Breadcrumb Region

Internal Revenue Bulletin: 2014-45

November 3, 2014


Highlights of This Issue

These synopses are intended only as aids to the reader in identifying the subject matter covered. They may not be relied upon as authoritative interpretations.

INCOME TAX

REG–136676–13 REG–136676–13

This document contains proposed regulations that will remove a rule that a deemed discharge of indebtedness for which a Form 1099–C “Cancellation of Debt,” must be filed occurs at the expiration of a 36-month non-payment testing period.

Rev. Rul. 2014–28 Rev. Rul. 2014–28

Federal rates; adjusted federal rates; adjusted federal long-term rate and the long-term exempt rate. For purposes of sections 382, 642, 1274, 1288, and other sections of the Code, tables set forth the rates for November 2014.

Rev. Proc. 2014–56 Rev. Proc. 2014–56

Publication 1223 General Rules and Specifications for Substitute Forms W–2c and W–3c This procedure provides general rules and specifications from the Service for paper and computer-generated substitutes for Form W–2c and W–3c. This procedure will be reproduced as the next revision of Publication 1223, General Rules and Specifications for Substitute Forms W–2c and W–3c.

Rev. Proc. 2014–57 Rev. Proc. 2014–57

This procedure provides general rules and specifications from the Service for paper and computer-generated substitutes for Form 941, Employer's Quarterly Federal Tax Return, Schedule B (Form 941), Report of Tax Liability for Semiweekly Schedule Depositors, Schedule D (Form 941), Report of Discrepancies Caused by Acquisitions, Statutory Mergers, or Consolidations, and Schedule R (Form 941), Allocation Schedule for Aggregate Form 941 Filers.

Rev. Proc. 2014–58 Rev. Proc. 2014–58

This procedure provides general rules and specifications from the Service for paper and computer-generated substitutes for Form W–2 and W–3. This procedure will be reproduced as the next revision of Publication 1141 General Rules and Specifications for Substitute Forms W–2 and W–3.

Notice 2014–63 Notice 2014–63

2014 Marginal Production Rates: The notice announces that under § 613A(c)(6)(C) of the Internal Revenue Code, the applicable percentage for purposes of determining percentage depletion on marginal properties for calendar year 2014 is 15 percent. The format of the notice is identical to the format of notices previously published on this issue.

Notice 2014–64 Notice 2014–64

2014 Section 43 Inflation Adjustment: The notice announces the inflation adjustment factor and phase-out amount for the enhanced oil recovery credit for taxable years beginning in the 2014 calendar year. The format of the notice is identical to the format of previously published notices on this issue. The notice concludes that because the reference price for the 2013 calendar year ($96.13) exceeds $28 multiplied by the inflation adjustment factor for the 2013 calendar year ($28 multiplied by 1.5974 = $44.73) by $51.40, the enhanced oil recovery credit for qualified costs paid or incurred in 2014 is phased out completely. The notice also contains the previously published figures for taxable years beginning in the 1991 through 2013 calendar years.

EMPLOYMENT TAX

Rev. Proc. 2014–56 Rev. Proc. 2014–56

Publication 1223 General Rules and Specifications for Substitute Forms W–2c and W–3c This procedure provides general rules and specifications from the Service for paper and computer-generated substitutes for Form W–2c and W–3c. This procedure will be reproduced as the next revision of Publication 1223, General Rules and Specifications for Substitute Forms W–2c and W–3c.

Rev. Proc. 2014–57 Rev. Proc. 2014–57

This procedure provides general rules and specifications from the Service for paper and computer-generated substitutes for Form 941, Employer's Quarterly Federal Tax Return, Schedule B (Form 941), Report of Tax Liability for Semiweekly Schedule Depositors, Schedule D (Form 941), Report of Discrepancies Caused by Acquisitions, Statutory Mergers, or Consolidations, and Schedule R (Form 941), Allocation Schedule for Aggregate Form 941 Filers.

ADMINISTRATIVE

REG–136676–13 REG–136676–13

This document contains proposed regulations that will remove a rule that a deemed discharge of indebtedness for which a Form 1099–C “Cancellation of Debt,” must be filed occurs at the expiration of a 36–month non-payment testing period.

Preface

The IRS Mission

Provide America’s taxpayers top-quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all.

Introduction

The Internal Revenue Bulletin is the authoritative instrument of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service and for publishing Treasury Decisions, Executive Orders, Tax Conventions, legislation, court decisions, and other items of general interest. It is published weekly.

It is the policy of the Service to publish in the Bulletin all substantive rulings necessary to promote a uniform application of the tax laws, including all rulings that supersede, revoke, modify, or amend any of those previously published in the Bulletin. All published rulings apply retroactively unless otherwise indicated. Procedures relating solely to matters of internal management are not published; however, statements of internal practices and procedures that affect the rights and duties of taxpayers are published.

Revenue rulings represent the conclusions of the Service on the application of the law to the pivotal facts stated in the revenue ruling. In those based on positions taken in rulings to taxpayers or technical advice to Service field offices, identifying details and information of a confidential nature are deleted to prevent unwarranted invasions of privacy and to comply with statutory requirements.

Rulings and procedures reported in the Bulletin do not have the force and effect of Treasury Department Regulations, but they may be used as precedents. Unpublished rulings will not be relied on, used, or cited as precedents by Service personnel in the disposition of other cases. In applying published rulings and procedures, the effect of subsequent legislation, regulations, court decisions, rulings, and procedures must be considered, and Service personnel and others concerned are cautioned against reaching the same conclusions in other cases unless the facts and circumstances are substantially the same.

The Bulletin is divided into four parts as follows:

Part I.—1986 Code. This part includes rulings and decisions based on provisions of the Internal Revenue Code of 1986.

Part II.—Treaties and Tax Legislation. This part is divided into two subparts as follows: Subpart A, Tax Conventions and Other Related Items, and Subpart B, Legislation and Related Committee Reports.

Part III.—Administrative, Procedural, and Miscellaneous. To the extent practicable, pertinent cross references to these subjects are contained in the other Parts and Subparts. Also included in this part are Bank Secrecy Act Administrative Rulings. Bank Secrecy Act Administrative Rulings are issued by the Department of the Treasury’s Office of the Assistant Secretary (Enforcement).

Part IV.—Items of General Interest. This part includes notices of proposed rulemakings, disbarment and suspension lists, and announcements.

The last Bulletin for each month includes a cumulative index for the matters published during the preceding months. These monthly indexes are cumulated on a semiannual basis, and are published in the last Bulletin of each semiannual period.

Note

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.

Part I. Rulings and Decisions Under the Internal Revenue Code of 1986

Rev. Rul. 2014–28

This revenue ruling provides various prescribed rates for federal income tax purposes for November 2014 (the current month). Table 1 contains the short-term, mid-term, and long-term applicable federal rates (AFR) for the current month for purposes of section 1274(d) of the Internal Revenue Code. Table 2 contains the short-term, mid-term, and long-term adjusted applicable federal rates (adjusted AFR) for the current month for purposes of section 1288(b). Table 3 sets forth the adjusted federal long-term rate and the long-term tax-exempt rate described in section 382(f). Table 4 contains the appropriate percentages for determining the loW–income housing credit described in section 42(b)(1) for buildings placed in service during the current month. However, under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after July 30, 2008, with respect to housing credit dollar amount allocations made before January 1, 2014, shall not be less than 9%.

Finally, Table 5 contains the federal rate for determining the present value of an annuity, an interest for life or for a term of years, or a remainder or a reversionary interest for purposes of section 7520.

REV. RUL. 2014–28 TABLE 1
Applicable Federal Rates (AFR) for November 2014
Period for Compounding
Annual Semiannual Quarterly Monthly
Short-term
AFR .39% .39% .39% .39%
110% AFR .43% .43% .43% .43%
120% AFR .47% .47% .47% .47%
130% AFR .51% .51% .51% .51%
Mid-term
AFR 1.90% 1.89% 1.89% 1.88%
110% AFR 2.09% 2.08% 2.07% 2.07%
120% AFR 2.28% 2.27% 2.26% 2.26%
130% AFR 2.48% 2.46% 2.45% 2.45%
150% AFR 2.86% 2.84% 2.83% 2.82%
175% AFR 3.34% 3.31% 3.30% 3.29%
Long-term
AFR 2.91% 2.89% 2.88% 2.87%
110% AFR 3.21% 3.18% 3.17% 3.16%
120% AFR 3.50% 3.47% 3.46% 3.45%
130% AFR 3.80% 3.76% 3.74% 3.73%
REV. RUL. 2014–28 TABLE 2
Adjusted AFR for November 2014
Period for Compounding
Annual Semiannual Quarterly Monthly
Short-term adjusted AFR .39% .39% .39% .39%
Mid-term adjusted AFR 1.31% 1.31% 1.31% 1.31%
Long-term adjusted AFR 2.80% 2.78% 2.77% 2.76%
REV. RUL. 2014–28 TABLE 3
Rates Under Section 382 for November 2014
Adjusted federal long-term rate for the current month 2.80%
Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjusted federal long-term rates for the current month and the prior two months.) 2.94%
REV. RUL. 2014–28 TABLE 4
Appropriate Percentages Under Section 42(b)(1) for November 2014
Note: Under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after July 30, 2008, with respect to housing credit dollar amount allocations made before January 1, 2014, shall not be less than 9%.
Appropriate percentage for the 70% present value low–income housing credit 7.55%
Appropriate percentage for the 30% present value low–income housing credit 3.24%
REV. RUL. 2014–28 TABLE 5
Rate Under Section 7520 for November 2014
Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years, or a remainder or reversionary interest 2.2%

Part III. Administrative, Procedural, and Miscellaneous

Notice 2014–63

2014 Marginal Production Rates

This notice announces the applicable percentage under § 613A of the Internal Revenue Code to be used in determining percentage depletion for marginal properties for the 2014 calendar year.

