreases here. Explain any decreases in amounts "Previously reported" . Also report here any previous, incorrect entry in box c.

  4. See the Instructions for Forms W-2c and W-3c for more complete information on the filing requirements.

21.3.11.33.5  (01-01-2012)
Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips

  1. Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips, is used by large food or beverage establishments when the employer is required to make annual reports to the IRS on receipts from food or beverage operations and tips reported by employees.

  2. Establishments providing food and beverages for on-site consumption and who employ more than ten employees on a typical day may have to report allocated tips if tipping is customary in the establishment. Generally, allocated tips must be reported in box 8 of Form W-2, Wage and Tax Statement, if the total of the tips reported to the employer by the employees does not total eight percent of the gross receipts of the establishment. The allocated tips are not included in total wages, and there is no federal tax, social security or Medicare tax withheld. The employer should make the allocation and report to the IRS using Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips.

  3. There are two types of tips reported on Form W-2, Wage and Tax Statement, and calculated on Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips.

    • Reported tips - These are the cash tips an employee must report to the employer on Form 4070, Employee's Report of Tips to Employer. Tips are reported in boxes 1, 5, and 7 on Form W-2, Wage and Tax Statement. They are subject to withholding, reported in boxes 2, 4, and 6. See IRM 21.3.11.33.1 for information for reporting this type of tip income.

    • Allocated tips - Employers use Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips, to compute allocated tips. Generally, the amount allocated is the difference between the total tips reported and eight percent of gross receipts. The excess is allocated among employees.

  4. Employers who operate establishments in the 50 states and the District of Columbia must file Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips, with the IRS.

  5. When an employer owns more than one establishment, a Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips, must be filed for each establishment.

  6. The due date for filing Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips, with the IRS is February 28 (paper) or March 31 (electronically). Information about filing this form electronically is provided in Publication 1239, Specifications for Filing Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips, Electronically.

  7. The information required to be reported on the form is:

    • Line 1, the total amount of charged tips for the calendar year.

    • Line 2, the total sales from charge receipts showing charged tips.

    • Line 3, the total amount of service charges of less than ten percent paid as wages to employees.

    • Line 4a, the total amount of tips reported for the year by indirectly tipped employees.

    • Line 4b, the total amount of tips reported for the year by directly tipped employees.

    • Line 4c, the total tips reported (Line 4a + Line 4b).

    • Line 5, the total gross receipts from the provision of food or beverages for the year.

    • Line 6, the result of multiplying line 5 by eight percent (.08) or a lower rate if the establishment was granted a lower rate by the IRS.

    • Line 7, the excess of the amount reported on Line 6 over the amount on Line 4c. This excess must be allocated to the employees in one of the following three ways: Line 7a, Hours worked method; Line 7b, Gross receipts method; and Line 7c, Good-faith agreement.

    • Line 8, the total number of directly tipped employees who worked at the establishment during the year.

    • Signature line, the signature, title, date signed, and telephone number.

  8. See the Instructions for Form 8027 for more complete information on the filing requirements.

21.3.11.34  (05-01-2010)
Correcting Form 1097, List of Dividend Payments, Form 1098 series, Form 1099 series, Form 3921, Exercise of an Incentive Stock Option Under Section 422(b), Form 3922, Exercise of an Incentive Stock Option Under Section 422(b), Form 5498 series and Form W-2G, Certain Gambling Winnings

  1. A correction is an information return submitted by a filer or transmitter to correct an information return that was previously submitted to and processed by the IRS, but it contained erroneous information.

  2. There are no due dates for submitting corrections; however, they should be filed as soon as possible after the error is found.

  3. Corrections filed after August 1st may be subject to the maximum penalty of $100 per return. Corrections filed prior to August 1st may be subject to lesser penalties.

  4. There are two correction procedures depending on the type of error that was made.

  5. If you receive a call from a payer that needs assistance in correcting any of the information returns listed above and they are filing on paper, you must refer them to the General Instructions for Certain Information Returns (Forms 1097, 1098,1099, 3921, 3922, 5498 and W-2G).

  6. If a customer is asking about filing corrections and they are filing the forms listed above electronically, you must refer them to Publication 1220, Specifications for Filing Forms 1097, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G Electronically. Part A, Section 8.