Section 613A(c)(6)(C) defines the term “applicable percentage” for purposes of determining percentage depletion for oil and gas produced from marginal properties. The applicable percentage is the percentage (not greater than 25 percent) equal to the sum of 15 percent, plus one percentage point for each whole dollar by which $20 exceeds the reference price (determined under § 45K(d)(2)(C)) for crude oil for the calendar year preceding the calendar year in which the taxable year begins. The reference price determined under § 45K(d)(2)(C) for the 2013 calendar year is $96.13.

The following table contains the applicable percentages for marginal production for taxable years beginning in calendar years 1991 through 2014.

Notice 2014–63
APPLICABLE PERCENTAGE FOR MARGINAL PRODUCTION
Calendar Year Applicable Percentage
1991 15 percent
1992 18 percent
1993 19 percent
1994 20 percent
1995 21 percent
1996 20 percent
1997 16 percent
1998 17 percent
1999 24 percent
2000 19 percent
2001 15 percent
2002 15 percent
2003 15 percent
2004 15 percent
2005 15 percent
2006 15 percent
2007 15 percent
2008 15 percent
2009 15 percent
2010 15 percent
2011 15 percent
2012 15 percent
2013 15 percent
2014 15 percent

The principal author of this notice is Martha M. Garcia of the Office of Associate Chief Counsel (Passthroughs and Special Industries). For further information regarding this notice contact Ms. Garcia at (202) 317-6853 (not a toll-free number).

Notice 2014–64

2014 Section 43 Inflation Adjustment

Section 43(b)(3)(B) of the Internal Revenue Code requires the Secretary to publish an inflation adjustment factor. The enhanced oil recovery credit under § 43 for any taxable year is reduced if the “reference price,” determined under § 45K(d)(2)(C), for the calendar year preceding the calendar year in which the taxable year begins is greater than $28 multiplied by the inflation adjustment factor for that year. The credit is phased out in any taxable year in which the reference price for the preceding calendar year exceeds $28 (as adjusted) by at least $6.

The term “inflation adjustment factor” means, with respect to any calendar year, a fraction the numerator of which is the GNP implicit price deflator for the preceding calendar year and the denominator of which is the GNP implicit price deflator for 1990.

Because the reference price for the 2013 calendar year ($96.13) exceeds $28 multiplied by the inflation adjustment factor for the 2013 calendar year ($28 multiplied by 1.5974 = $44.73) by $51.40, the enhanced oil recovery credit for qualified costs paid or incurred in 2014 is phased out completely.

Table 1 contains the GNP implicit price deflator used for the 2014 calendar year, as well as the previously published GNP implicit price deflators used for the 1991 through 2013 calendar years.

Notice 2014–64 TABLE 1
GNP IMPLICIT PRICE DEFLATORS
Calendar Year GNP Implicit Price Deflator
1990 112.9 (used for 1991)
1991 117.0 (used for 1992)
1992 120.9 (used for 1993)
1993 124.1 (used for 1994)
1994 126.0 (used for 1995)*
1995 107.5 (used for 1996)
1996 109.7 (used for 1997)**
1997 112.35 (used for 1998)
1998 112.64 (used for 1999)***
1999 104.59 (used for 2000)
2000 106.89 (used for 2001)
2001 109.31 (used for 2002)
2002 110.63 (used for 2003)
2003 105.67 (used for 2004)****
2004 108.23 (used for 2005)
2005 112.129 (used for 2006)
2006 116.036 (used for 2007)
2007 119.656 (used for 2008)
2008 122.407 (used for 2009)
2009 109.764 (used for 2010)*****
2010 110.654 (used for 2011)
2011 113.347 (used for 2012)******
2012 115.387 (used for 2013)
2013 106.710 (used for 2014)*******

* Beginning in 1995, the GNP implicit price deflator was rebased relative to 1992. The 1990 GNP implicit price deflator used to compute the 1996 § 43 inflation adjustment factor is 93.6.

** Beginning in 1997, two digits follow the decimal point in the GNP implicit price deflator. The 1990 GNP price deflator used to compute the 1998 § 43 inflation adjustment factor is 93.63.

*** Beginning in 1999, the GNP implicit price deflator was rebased relative to 1996. The 1990 GNP implicit price deflator used to compute the 2000 § 43 inflation adjustment factor is 86.53.

**** Beginning in 2003, the GNP implicit price deflator was rebased, and the 1990 GNP implicit price deflator used to compute the 2004 § 43 inflation adjustment factor is 81.589.

***** Beginning in 2009, the GNP implicit price deflator was rebased, and the 1990 GNP implicit price deflator used to compute the 2010 § 43 inflation adjustment factor is 72.199.

****** Beginning in 2011, the 1990 GNP implicit price deflator used to compute the 2012 § 43 inflation adjustment factor is 72.260.

******* Beginning in 2013, the GNP implicit price deflator was rebased, and the 1990 GNP implicit price deflator used to compute the 2014 § 43 inflation adjustment factor is 66.803.

Table 2 contains the inflation adjustment factor and the phase-out amount for taxable years beginning in the 2014 calendar year as well as the previously published inflation adjustment factors and phase-out amounts for taxable years beginning in the 1991 through 2013 calendar years.

DRAFTING INFORMATION

The principal author of this notice is Martha M. Garcia of the Office of Associate Chief Counsel (Passthroughs and Special Industries). For further information regarding this notice, contact Ms. Garcia at (202) 317-6853 (not a toll-free number).

Notice 2014–64 TABLE 2
INFLATION ADJUSTMENT FACTORS AND PHASE-OUT AMOUNTS
Calendar Year Inflation Adjustment Factor Phase-out Amount
1991 1.0000 0
1992 1.0363 0
1993 1.0708 0
1994 1.0992 0
1995 1.1160 0
1996 1.1485 0
1997 1.1720 0
1998 1.1999 0
1999 1.2030 0
2000 1.2087 0
2001 1.2353 0
2002 1.2633 0
2003 1.2785 0
2004 1.2952 0
2005 1.3266 0
2006 1.3743 100 percent
2007 1.4222 100 percent
2008 1.4666 100 percent
2009 1.5003 100 percent
2010 1.5203 100 percent
2011 1.5326 100 percent
2012 1.5686 100 percent
2013 1.5968 100 percent
2014 1.5974 100 percent

Rev. Proc. 2014–56

NOTE. This revenue procedure will be reproduced as the next revision of IRS Publication 1223, General Rules and Specifications for Substitute Forms and Schedules.

TABLE OF CONTENTS
Part 1 – SUBSTITUTE FORMS W–2C AND W–3C 762
Section 1.1 – Purpose 762
Section 1.2 – Whatrsquo;s New 763
Section 1.3 – Filing Forms W–2c and W–3c Electronically 764
Section 1.4 – Specifications for Red-Ink Substitute Forms W–2c (Copy A) and W–3c Filed With SSA 764
Section 1.5 – Specifications for Substitute Black-and-White Forms W–2c (Copy A) and W–3c Filed With the SSA 767
Section 1.6 – Requirements for Substitute Privately-Printed Forms W–2c (Copies B, C, and 2) Furnished to Employees 769
Section 1.7 – Instructions for Employers 770
Section 1.8 – OMB Requirements for Both Red-Ink and Black-and-White Copy A and W–3c Substitute Forms 771
Section 1.9 – Order Forms and Instructions 771
Section 1.10 – Effect on Other Documents 772
Section 1.11 – Exhibits 772

Part 1

Substitute Forms W–2c and W–3c

Section 1.1 – Purpose

.01 The purpose of this revenue procedure is to state the requirements of the Internal Revenue Service (IRS) and the Social Security Administration (SSA) regarding the preparation and use of substitute forms for Form W–2c, Corrected Wage and Tax Statement, and Form W–3c, Transmittal of Corrected Wage and Tax Statements.

.02 The official IRS Form W–2c is a six-part form and the official IRS Form W–3c is a one-part form. Red-ink substitute forms that completely conform to the specifications contained in this document may be privately-printed without the prior approval of the IRS or the SSA. Only the substitute black-and-white Form (Copy A) and substitute black-and-white W–3c forms need to be submitted to the SSA for approval.

Note. Both paper substitute forms filed with the SSA, and those furnished to employees, that do not totally conform to these specifications are not acceptable. Forms W–2c (Copy A) and Forms W–3c that do not conform may be returned. In addition, penalties may be assessed by the IRS.

.03 Substitute red-ink forms should not be submitted to either the IRS or the SSA for specific approval. If you are uncertain of any specification and want clarification, do the following.

  1. Submit a letter to the appropriate address below citing the specification.

  2. State your understanding of the specification; enclose an example.

  3. Be sure to include your name, complete address, phone number, and, if applicable, your email address with your correspondence.

.04 Any questions about the red-ink Form W–2c (Copy A) and Form W–3c, should be emailed to substituteforms@irs.gov. Please enter “Substitute Forms” on the subject line. Or send your questions to:

Internal Revenue Service

Attn: Substitute Forms Program

SE:W:CAR:MP:P:TP

5000 Ellin Road, C6-440

Lanham, MD 20706

Any questions about the substitute black-and-white Form W–2c (Copy A) and W–3c should be emailed to copy.a.forms@ssa.gov or sent to:

Social Security Administration

Data Operations Center

Attn: Substitute Black-and-White Copy A Forms, Room 360

1150 E. Mountain Drive

Wilkes-Barre, PA 18702-7997

Do not mail completed Forms W–2c (Copy A) employer reports to the Substitute Black-and-White Copy A Forms address. Submitters should use the address shown on the Form W–3c.

Note. You should receive a response from either the IRS or the SSA within 30 days.

.05 The Internal Revenue Service/Information Returns Branch (IRS/IRB) maintains a centralized customer service call site to answer questions related to information returns (Forms W–2, W–3, W–2c, W–3c, 1099 series, 1096, etc.). You can call at 1-866-455-7438 (toll-free) or 304-263-8700 (not a toll-free number). The Telecommunication Device for the Deaf (TDD) number is 304-579-4827 (not a toll-free number). The hours of operation are Monday through Friday from 8:30 a.m. to 4:30 p.m. Eastern time. You may also send questions via email at mccirp@irs.gov. IRS/IRB does not process information returns which are filed on paper forms.

Do not submit employee information via email, because electronic mail may not be secure and the employee’s information may be compromised.

.06 The following form instructions and publications provide more detailed filing procedures for certain information returns.

  • General Instructions for Forms W–2 and W–3 (including Forms W–2AS, W–2GU, W–2VI, W–3SS, W–2c, and W–3c).

  • Publication 1141, General Rules and Specifications for Substitute Forms W–2 and W–3.

Section 1.2 – What’s New

.01 The following changes have been made to Publication 1223. The major changes include the following.

  • Form W–3c—Telephone number, email, and fax number. The word “Employer’s” was added to the telephone, fax, and email data entry box headings/caption located in the bottom section of the form.

  • Form W–3c—Information sequence. The signature fields at the bottom of the form have been rearranged.

  • Form W–3c—“For Official Use Only.” The “For Official Use Only” field size has been reduced.

  • Form W–3c—Instructions on e-file. E-file instructions were added at the bottom of the form under the Purpose of Form section of the instructions.

  • Section 6.02 (Revised)—Logos, slogans, and advertising. Revised Section 6.02 to clarify that forms may include an embossment or watermark on the information return and employee copies that is a representation of the name, a primary trade name, trademark, service mark, or symbol of the employer or agent. In addition, the address for submitting comments regarding the prohibition against including slogans, advertising, and logos has changed.

  • IRS address change. The address for the Substitute Forms Unit has changed to: Internal Revenue Service, Attn: Substitute Forms Program, SE:W:CAR:MP:P:TP, 5000 Ellin Road, C6-440, Lanham, MD 20706.

  • SSA address change. Inquiries about the substitute black-and-white Form Copy A and substitute black-and-white Form W–3c, should be sent to the SSA at: Social Security Administration Data Operation Center, Attn: Substitute Black-and-White Copy A Forms, Room 360, 1150 E. Mountain Drive, Wilkes-Barre, PA 18702-7997.

  • IRS DVD. The DVD containing IRS tax products will no longer be produced. Official IRS forms and information copies of federal tax materials can be obtained at local IRS offices, by calling the National Distribution Center, or by accessing IRS.gov. Further details are provided in Section 9–Order Forms and Instructions.

  • Editorial changes. We made editorial changes. Redundancies were eliminated as much as possible.

Section 1.3 – Filing Forms W–2c and W–3c Electronically

.01 Employers must file electronically with the SSA if they file 250 or more Forms W–2c (Copy A) during a calendar year unless the IRS granted you a waiver. For details, see the General Instructions for Forms W–2c and W–3c (Including Forms W–2AS, W–2GU, W–2VI, W–3SS, W–2c, and W–3c). SSA publication EFW2C, Specifications for Filing Forms W–2c Electronically, contains specifications and procedures for filing Forms W–2c. Employers are cautioned to obtain the most recent revision of EFW2C (and supplements) due to any subsequent changes in specifications and procedures.

Note. For purposes of the electronic filing requirement, only Forms W–2c for the immediate prior year are taken into account. For example, if an employer must file 200 Forms W–2c for the immediate prior year in March and then discovers that another 100 Forms W–2c for the current year must be filed in August, only the 100 Forms W–2c filed in August must be filed electronically.

.02 You may obtain a copy of the EFW2C by:

  • Accessing the SSA website at www.socialsecurity.gov/employer.

.03 Electronic filers do not file a paper Form W–3c. SSA creates this for you when Forms W–2c are submitted electronically. See the SSA publication EFW2 for guidance on transmitting Form W–2c (Copy A) information to the SSA electronically.

.04 Employers with fewer than 250 Forms W–2 to be corrected are encouraged to electronically file Forms W–2c (Copy A) with the SSA. Doing so will enhance the timeliness and accuracy of forms processing.

.05 Employers who do not comply with the electronic filing requirements for Form W–2c (Copy A) and who are not granted a waiver by the IRS may be subject to penalties. Employers who file Form W–2c information with the SSA electronically must not send the same data to the SSA on paper Forms W–2c (Copy A). Any duplicate reporting may subject filers to unnecessary contacts by the SSA or the IRS.

Section 1.4 – Specifications for Red-Ink Substitute Forms W–2c (Copy A) and W–3c Filed With the SSA

.01 The official IRS-printed red dropout ink Form W–2c (Copy A) and W–3c and their exact substitutes are referred to as red-ink in this revenue procedure. Employers may file substitute Forms W–2c (Copy A) and W–3c with the SSA. The substitute forms must be exact replicas of the official IRS forms with respect to layout and content because they will be read by scanner equipment. Even the slightest deviation can result in incorrect scanning, and may affect money amounts reported for employees.

.02 Color and paper quality for Form W–2c (Copy A) (cut sheets and continuous pin-fed forms) and Form W–3c, as specified by JCP Code 0–25 dated November 29, 1978, must be white 100% bleached chemical wood, optical character recognition (OCR) bond. The contractor must initiate or have a quality control program to assure OCR ink density.

Acidity: Ph value, average, not less than 4.5
Basis weight: 17 x 22 inches 500 cut sheets, pound 18–20
Metric equivalent—gm./sq. meter (a tolerance of +5 pct. is allowed) 68–75
Stiffness: Average, each direction, not less than—milligrams Cross direction Machine direction 50–80
Tearing strength: Average, each direction, not less than—grams 40
Opacity: Average, not less than—percent 82
Reflectivity: Average, not less than—percent 68
Thickness: Average—inch 0.0038
Metric equivalent—mm. (a tolerance of +0.0005 inch (0.0127 mm) is allowed) Paper cannot vary more than 0.0004 inch (0.0102 mm) from one edge to the other 0.097
Porosity: Average, not less than—seconds 10
Finish (smoothness): Average, each side—seconds 20–55
(For information only) the Sheffield equivalent—units 170–d200
Dirt: Average, each side, not to exceed—parts per million 8

Note. Reclaimed fiber in any percentage is permitted, provided the requirements of this standard are met.

.03 All printing of substitute Forms W–2c (Copy A) and W–3c must be in Flint red OCR dropout ink except as specified below. The following must be printed in nonreflective black ink:

  • Identifying number “44444” or “55555” at the top of the forms.

  • The four (4) corner register marks on the forms.

  • The form identification number (“W–3c”) at the bottom of Form W–3c.

  • All the instructions below Form W–3c beginning with “Purpose of Form” to the end of Form W–3c.

.04 The vertical and horizontal spacing on Forms W–2c and W–3c must meet specifications. See Exhibits A and B.