21.3.11.35  (05-01-2010)
Non-Receipt, Incorrect, Loss of Form W-2, Wage and Tax Statement, Form 1099 series, Form 1098 series

  1. Taxpayers who are no longer employed by a company may request assistance in securing a Form W-2, Wage and Tax Statement, for the following circumstances:

    • The employer has no forwarding address for the employee

    • The employer may have considered the taxpayer an independent contractor

    • Conditions of separation are less than favorable

  2. If an employee/payee calls about the non-receipt of a Form W-2, Wage and Tax Statement, or a Form 1099, advise the customer that the employer/payer has until January 31 of the year following the payment to issue income statements to payees. If the contact /inquiry is prior to February 14th in the current processing year, advise the taxpayer to contact the employer/payer. If the call is after February 14th, advise the customer to call 1-800-829-1040. Also advise customers that they should always attempt to obtain the form(s) from the employer/payer prior to contacting the IRS.

  3. If a payee/employee calls and states that they have lost their form, you must refer them to the payer/employer. The payer or employer has a right to charge the payee/employee for the additional copy. If the payee/employee has already contacted the payer/employer and could not get a new copy of the form(s), refer them to 1-800-829-1040 for assistance in completing their personal tax return.

  4. If an employee states the SSN on their Form W-2, Wage and Tax Statement, is incorrect, follow the procedures below:

    If And Then
    an employee calls and states that he/she discovered the SSN on their Form W-2, Wage and Tax Statement, was incorrect, the person has already filed their personal tax return, advise the taxpayer to contact their employer for a Form W-2c, Corrected Wage and Tax Statement. Taxpayers should check their Social Security statement received at least one full year after the correction. If the earnings shown on Form W-2c, Corrected Wage and Tax Statement, are not shown on the statement, they should contact SSA at the telephone number shown on the statement. For information about their personal tax return, refer the customer to 1-800-829-1040.
    an employee calls and states that he/she discovered the SSN on their Form W-2, Wage and Tax Statement, was incorrect, the person has not already filed their personal tax return, advise the taxpayer to contact their employer for a Form W-2c, Corrected Wage and Tax Statement. Refer the customer to 1-800-829-1040 for help with their personal tax return. Additionally, advise to check their Social Security statement at least one full year after the correction. If the earnings shown on Form W-2c, Corrected Wage and Tax Statement, are not shown on the statement, they should contact SSA at the telephone number shown on the statement.

21.3.11.36  (01-01-2011)
Electronic Filing

  1. IRC 6011(e)(2)(A) requires payers who file 250 or more information returns to file those returns electronically. Payers who are under the filing threshold requirement are encouraged to file electronically.

  2. Employers filing 250 or more Forms W-2, Wage and Tax Statement, must file those returns electronically. Form W-2, Wage and Tax Statement, is filed with the Social Security Administration. Advise the customer to call SSA's Employer Reporting Branch at 1-800-772-6270 for format and specifications.

  3. SSA also has an online wage reporting program that allows filers of Form W-2, Wage and Tax Statement, to file electronically by entering wage data directly from their personal computers. Advise employers to contact SSA directly at Business Services Online, 1-888-772-2970 or refer the customer to the SSA website at www.socialsecurity.gov/employer and select "Business Services Online (BSO)" to register.

  4. Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, Form 1097-BTC, Bond Tax Credit, Form 1098 series, Form 1099 series, Form 3921, Exercise of an Incentive Stock Option Under Section 422(b), Form 3922, Exercise of an Incentive Stock Option Under Section 422(b), Form 5498 series, Form 8935, Airline Payments Report, and Form W-2G, Certain Gambling Winnings, are also required to be filed electronically if a payer is filing 250 or more of any one type of these forms.

  5. This filing requirement (250 or more) applies separately to originals and corrections.

  6. If Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, Form 1097-BTC, Bond Tax Credit, Form 1098 series, Form 1099 series, Form 3921, Exercise of an Incentive Stock Option Under Section 422(b), Form 3922, Transfer of Stock Acquired Through an Employee Stock Plan Under Section 423(c), Form 5498 series, Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips, Form 8935, Airline Payments Report, Form 8955-SSA, Annual Registration Statement Identifying Separated Participants With Deferred Vested Benefits, and Form W-2G, Certain Gambling Winnings, are required to be filed electronically, they must be filed with IRB through the Filing Information Returns Electronically (FIRE) system. See Publication 1220, Specifications for Filing Forms 1097, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G Electronically, Publication 1187,Specifications for Filing Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, Electronically, Publication 1239, Specifications for Filing Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips, Electronically, and/or Publication 4810, Specifications for Filing, Form 8955-SSA, Annual Registration Statement of Identifying Separated Participants With Deferred Vested Benefits, Electronically,for the format and specifications of the files.

    Note:

    Remind customers that they must have software that can produce a file in the proper format. The FIRE system does not provide a fill-in form option for information return reporting.