  • On Form W–3c and Form W–2c (Copy A), all the perimeter rules must be 1-point (0.014-inch), while all other rules must be one-half point (0.007-inch). Vertical rules must be parallel to the left edge of the form; horizontal rules parallel to the top edge.

  • The left and top margins on Form W–2c (Copy A) and Form W–3c must be .5 inches. The width of a substitute Form W–2c (Copy A) or W–3c must be 7.5 inches. See Exhibits A and B.

  • The first three column’s on Form W–2c (Copy A) and Form W–3c must measure 1.9 inches in width.

  • The last column on Form W–2c (Copy A) and Form W–3c must measure 1.8 inches in width.

.05 The official red-ink Form W–3c and Form W–2c (Copy A) are 7.5 inches wide. Employers filing Forms W–2c (Copy A) with the SSA on paper must also file a Form W–3c. One Form W–2c (Copy A) or Form W–3c is contained on a standard-size, 8.5 x 11-inch page.

.06 The top, left, and right margins for the Form W–2c (Copy A) and Form W–3c are .5 inches (½ inch). All margins must be free of printing except for the words “DO NOT CUT, FOLD, OR STAPLE THIS FORM” on red-ink Form W–2c (Copy A) and on red-ink Form W–3c.

.07 The identifying numbers are “44444” for Form W–2c and “55555” for Form W–3c. No printing should appear anywhere near the identifying numbers.

Note. The identifying number must be printed in nonreflective black ink in OCR-A font of 10 characters per inch.

.08 Continuous pin-fed Forms W–2c (Copy A) must be separated into 11-inch deep pages. The pin-fed strips must be removed when Forms W–2c (Copy A) are filed with the SSA.

.09 Box 12 of Form W–2c (Copy A) contains four entry boxes – 12a, 12b, 12c, and 12d. Do not make more than one entry per box. Enter your first code in box 12a (for example, enter Code D in box 12a, not 12d, if it is your first entry). If more than four items need to be reported in box 12, use a second Form W–2c to report the additional items. Do not report the same federal tax data to the SSA on more than one Form W–2c (Copy A). However, repeat the identifying information (employee’s name, address, and SSN; employer’s name, address, and EIN) on each additional form.

.10 The checkboxes in box 13 of Form W–2c (Copy A) must be .14 inches each; the space before the first checkbox is .20 inches; the spacing on each remaining side of the three checkboxes is .36 inches. The checkboxes in box c of Form W–3c must also be .14 inches.

Note. More than 50% of an applicable checkbox must be covered by an “X.”

.11 All substitute Forms W–2c (Copy A) and W–3c in the red-ink format must have the form number and form title printed on the bottom face of each form using type identical or a close approximation to that of the official IRS form. The red-ink substitute must have the form producer’s (not the form filer’s) EIN entered in red in place of the Cat. No. (directly to the left of “Department of the Treasury” for Form W–2c (Copy A) and at the bottom for Form W–3c).

.12 The words “For Privacy Act and Paperwork Reduction Act Notice, see separate instructions.” must be printed on all Forms W–2c (Copy A) and Forms W–3c.

.13 The Office of Management and Budget (OMB) Number must be printed on substitute Forms W–3c and W–2c (Copy A) (on each ply) in the same location as on the official IRS forms.

.14 All substitute Forms W–3c must include the instructions that are printed on the same sheet below the official IRS form.

.15 The appropriate SSA addresses must be printed on the front of Form W–3c below the body of the form (see Exhibit B).

If you use the U.S. Postal Service, the address is:

Social Security Administration

Data Operations Center

P.O. Box 3333

Wilkes-Barre, PA 18767-3333

If you use a carrier other than the U.S. Postal Service, the address is:

Social Security Administration

Data Operations Center

Attn: W–2c Process

1150 E. Mountain Drive

Wilkes-Barre, PA 18702-7997

.16 The back of substitute Form W–2c (Copy A) and Form W–3c must be free of all printing.

.17 All copies must be clearly legible. Fading must be minimized to assure legibility.

.18 Chemical transfer paper is permitted for Form W–2c (Copy A) only if the following standards are met:

  • Only chemically-backed paper is acceptable for Form W–2c (Copy A). Front and back chemically-treated paper cannot be processed properly by scanning equipment.

  • Chemically-transferred images must be black.

  • Carbon-coated forms are not permitted.

.19 The Government Printing Office (GPO) symbol and the Catalog Number (Cat. No.) must be deleted from substitute Form W–2c (Copy A) and Form W–3c.

.20 The sequence for assembling the copies of Form W–2c is as follows.

  • Copy A—For Social Security Administration

  • Copy 1—State, City, or Local Tax Department

  • Copy B—To Be Filed with Employee’s FEDERAL Tax Return

  • Copy C—For EMPLOYEE’s RECORDS

  • Copy 2—To Be Filed with Employee’s State, City, or Local Income Tax Return

  • Copy D—For Employer

Section 1.5 – Specifications for Substitute Black-and-White Forms W–2c (Copy A) and W–3c Filed With the SSA

.01 The SSA-approved substitute black-and-white Forms W–2c (Copy A) and W–3c are referred to as substitute black-and-white Form W–2c (Copy A) and W–3c. Specifications for the substitute black-and-white Form W–2c (Copy A) and W–3c are similar to the red-ink forms (Section 4) except for the items that follow (see Exhibits C and D). You may contact the SSA via email at copy.a.forms@ssa.gov for more information.

Note. Exhibits are samples only and must not be downloaded to meet tax obligations.

1. Forms must be printed on 8.5 x 11-inch single-sheet paper only, not on continuous pin-fed paper. There must be one Form W–2c (Copy A) or W–3c printed on a page.

2. All forms and data must be printed in nonreflective black ink only.

3. The data and forms must be programmed to print simultaneously. Forms cannot be produced separately from wage data entries.

4. The forms must not contain corner register marks.

5. The forms must not contain any shaded areas including those boxes that are entirely shaded on the red-ink forms.

6. Identifying numbers on both Form W–2c (Copy A) (“44444”) and Form W–3c (“55555”) must be preprinted in 14-point Arial bold font or a close approximation.

7. The form numbers (“W–2c” and “W–3c”) must be in 18-point Arial font or a close approximation.

8. No part of the box titles or the data printed on the forms may touch any of the vertical or horizontal lines, nor should any of the data intermingle with the box titles. The data should be centered in the boxes.

9. Do not print any information in the margins of the black-and-white forms (for example, do not print “DO NOT CUT, FOLD, OR STAPLE” in the top margin of Form W–3c).

10. The word “Code” must not appear in box 12 on Form W–2c (Copy A).

11. A 4-digit vendor code (not filer code) preceded by four zeros and a slash (for example, 0000/9876) must appear in 12-point Arial font, or a close approximation, in place of the Cat. No. to the left of “Department of the Treasury” on Form W–2c (Copy A) and in the bottom right corner of Form W–3c.

Note. Do not display the form producer’s EIN. The vendor code will be used to identify the form producer.

12. Do not print Catalog Numbers (Cat. No.) on either Form W–2c (Copy A)

or Form W–3c.

13. Do not print dollar signs. If there are no money amounts being reported, the entire field should be left blank.

.02 The dimensions for the substitute black-and-white Forms W–2c (Copy A) and W–3c are as follows. See Exhibits C and D.

1. The left and top margins on Form W–2c (Copy A) and Form W–3c must measure ½ (0.5) inch.

2. The distance from the top line of Form W–3c to the bottom line of the form must measure 73 16 (7.19) inches.

3. The distance from the top line of Form W–2c (Copy A) to the bottom line of the form must measure 9⅓ (9.33) inches.

4. Each box on Form W–2c (Copy A) and Form W–3c must measure ⅓ (0.33) inch in height.

5. Box b on Form W–3c must measure (1) inch in height.

6. Box a on Form W–2c (Copy A) must measure 1⅓ (1.33) inches in height and box 14 must measure ⅚ (0.83) inch in height.

7. The first three columns on the right of Form W–2c (Copy A) and Form W–3c must measure 19 10 (1.9) inches in width.

8. The last column on the right of Form W–2c (Copy A) and Form W–3c must measure 18 10 (1.8) inches in width.

9. The “Explain decreases here” box has been reduced to measure ⅓ (0.33) inch to allow for an increase in Box b and the “Signature” box on Form W–3c must measure ½ (0.5) inch in height.

.03 You must submit samples of your black-and-white substitute forms to the SSA. Only black-and-white substitute Forms W–2c (Copy A) and W–3c will be accepted for approval by the SSA. Questions regarding other forms (that is, red-ink Forms W–2, W–2c, W–3, W–3c, 1099 series, 1096, etc.) must be directed to the IRS. Also, see IRS Publications 1141 and 1179.

.04 You will be required to send one set of blank and one set of dummy-data substitute black-and-white Form W–2c (Copy A) and W–3c for approval. Sample data entries should be filled in to the maximum length for each box entry, preferably using numeric data or alpha data, depending upon the type required to be entered. Include in your submission the name, telephone number, fax number, and email address of a contact person who can answer questions regarding your sample forms.

.05 To receive approval, you may first contact the SSA at copy.a.forms@ssa.gov to obtain a template and further instructions in PDF format. Do not mail completed Form W–2c (Copy A) and W–3c employer reports to the Substitute Black-and-White Forms (Copy A) address. Submitters should use the address shown on the Form W–3c. You may also send your sample substitute black-and-white forms to:

Social Security Administration

Data Operations Center

Attn: Substitute Black-and-White Copy A Forms, Room 360

1150 E. Mountain Drive

Wilkes-Barre, PA 18702-7997

Send your sample forms via private mail carrier or certified mail in order to verify their receipt. You may send your sample forms via electronic mail to copy.a.forms@ssa.gov.

.06 The 4-digit vendor code preceded by four zeros and a slash (0000/9876) must be preprinted on the sample black-and-white substitute forms. Forms not containing a vendor code will be rejected and will not be submitted for testing or approval. If you have a valid vendor code provided to you through the National Association of Computerized Tax Processors, you should use that code. If you do not have a valid vendor code, contact the Social Security Administration at copy.a.forms@ssa.gov to obtain an SSA-issued code. (Additional information on vendor codes may be obtained from the SSA or the National Association of Computerized Tax Processors via email at http://nactp.org/.

Note. Vendor codes are only required by those companies producing the W–2 family of forms as part of a product for resale to be used by multiple employers and payroll professionals. Employers developing Forms W–2c or W–3c to be used only for their individual company do not require a vendor code.

.07 If you use forms produced by a vendor and have questions concerning approval, do not send the forms to the SSA for approval. Instead, you may contact the software vendor to obtain a copy of SSA’s dated approval notice supplied to that vendor.

Section 1.6 – Requirements for Substitute Privately-Printed Forms W–2c (Copies B, C, and 2) Furnished to Employees

.01 All employers (including those who file electronically) must furnish employees with at least two copies of Form W–2c (three or more for employees required to file a state, city, or local income tax return). Employee copies do not require approval as long as these requirements are followed.

Note. Although substitute Copy 1 of Form W–2c can be printed in black instead of the red dropout ink, it should conform as closely as possible to Copy A of the official IRS form in content, format, and layout in order to satisfy

state and local reporting requirements.

.02 Some Forms W–2c that include logos, slogans, and advertisements (including advertisements for tax preparation software) may be confused with questionable Forms W–2c. An employee may not recognize the importance of the employee copy for tax reporting purposes due to the use of logos, slogans, and advertisements. Thus, the IRS has determined that logos, slogans, and advertising will not be allowed on Forms W–3c, Copy A of Forms W–2c, or any employee copies reporting wages paid during the 2014 calendar year, and thereafter, with the following exceptions:

  • Forms may include the exact name of the employer or agent, primary trade name, trademark, service mark, or symbol of the employer or agent.

  • Presentation may be in any typeface, font, stylized fashion, or print color normally used by the employer or agent; and used in a non-intrusive manner.

  • These items do not materially interfere with the ability of the recipient to recognize, understand, and use the tax information on the employee copies.

  • Corrected information on information returns and employee copies that was shown on Forms W–2c for amounts paid before January 1, 2014.

The IRS e-file logo on the IRS official employee copies may be included, but it is not required, on any of the substitute form copies.

The information return and employee copies must clearly identify the employer’s name associated with its employer identification number.

Forms W–2c and W–3c are subject to annual review and possible change. If you have comments about the prohibition against including slogans, advertising, and logos on information returns and employee copies, email or send your comments to: substituteforms@irs.gov or Internal Revenue Service, Attn: Substitute Forms Program, SE:W:CAR:MP:P:TP, 5000 Ellin Road, C6-440, Lanham, MD 20706.

.03 Chemical transfer paper for employee copies must be clearly legible, have the capability to be photocopied, and not fade to such a degree as to preclude legibility and the ability to photocopy.

.04 The paper for all copies must be white and printed in black ink. The substitute Copy B (or its equal), which employees are instructed to attach to their federal income tax returns, as well as all other copies furnished to employees, must be 17 x 22 inches - 500 cut sheets, as described in Section 1.4.02. Additional information on trim size and margins can also be found in this section.

.05 Type must be substantially identical in size and shape to that on the official form.

.06 Substitute forms for employees need to contain only the payment boxes and captions that are applicable. These boxes, box numbers, and box titles must, when applicable, match the IRS-printed form. In all cases, the employee name, address, and SSN, as well as the employer name, address, and EIN, must be present.

.07 The dimensions of the boxes on these copies (Copies B, C, and 2), but not Copy A, may be adjusted to allow space for conveying additional information. This may permit the employer to eliminate other statements or notices that would otherwise be furnished to employees.

.08 The maximum allowable dimensions for employee copies of Form W–2c are no more than 11 inches deep by 8.5 inches wide. The minimum allowable dimensions for employee copies of Form W–2c are 2.67 inches deep by 4.25 inches wide.

Note. These maximum and minimum size specifications are subject to future change.

.09 Either horizontal or vertical format is permitted for substitute employee copies of Forms W–2c. That is, the width of the form may be either greater or less than the depth of the form.

.10 All copies of Form W–2c must clearly and prominently display the form number and the form title together in one area of the form. It is recommended (but not required) that this be located on the bottom left of Form W–2c. The reference to the “Department of the Treasury – Internal Revenue Service” must be on all copies of Form W–2c. It is recommended (but not required) that this be located on the bottom right of Form W–2c.

.11 If the substitute Forms W–2c are not labeled as to the disposition of the copies, then written notification must be provided to each employee as specified below.

  • The first copy of Form W–2c (Copy B) is filed with the employee’s federal tax return.

  • The second copy of Form W–2c (Copy C) is for the employee’s records.

  • If applicable, the third copy (Copy 2) of Form W–2c is filed with the employee’s state, city, or local income tax return.

If the substitute Forms W–2c are labeled, the forms must contain the applicable description as stated on the official form.

.12 Instructions similar to those on the back of Form W–2c (Copy C) of the official form must be provided to each employee.

Section 1.7 – Instructions for Employers

.01 Privately-printed substitute Forms W–2c are not required to contain a copy to be retained by employers (Copy D). However, employers must retain copies of the Forms W–2 filed with SSA or have the ability to reconstruct the data for at least four years. Employers must be able to generate a facsimile of Form W–2 (Copy A), in case of loss.

.02 If Copy D is provided for the employer, instructions contained on the back of Copy D of the official form must appear on the back of the substitute form. If Copy D is not provided, these instructions must be furnished to the employer on a separate statement.

.03 Only originals or compliant substitute copies of Forms W–2c (Copy A) and Forms W–3c may be filed with the SSA. Carbon copies and photocopies are unacceptable.

.04 Employers should type or machine print entries on non-laser generated forms whenever possible and provide good quality data entries by using a high quality type face, inserting data in the middle of blocks that are well separated from other printing and guidelines, and taking any other measures that will guarantee clear, sharp images.

.05 Because employers must file a machine-scannable Form W–2c, they should meet the following requirements.

  • Use 12-point Arial font or a close approximation for data entries.

  • Proportional-spaced fonts are unacceptable.

  • Refrain from printing any data in the top margin of the forms.

.06 The employer must also furnish payee copies of Forms W–2c (Copies B, C, and 2) that are legible and capable of being photocopied (by the employee).

.07 When Forms W–2c or W–3c are typed, black ink must be used with no script type, inverted font, italics, or dual-case alpha characters.

.08 Forms W–2c (Copy A) requires decimal entries for wage data. Dollar signs should not be printed with money amounts on Forms W–2c (Copy A) and Form W–3c.

.09 The filer’s employer identification number (EIN) must be entered in box

(b) of Form W–2c and box (e) of Form W–3c.

.10 The employer’s name, address, EIN, and state ID number may be preprinted.

Section 1.8 – OMB Requirements for Both Red-Ink and Black-and-White Copy A and W–3c Substitute Forms

.01 The Paperwork Reduction Act (the Act) of 1995 (Public Law 104–13) requires the following.

  • The Office of Management and Budget (OMB) approves all IRS tax forms that are subject to the Act.

  • Each IRS form contains (in or near the upper right corner) the OMB approval number, if assigned. (The official OMB numbers may be found on the official IRS printed forms and are also shown on the forms in the exhibits.)

  • Each IRS form (or its instructions) states:

.02 This information must be provided to any users of official or substitute IRS forms or instructions.

.03 The OMB requirements for substitute IRS Form W–2c (Copy A) and Form W–3c are the following.

  • Any substitute form or substitute statement to a recipient must show the OMB number as it appears on the official IRS form.