21.3.11.36.1  (01-01-2013)
The FIRE System

  1. The FIRE system is the means by which transmitters can send information returns electronically to the IRS. It is an internet based system. The address is http://fire.irs.gov or http://fire.test.irs.gov to connect to the FIRE test system.

  2. The advantages of filing electronically are:

    1. Paperless

    2. Results are available in 1 to 2 business days

    3. There is a later due date (3/31 as opposed to 2/28)

    4. Better customer service due to the online availability of transmitter files

    5. Available 24 hours a day 7 days a week, except for every Wednesday from 2:00 a.m. to 5:00 a.m. for programming updates and the last two weeks of the year when the system is down for yearly updates

  3. If customers question whether they are required to file electronically, probe to determine how many forms they are filing.

  4. If they have 250 or more, they are required to file them electronically unless they are granted a waiver with Form 8508, Request for Waiver from Filing Information Returns Electronically, from the electronic filing requirement.

  5. If they have less than 250 and it is prior to February 28, they can do one of the following.

    • File the forms on paper

    • Buy software to produce the file themselves

    • File the returns through a third party/transmitter

  6. If the customer decides to buy software, explain procedures to apply for a TCC using Form 4419,Application for Filing Information Returns Electronically. Advise the customer that a transmitter must have an EIN to receive a TCC. SSNs are no longer accepted when filing Form 4419, Application for Filing Information Returns Electronically.

  7. If they have 250 or more forms and it is after February 28,

    • They can still file on paper; however, they could be subject to a penalty.

    • You can refer them to the IRS website at http://www.irs.gov for software or a third party provider. Advise to type "Business Providers" in the search box and then click on "Approved IRS e-File for Business Providers" , then "Information Returns" . This page provides a list of software companies that provide software, fill-in forms, etc.

21.3.11.36.2  (01-01-2013)
Form 4419, Application to File Information Returns Electronically

  1. Filers must use Form 4419, Application for Filing Information Returns Electronically, to request a Transmitter Control Code (TCC) to file Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, Form 1097-BTC, Bond Tax Credit, Form 1098 series, Form 1099 series, Form 3921, Exercise of an Incentive Stock Option Under Section 422(b), Form 3922, Transfer of Stock Acquired Through an Employee Stock Plan Under Section 423(c)Form 5498 series, Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips, Form 8809, Application for Extension of Time to File Information Returns, Form 8935, Airline Payments Report, Form 8955-SSA, Annual Registration Statement Identifying Separated Participants With Deferred Vested Benefits, and Form W-2G, Certain Gambling Winnings, electronically.

    Note:

    A Transmitter Control Code is not needed when filing Form 8809, Application for Extension of Time to File Information Returns, using the online system in FIRE.

  2. A TCC is a 5 digit alpha/numeric code that is required when formatting a file and submitting it through the FIRE system. The TCC must be coded in the Transmitter "T" Record. IRB uses the TCC to identify payers/transmitters and to track their files through the processing system.

  3. One Form 4419, Application for Filing Information Returns Electronically, can be used to apply to file Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, Form 1097-BTC, Bond Tax Credit, Form 1098 series, Form 1099 series, Form 3921, Exercise of an Incentive Stock Option Under Section 422(b), Form 3922, Transfer of Stock Acquired Through an Employee Stock Plan Under Section 423(c), Form 5498 series, Form, 8027, Employer's Annual Information Return of Tip Income and Allocated Tips, Form 8935, Airline Payments Report, Form 8955-SSA, Annual Registration Statement Identifying Separated Participants With Deferred Vested Benefits, and Form W-2G, Certain Gambling Winnings. IRB will issue separate TCCs when applicable. Only one TCC will be assigned per payer/transmitter Employer Identification Number (EIN) unless they are also filing other types of returns. For example, Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips, Form 8955-SSA, Annual Registration Statement Identifying Separated Participants With Deferred Vested Benefits, and Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, require a separate TCC.

  4. Remind filers that they must complete Form 4419, Application for Filing Information Returns Electronically, in its entirety. The following items are frequently submitted incorrectly:

    • Missing or incomplete EIN

    • Omission of the contact person's telephone number

    • Wrong organization identified as the transmitter

    • Filers incorrectly submitting Form 4419, Application for Filing Information Returns Electronically, for filing Form W-2, Wage and Tax Statement

    • Failure to check all the types of information returns to be filed

    • Submission of a new Form 4419, Application for Filing Information Returns Electronically, every year

    • Missing signature

  5. Transmitters/filers will keep the same TCC as long as they continue to file. If any information from the original application changes, they must notify IRB in writing.