  • For Form W–3c and Form W–2c (Copy A), the OMB number (1545-0008) must appear exactly as shown on the official IRS form.

  • For any copy of Form W–3c or Form W–2c, other than Copy A, the OMB number must use one of the following formats.

.04 Any substitute Form W–3c and Form W–2c (Copy A only) must state “For Privacy Act and Paperwork Reduction Act Notice, see back of Copy D.” If no instructions are provided to users of your forms, you must furnish them the exact text of the Privacy Act and Paperwork Reduction Act Notice.

Section 1.9 – Order Forms and Instructions

.01 You can order official IRS Forms W–2c, Forms W–3c, and the General Instructions for Forms W–2 and W–3 (Including Forms W–2AS, W–2GU, W–2VI, W–3SS, W–2c, and W–3c), online at IRS.gov. Click on the Forms and Pubs link and then click the Order Forms and Pubs link. You may also order these forms and instructions by calling 1-800-TAX-FORM (1-800-829-3676).

Only contact the IRS, not the SSA, for forms.

Copies of Forms W–2c and W–3c obtained from these sources are for information purposes only.

.02 Copies of Form W–2c (Copy A) and Form W–3c downloaded from IRS.gov cannot be used for filing with the SSA. These copies of Forms W–2c and W–3c are for information purposes only.

Section 1.10 – Effect on Other Documents

.01 Revenue Procedure 2014–29, 2014–28 I.R.B. (reprinted as Publication 1223, Rev. 04–2014), is superseded.

Rev. Proc. 2014–57

NOTE. This revenue procedure will be reproduced as the next revision of IRS Publication 4436, General Rules and Specifications for Substitute Forms and Schedules.

TABLE OF CONTENTS
Part 1 –
Section 1.1 – Purpose 777
Section 1.2 – What’s New 778
Section 1.3 – General Requirements for Reproducing IRS Official Form 941, Schedule B, Schedule D, and Schedule R 779
Section 1.4 – Reproducing Form 941, Schedule B, Schedule D, and Schedule R for Software-Generated Paper Forms 781
Section 1.5 – Specific Instructions for Schedule D 782
Section 1.6 – Specific Instructions for Schedule R 782
Section 1.7 – OMB Requirements for Substitute Forms 783
Section 1.8 – Order Forms and Instructions 784
Section 1.9 – Effect on Other Documents 784
Section 1.10 – Helpful Information 784

Part 1

Section 1.1 – Purpose

.01 The purpose of this publication is to provide general rules and specifications from the Internal Revenue Service (IRS) for paper and computer-generated substitutes for Form 941, Employer’s QUARTERLY Federal Tax Return, Schedule B (Form 941), Report of Tax Liability for Semiweekly Schedule Depositors (referred to in this publication as “Schedule B”), Schedule D (Form 941), Report of Discrepancies Caused by Acquisitions, Statutory Mergers, or Consolidations (referred to in this publication as “Schedule D”), and Schedule R (Form 941), Allocation Schedule for Aggregate Form 941 Filers (referred to in this publication as “Schedule R”).

Note. Substitute territorial forms (941–PR, Planilla para la Declaracion Federal TRIMESTRAL del Patrono, 941–SS, Employer’s QUARTERLY Federal Tax Return (American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, and the U.S. Virgin Islands) and Anexo B (Formulario 941–PR, Registro de la Obligación Contributiva para los Despositantes de Itinerario Bisemanal) should also conform to the specifications outlined in this revenue procedure.

.02 This publication provides information for substitute Form 941, Schedule B, Schedule D, and Schedule R. If you need more in-depth information on who must complete the forms and how to complete them, see the Instructions for Form 941, Instructions for Schedule B (Form 941), Instructions for Schedule D, the instructions included in Schedule R, and Publication 15 (Circular E), Employer’s Tax Guide, or visit IRS.gov.

Note. Failure to produce acceptable substitutes of the forms and schedules listed in this publication may result in delays in processing and penalties.

.03 Forms that completely follow the guidelines in this publication and are exact replicas of the official IRS forms do not need to be submitted to the IRS for specific approval. Substitute forms and schedules need to be scanned using IRS scanning equipment.

If you are uncertain of any specification and want clarification, do the following.

1. Submit a letter citing the specification.

2. State your understanding of the specification.

3. Enclose an example (if appropriate) of how the form would appear if produced using your understanding.

4. Be sure to include your name, complete address, phone number, and, if applicable, your email address with your correspondence. Email to

SCRIPS@irs.gov or substituteforms@irs.gov or use the following address.

Internal Revenue Service

Attn: Substitute Forms Program

SE:W:CAR:MP:P:TP

5000 Ellin Road, C6-440

Lanham, MD 20706

Note. Allow at least 30 days for the IRS to respond.

.04 However, software developers and form producers should send a blank copy of their substitute Form 941 and Schedule B (Form 941) in pdf format to SCRIPS@irs.gov. The purpose is not specifically for approval but to assist the IRS in preparing to scan these forms. Submitters will only receive comments if a significant problem is discovered through this process. Submitters are not expected to delay marketing their forms in order to receive feedback. In no case should Submitters include “live” taxpayer data.

.05 The six-digit form ID code (beginning 950114) on Form 941, Schedule B (Form 941), and Schedule D (Form 941) identifies the official paper form. The six-digit form ID code (beginning 970114) identifies substitute 6x10 grid Form 941 and Schedule B (Form 941). The six-digit ID code (beginning 990114) identifies the official IRS issued Form 941 and Schedule B (Form 941). Generally, the last two digits of the code represent the last year in which major formatting changes were made to the layout of the forms.

Section 1.2 – What’s New

.01 Future Developments. The IRS has created a page on IRS.gov for information about Form 941 at www.irs/gov/form 941. Information about any future development affecting form 941 (such as legislation enacted after we release it) will be posted on that page.

.02 IRS mailing address change. The address for the Substitute Forms Program has changed to: Internal Revenue Service, Attn: Substitute Forms Program, SE:W:CAR:MP:P:TP, 5000 Ellin Road, C6-440, Lanham, MD 20706.

.03 IRS DVD. The DVD containing IRS tax products will no longer be produced. Official IRS forms and information copies of federal tax materials can be obtained at local IRS offices, by calling the National Distribution Center, or by accessing IRS.gov. Further details are provided in Section 1.7–Order Forms and Instructions.

.04 Form 941. Section 4 of the payment voucher, text has been added for a business to report their foreign address, when applicable.

.05 Form 941. Page 1, Line 3. We added “Federal” at the beginning of the line 3 title to provide clarity. Form 941 may be filed by employers in the U.S. territories and those employers may be subject to income tax withholding that is not “federal” income tax withholding.

.06 Form 941. Page 1, three new fields were added to the entity section to capture, “Foreign Country Name,” “Foreign province/county,” and “Foreign postal code.”

.07 Form 941. Page 1, lines 12a, 12b, and 13 were removed. As a result, subsequent lines were renumbered.

.08 Form 941. Page 3, box 1-Employer Identification Number (EIN). It was clarified that Form SS–4 is faxed or mailed to the IRS.

.09 Form 941. Page 4, under Privacy Act and Paperwork Reduction Act Notice, the language was updated to clarify that Subtitle C, Employment Tax, of the IRC “provides for income tax withholding.”

.10 Schedule B. Page 1, in the introductory instructions, employers are advised NOT to change their tax liability by adjustments reported on Form 944–X.

.11 Schedule B. Page 1, at the bottom center of the page, a link to the product page was added.

.12 Schedule R. Pages 1 and 2, the reference to “COBRA payments” was removed from column (g). All references to the COBRA premium assistance credit were removed from all employment tax products (except amended returns) beginning with tax year 2014.

.13 Schedule R. Pages 1 and 2. We updated column (g) for the Form 941, line 13 to Form 941, line 11.

.14 Schedule R. Under the section Client and Employee Information, we changed the reference to Form 941, line 11 (formerly line 13), as a result of removing the COBRA premium assistance credit lines from Form 941.

.15 COBRA premium assistance credit. Effective for tax periods beginning after December 31, 2013, the credit for COBRA premium assistance payments cannot be claimed on 941. Instead, after filing your Form 941, file Form 941–X, Adjusted Employer’s QUARTERLY Federal Tax Return or Claim for Refund, to claim the COBRA premium assistance credit. Filing a Form 941–X before filing a Form 941 for the quarter may result in errors or delays in processing your Form 941–X. For more information, visit IRS.gov and enter “COBRA” in the search box.

.16 Schedule R. Page 1, at the bottom center of the page, a link to the product page was added.

.17 Editorial Changes. We made editorial changes throughout, including updated references. Redundancies were eliminated as much as possible.

Section 1.3 – General Requirements for Reproducing IRS Official Form 941, Schedule B, Schedule D, and Schedule R

.01 Submit substitute Form 941, Schedule B, Schedule D, and Schedule R to the IRS for specifications review. Substitute Form 941, Schedule B, Schedule D, and Schedule R that completely conform to the specifications contained in this revenue procedure do not require prior approval from the IRS, but should be submitted to SCRIPS@irs.gov to ensure that they conform to IRS format and scanning specifications.

.02 Print the form on standard 8.5 inches wide by 11-inch paper.

.03 Use white paper that meets generally accepted weight, color, and quality standards (minimum 20 lb. white bond paper).

Note. Reclaimed fiber in any percentage is permitted provided that the requirements of this standard are met.

.04 The IRS prefers printing Form 941 on both sides of a single sheet of paper, but it is acceptable to print on one side of each of two separate sheets of paper.

.05 Make substitute paper forms as identical to the official IRS-printed forms as possible.

.06 Print the substitute forms using nonreflective black (not blue or other-colored) ink. Printing in an ink color other than black may reduce readability in the scanning process. This may result in figures being too faint to be recognizable.

.07 Use typefaces that are substantially identical in size and shape to the official forms and use rules and shading (if used) that are substantially identical to those on the offical forms. Use font size as large as possible within the fields.

.08 Print the six-digit form ID codes in the upper right-hand corner of each form using nonreflective black, carbon-based, 12-point. The use of non-OCR-A font may reduce readability for scanning. Use the official paper over-the-counter IRS forms to develop your substitute paper forms.

Note. Maintain as much white space as possible around the form ID code. Do not allow character strings to print adjacent to the code.

The year digits represent the year of the form layout and the tax year filed. For tax year 2014, print “950114” on page 1 of Form 941; “950214” on page 2 of Form 941; “960314” on Schedule B (Form 941); “950413” on page 1 of Schedule R (Form 941); “950513” on page 2 of Schedule R (Form 941) (continuation sheet); and “950613” on page 3 of Schedule R (Form 941) (instructions). See Section 4 for information on form ID codes for software-generated forms.

NOTE. The last two digits of the ID code generally represent the last year in which major formatting changes were made to the layout of the forms.

Therefore, the last two digits may not always be of the current tax year. Some forms will not undergo formatting changes, and therefore will carry the ID code of a prior year. For example, the January 2014 revision of Schedule R, the ID code is “954013.” The tax year is 2014, however, the last two digits are “13” since the last extensive formatting changes occurred in 2013.

.09 Print the OMB number in the same location as on the official forms. Be sure to include the OMB number on Form 941 and Schedules B, D, and R.

.10 Print all entry boxes and checkboxes exactly as shown (location and size) on the official forms.

Note. Instead of a four-sided checkbox for the entry, just the bottom line of the box can be used as long as the location and size remain the same.

.11 Print your IRS-issued three-letter substitute form source code in place of the Cat. No. on the left at the bottom of page 1 of Form 941, Schedule B, or Schedule R.

Note. You can obtain a three-letter substitute form source code by requesting it by email at substituteforms@irs.gov. Please enter “Substitute Forms” on the subject line.

.12 Print “For Privacy Act and Paperwork Reduction Act Notice, see the back of the Payment Voucher” at the bottom of page 1 of Form 941.

.13 Print “For Paperwork Reduction Act Notice, see separate instructions” at the bottom of Schedule B, Schedule D, and Schedule R.

.14 Do not print the form catalog number (“Cat. No.”) at the bottom of the forms or instructions.

.15 Do not print the Government Printing Office (GPO) symbol at the bottom of the forms or instructions.

Section 1.4 – Reproducing Form 941, Schedule B, Schedule D, and Schedule R for Software-Generated Paper Forms

.01 You may use the pdf files to develop the layout for your forms. Draft forms found at http://www.irs.gov/app/picklist/list/draftTaxForms.html can be used to develop interim formats until the forms are finalized. When forms become finalized, they are posted and can be found at http://www.irs.gov/app/ picklist/list/formsPublications.html. You may use 6x10 grid formats to develop software versions of Form 941 and Schedules B, D, and R. Please follow the specifications exactly to develop the fields.

.02 If you are developing software using the 6 × 10 grid, you may make the following modifications.

  • “970114” for page 1 of Form 941, “970214” for page 2 of Form 941, “970314” for Schedule B (Form 941), “970413” for page 1 of Schedule R (Form 941), “970513” for page 2 of Schedule R (Form 941) (continuation sheet), and “970613” for page 3 of Schedule R (Form 941) (instructions) as the form ID codes.

Note. Maintain as much white space as possible around the form ID code. Do not allow character strings to print adjacent to the code.

  • Place all 6 × 10 grid boxes and entry spaces in the same field locations as indicated on the official forms.

  • Use single lines for “Employer Identification Number (EIN)” and other entry areas in the entity section of page 1 of Form 941 and Schedule B, and the first page and continuation page of Schedule R.

  • Reverse type is not needed as shown on the IRS official form.

  • Do not pre-print decimal points in the data boxes. However, where the amounts are required, the amounts should be printed with decimal points and place holders for cents.

  • Use a single box for “state abbreviation” on Form 941, line 16.

  • Delete the pre-printed formatting in any “date” boxes.

  • Use a single box for “Personal Identification Number (PIN)” on Form 941.

  • You may delete all shading when using the 6 × 10 grid format.

.03 If producing both the form and the data or the form only, print your three-letter source code at the bottom of page 1 of Form 941 and Schedule B, or the first page of Schedule R. See Section 3.11.

.04 If producing only the data on the form, print your four-digit software industry form code on Form 941. The four-digit vendor code preceded by four zeros and a slash (0000/9876) must be pre-printed. If you have a valid vendor code issued to you through the National Association of Computerized Tax Processors (NACTP), you should use the code. If you do not have a valid vendor code, contact the NATCP via email at president@natcp.org for information on these codes.

.05 Print “For Privacy Act and Paperwork Reduction Act Notice, see the Payment Voucher.” at the bottom of page 1 of Form 941.

.06 Print “For Paperwork Reduction Act Notice, see separate instructions.” at the bottom of Schedule B, Schedule D, Schedule R.

.07 Be sure to print the OMB number in the same location as on the official forms on substitute Form 941, Schedule B, and Schedule R.

.08 Do not print the form catalog number (“Cat. No.”) at the bottom of the forms or instructions.

.09 Do not print the Government Printing Office (GPO) symbol at the bottom of the forms or instructions.

.10 To ensure accurate scanning and processing, enter data on Form 941, Schedule B, Schedule D, and Schedule R as follows.

  • Display/print the name and EIN on all pages and attachments in the proper associated fields.

  • Use 12-point (minimum 10-point) Courier font (where possible).

  • Omit dollar signs, but use commas when showing amounts.

  • Except for lines 1 and 2 on Form 941, leave blank any data field with a value of zero.

  • Enter negative amounts with a minus sign. For example, report “–10.59” instead of “(10.59).”

Note. The IRS prefers that you use a minus sign for negative amounts instead of parentheses or some other means. However, if your software only allows for parentheses in reporting negative amounts, you may use them.

Section 1.5 – Specific Instructions for Schedule D

.01 To properly file and to reduce delays and contact from the Service, Schedule D must be produced as closely as possible to the official IRS form.

.02 Use Schedule D to explain why you have certain discrepancies. See the Instructions for Schedule D for more information. In many cases, the information on Schedule D helps the IRS resolve discrepancies without contacting you.

.03 If a substitute Schedule D is not submitted in similar format to the official IRS schedule, the substitutes may be returned, you may be contacted by the IRS, delays in processing may occur, and you may be subject to penalties.

Section 1.6 – Specific Instructions for Schedule R

.01 To properly file and to reduce delays and contact from the Service, Schedule R must be produced as closely as possible to the official IRS form.

Note. Do not present the information in spreadsheet or similar format. We may not be able to properly process nonconforming documents with an excessive number of entries. Complete as many Continuation Sheets for Schedule R as necessary. If Continuation Sheets are not used or they vary in form from the official form, processing may be delayed and you may be subject to penalties.

.02 Use Schedule R to allocate the aggregate information reported on Form 941 to each client. If you have more than 15 clients, complete as many Continuation Sheets for Schedule R (page 2) as necessary. Attach Schedule R, including any Continuation Sheets, to your aggregate Form 941 and file it with your return. Enter your business information carefully.

Make sure all information exactly matches the information shown on the aggregate Form 941. Compare the total of each column on line 19 (including your information on line 18) of Schedule R to the amounts reported on the aggregate Form 941. For each column total of Schedule R, the relevant line from Form 941 is noted in the column heading. If the totals on line 19 of the Schedule R do not match the totals on Form 941, there is an error that must be corrected before submitting Form 941 and Schedule R.

.03 Do:

  • Develop and submit only conforming Schedules R.

  • Follow the format and fields exactly as on the official IRS Schedule R.

  • Maintain the same number of entry lines on the substitute Schedule R as on the official IRS form.

.04 Do not:

  • Add or delete entry lines.