  6. For additional information about Form 4419, Application for Filing Information Returns Electronically, and the application process, see Publication 1220, Specifications for Filing Forms 1097, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G Electronically, Part A, Section 6.

  7. If filers/transmitters do not use their TCCs for two consecutive years, the system automatically deletes them. If a filer does not use the TCC, a "TCC Not Used Letter" will be generated from IRB informing them that we have no record of receiving an electronic file using the TCC.

  8. When you receive calls because a filer/transmitter has received a "TCC Not Used Letter," explain the following:

    If Then
    the filer/transmitter will not be using the TCC in the future, explain that they do not have to take any action. The TCC will be deleted from our system automatically.
    the filer/transmitter wants to keep the TCC for future filing, explain that the TCC will not be deleted if they file returns in the next filing season (January - June) using the TCC.
    the filer/transmitter wants to keep the TCC and some of the entity information has changed, explain that they should mail or fax the letter back to IRB explaining that they want to keep the TCC and provide any changes to the entity information.
    the filer/transmitter states that they filed returns but used a different TCC, explain that the letter is only concerning the one TCC that was not used. If they don't need that TCC, explain that they do not have to take any action. The TCC will be deleted from our system automatically.
    the filer/transmitter states that they filed the returns using the TCC on the letter and the call was received in CSS or QCS, explain that you will have to transfer the call to someone at the FIRE system to research the submission. Transfer the call to EDMS (#92482).

  9. Assistors who are authorized to access the FIRE system will take the following actions:

    1. Complete authentication and authorization procedures. See IRM 21.3.11.11.4, Authentication and Authorization Guidelines.

    2. Ask for the Transmitter Control Code (TCC) listed on the letter.

    3. Look up the TCC in the FIRE Customer Service Representative (CSR) application and/or IR.MAG.1 to ensure that no files were received.

    4. Look up the User ID in the FIRE CSR Pword Log History to see if the customer was logged onto the system and did not upload the file, or the upload didn't finish, etc.

    5. Check the TIN on the Payer Master File (PMF) to see if the file was received using another TCC or on paper. The current year History File Search can also be used to check if the data was filed using another TCC.

    6. If the information is listed on the Payer Master File (PMF), explain to the customer that the information was filed on paper or electronically using another TCC. See the table above if the customer wants to keep the unused TCC on file.

    7. If the data is not on PMF, no file was received, the customer must send a file through the FIRE system or on paper if there are less than 250 records in the file.

21.3.11.36.2.1  (05-09-2012)
Forgotten Transmitter Control Code (TCC)

  1. If customers state that they have lost or forgotten their TCC, follow the guidance provided in IRM 3.42.9.8.6.1, Forgotten Transmitter Control Code.

21.3.11.36.3  (01-01-2013)
Publication 1220, Specifications for Filing Forms 1097, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G Electronically

  1. Publication 1220, Specifications for Filing Forms 1097, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G Electronically is published each year as a Revenue Procedure. For filing tax year 2012 returns, the publication is also published as Rev. Proc. 2012-33. It was published in the Internal Revenue Bulletin 2012-30, dated August 13, 2012.

  2. Publication 1220, Specifications for Filing Forms 1097, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G Electronically, provides the information, specifications, and necessary forms associated with filing Copy A of most information returns with the IRS using computer generated files instead of paper documents.

  3. Part A of the publication addresses the purpose of the publication, What's New for the current year, filing requirements and due dates, corrected returns, the Combined Federal/State Filing Program, and other general topics.

  4. Part B of the publication provides the electronic filing specifications covering topics such as the electronic filing approval procedure, test files, electronic submissions, how to connect to the FIRE system, and common problems and questions.

  5. Part C covers the record format specifications and the record layouts for each record in the file. Publication 1220, Specifications for Filing Forms 1097, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G Electronically, Part C will be your primary reference for answering electronic formatting questions.

  6. Part D addresses the specifications for filing extensions of time electronically and the record layout of the file. It also addresses Form 8508, Request for Waiver From Filing Information Returns Electronically.

  7. Publication 1220, Specifications for Filing Forms 1097, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G Electronically is not available in a printed version. Refer filers to the IRS web site at http://www.irs.gov/app/picklist/list/publicationsNoticesPdf.html.

21.3.11.36.3.1  (05-01-2010)
File Format

  1. Form 1097-BTC, Bond Tax Credit, Form 1098 series, Form 1099 series, Form 3921, Exercise of an Incentive Stock Option Under Section 422(b), Form 3922, Exercise of an Incentive Stock Option Under Section 422(b), Form 5498 series, Form 8935, Airline Payments Report, and Form W-2G, Certain Gambling Winnings, files must be formatted or organized according to specifications in Publication 1220, Specifications for Filing Forms 1097, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G Electronically. All files must be in standard ASCII code.

  2. In most cases, filers need to report the same exact data that is required on IRS paper forms. The electronic file is designed with records and specific field positions within the records to report certain portions of the data corresponding with different parts of the paper documents.

    Note:

    Generally, the box numbers on the paper forms correspond with the amount codes used to file electronically; however, if discrepancies occur, the instructions in Publication 1220, Specifications for Filing Forms 1097, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G Electronically, must be followed for electronic filing.

  3. A correctly formatted electronic file will be composed of a series of different records, each 750 field positions (spaces) in length, presented in a defined sequence.

  4. The files will contain five or six different kinds of records, each relating to a specific aspect of the paper forms.

  5. Each record is related in a particular manner to the records that either follow or precede it in sequence.

  6. The records must be arranged in the following sequence:

    1. "T" Record - Identifies the transmitter of the electronic file.

    2. "A" Record - Identifies the payer, the type of document being reported and other miscellaneous information.

    3. "B" Record - Identifies the payee, the specific payment amounts, and information pertinent to the type of form.

    4. "C" Record - Summary of "B" records for the payees, money amounts by the payer, and type of return.

    5. "K" Record - Summary of state(s) totals for Combined Federal/State files. Each state must have a separate "K" Record.

    6. "F" Record - End of transmission record.

  7. There can only be one "T" Record and one "F" Record per file. However there can be multiple series of "A" , "B" , "C" and "K" records in a file depending on the of type(s) of returns and different payers being reported.

  8. Refer to Publication 1220, Specifications for Filing Forms 1097, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G Electronically, Part C for specific information about the format for electronic files.

21.3.11.36.4  (01-01-2013)
Publication 1187, Specifications for Filing Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, Electronically

  1. Publication 1187, Specifications for Filing Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, Electronically, is published each year as a Revenue Procedure. For filing tax year 2012 returns, the publication is also published as Rev. Proc. 2012-36. It was published in the Internal Revenue Bulletin number 2012-39, dated September 24, 2012.

  2. Information is provided on specifications, and necessary forms associated with filing Copy A of Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, with the IRS using computer generated files instead of paper documents.

  3. Part A of the publication addresses the purpose of the publication, What's New for the current year, filing requirements and due dates, amended returns, and other general topics.

  4. Part B of the publication provides the electronic filing specifications covering topics such as the electronic filing approval procedure, test files, electronic submissions, how to connect to the FIRE system, and common problems and questions.

  5. Part C covers the record format specifications and the record layouts for each record in the file. Publication 1187, Part C will be your primary reference for answering electronic formatting questions pertaining to Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding.

  6. Part D addresses the specifications for filing extensions of time electronically and the record layout of the file. It also addresses Form 8508,Request for Waiver From Filing Information Returns Electronically.

  7. Publication 1187 is not available in a printed version. Refer filers to the IRS website at, http://www.irs.gov/app/picklist/list/publicationsNoticesPdf.html.

21.3.11.36.4.1  (05-01-2010)
File Format

  1. Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, files must be formatted or organized according to specifications in Publication 1187, Specifications for Filing Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, Electronically. All files must be in standard ASCII code.

  2. In most cases, filers need to report the exact same data that is required on the IRS paper forms. The electronic file is designed with records and specific field positions within the records to report certain portions of the data corresponding with different parts of the paper documents.

  3. A correctly formatted electronic file will be composed of a series of different records, each 820 field positions (spaces) in length, presented in a defined sequence.

  4. The files will contain five different kinds of records, each relating to a specific aspect of the paper forms.

  5. Each record is related in a particular manner to the records that either follow or precede it in sequence.

  6. The records must be arranged in the following sequence:

    1. "T" Record - Transmitter Record - Identifies the transmitter of the electronic file.

    2. "W" Record - Withholding Agent Record - Identifies the withholding agent and other miscellaneous information.

    3. "Q" Record - Recipient information - Identifies the payee, the specific payment amounts, withholding rates, amount withheld, and information pertinent to the form.

    4. "C" Record - Reconciliation Record - Summary of "Q" records for the payees, money amounts by the payer, and type of return.

    5. "F" Record - End of transmission record.

  7. There can only be one "T" Record and one "F" Record per file. However, there can be multiple series of "W" , "Q" , and "C" records in a file depending on the different withholding agents being reported.

  8. Refer to Publication 1187, Specifications for Filing Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, Electronically, Part C for specific information about the format for electronic files.


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