  • Submit spreadsheets, database printouts, or similar formatted documents instead of using the Schedule R format to report data.

  • Reduce or expand font size to add or delete extra data or lines.

.05 If Substitute Schedules R and Continuation Sheets for Schedule R are not submitted in similar format to the official IRS schedule, the substitutes may be returned, you may be contacted by the IRS, delays in processing may occur, and you may be subject to penalties.

Section 1.7 – OMB Requirements for Substitute Forms

.01 The Paperwork Reduction Act (the Act) of 1995 (Public Law 104–13)requires the following.

  • The Office of Management and Budget (OMB) approves all IRS tax forms that are subject to the Act.

  • Each IRS form contains the OMB approval number, if assigned. (The official OMB numbers may be found on the official IRS-printed forms.)

  • Each IRS form (or its instructions) states:

1. Why the IRS needs the information,

2. How it will be used, and

3. Whether or not the information is required to be furnished to the IRS.

.02 This information must be provided to any users of official or substitute IRS forms or instructions.

.03 The OMB requirements for substitute IRS forms are the following.

  • Any substitute form or substitute statement to a recipient must show the OMB number as it appears on the official IRS form.

  • For Form 941, Schedule B, Schedule D, and Schedule R, the OMB number (1545-0029) must appear exactly as shown on the official IRS form.

  • For Form 941, Schedule B, Schedule D, and Schedule R, the OMB number must use one of the following formats.

1. OMB No. 1545–0029 (preferred).

2. OMB # 1545–0029 (acceptable).

.04 If no instructions are provided to users of your forms, you must furnish to them the exact text of the Privacy Act and Paperwork Reduction Act Notice.

Section 1.8 – Order Forms and Instructions

.01 You can obtain copies of federal tax forms by calling your local IRS location. You can access tax material and/or order official IRS Forms 941, Schedule B, Schedule D, and Schedule R, online at IRS.gov. Click on the Forms and Pubs tab, and then click on the Order Forms and Pubs link to the left. You may also order these forms and instructions by calling 1-800-TAX-FORM (1-800-829-3676).

Section 1.9 – Effect on Other Documents

.01 Publication 4436, Revised 05–2014, is superseded.

Section 1.10 – Helpful Information

.01 Please follow the specifications and guidelines to produce substitute Form 941, Schedules B, D, and R.

.02 These forms are subject to review and possible changes as required. Therefore, employers are cautioned against overstocking supplies of privately printed substitutes.

.03 Here is a review of references that were listed throughout this document.

  • Form 941, Employer’s QUARTERLY Federal Tax Return Schedule

  • Schedule B (Form 941), Report of Tax Liability for Semiweekly Schedule Depositors (referred to in this publication as “Schedule B”).

  • Schedule D (Form 941), Report of Discrepancies Caused by Acquisitions, Statutory Mergers, or Consolidations (referred to in this publication as “Schedule D”).

  • Schedule R (Form 941), Allocation Schedule for Aggregate Form 941 Filers (referred to in this publication as “Schedule R”).

  • Substitute territorial forms (941–PR, 941–SS, and Anexo B (Formulario 941–PR)).

  • Instructions for Form 941.

  • Instructions for Schedule B (Form 941).

  • Publication 15 (Circular E), Employer’s Tax Guide.

  • SCRIPS@irs.gov for submissions.

  • Substituteforms@irs.gov for questions.

  • For questions:

Internal Revenue Service

Attn: Substitute Forms Program

SE:W:CAR:MP:P:TP

5000 Ellin Road, C6-440

Lanham, MD 20706

  • http://www.irs.gov/app/picklist/list/draftTaxForms.html. for draft forms.

  • http://www.irs.gov/app/picklist/list/formsPublications.html. for final forms.

1.11 Exhibits

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Rev. Proc. 2014–58

NOTE. This revenue procedure will be reproduced as the next revision of IRS Publication 1141, General Rules and Specifications for Substitute Forms and Schedules.

TABLE OF CONTENTS
Part 1 – GENERAL 793
Section 1.1 – Purpose 793
Section 1.2 – Whatrsquo;s New 795
Section 1.3 – General Rules for Paper Forms W–2 and W–3 795
Section 1.4 – General Rules for Filing Forms W–2 (Copy A) Electronically 797
Part 2 – SPECIFICATIONS FOR SUBSTITUTE FORMS W–2 AND W–3 797
Section 2.1 – Specifications for Red-Ink Substitute Form W–2 (Copy A) and Form W–3 Filed with the SSA 797
Section 2.2 – Specifications for Substitute Black-and-White Copy A and W–3 Forms Filed with the SSA 800
Section 2.3 – Requirements for Substitute Forms Furnished to Employees (Copies B, C, and 2 of Form W–2) 801
Section 2.4 – Electronic Delivery of Form W–2 and W–2c Recipient Statements 804
Part 3 – ADDITIONAL INSTRUCTIONS 805
Section 3.1 – Additional Instructions for Form Printers 805
Section 3.2 – Instructions for Employers 806
Section 3.3 – OMB Requirements for Both Red-Ink and Black-and-White Copy A and W–3 Substitute Forms 806
Section 3.4 – Order Forms and Instructions 807
Section 3.5 – Effect on Other Documents 807
Section 3.6 – Exhibits 807

Part 1 General

Section 1.1 – Purpose

.01 The purpose of this revenue procedure is to state the requirements of the Internal Revenue Service (IRS) and the Social Security Administration (SSA) regarding the preparation and use of substitute forms for Form W–2, Wage and Tax Statement, and Form W–3, Transmittal of Wage and Tax Statements, for wages paid during the 2014 calendar year.

.02 For purposes of this revenue procedure, substitute Form W–2 (Copy A) and substitute Form W–3 are forms that are not printed by the IRS. Copy A or any other copies of a substitute Form W–2 or a substitute Form W–3 must conform to the specifications in this revenue procedure to be acceptable to the IRS and the SSA. No IRS office is authorized to allow deviations from this revenue procedure. Preparers should also refer to the 2014 General Instructions for Forms W–2 and W–3 for details on how to complete these forms. See Part 3, Section 3.4, for information on obtaining the official IRS forms and instructions. See Part 2, Sections 2.3 and 3.4, for requirements for the copies of substitute forms furnished to employees.

.03 For purposes of this revenue procedure, the official IRS-printed red dropout ink Forms W–2 (Copy A) and W–3, and their exact substitutes, are referred to as “red-ink.” The SSA-approved black-and-white Forms W–2 (Copy A) and W–3 are referred to as “substitute black-and-white Copy A” and “substitute black-and-white W–3” forms.

Any questions about the red-ink Form W–2 (Copy A) and Form W–3 and the substitute employee statements should be emailed to Substituteforms@irs.gov. Please enter “Substitute Forms” on the subject line. Or send your questions to:

Internal Revenue Service

Attn: Substitute Forms Program

SE:W:CAR:MP:P:TP

5000 Ellin Rd., C6-440

Lanham, MD 20706

Any questions about the black-and-white Copy A and W–3 forms should be emailed to copy.a.forms@ssa.gov or sent to:

Social Security Administration

Data Operations Center

Attn: Substitute Black-and-White Copy A Forms, Room 360

1150 E. Mountain Drive

Wilkes-Barre, PA 18702-7997

Note. You should receive a response from either the IRS or the SSA within 30 days.

.04 Some Forms W–2 that include logos, slogans, and advertisements (including advertisements for tax preparation software) may be confused with questionable Forms W–2. An employee may not recognize the importance of the employee copy for tax reporting purposes due to the use of logos, slogans, and advertisements. Thus, the IRS has determined that logos, slogans, and advertising will not be allowed on Forms W–3, Copy A of Forms W–2, or any employee copies reporting wages paid during the 2014 calendar year, and thereafter, with the following exceptions:

  • Forms may include the exact name of the employer or agent, primary trade name, trademark, service mark, or symbol of the employer or agent.

  • Forms may include an embossment or watermark on the information return (and copies) that is a representation of the name, a primary trade name, trademark, service mark, or symbol of the employer or agent.

  • Presentation may be in any typeface, font, stylized fashion, or print color normally used by the employer or agent, and used in a non-intrusive manner.

  • These items must not materially interfere with the ability of the recipient to recognize, understand, and use the tax information on the employee copies.

  • Corrected information on information returns and employee copies that was shown on Forms W–2 for amounts paid before January 1, 2011, is an exception.

The IRS e-file logo on the IRS official employee copies may be included, but it is not required, on any of the substitute form copies.

The information return and employee copies must clearly identify the employer’s name associated with its employer identification number.

Logos and slogans, may be used on permissible enclosures, such as a check or account statement, other than information returns and payee copies.

Forms W–2 and W–3 are subject to annual review and possible change. This revenue procedure may be revised to state other requirements of the IRS and the SSA regarding the preparation and use of substitute forms for Form W–2 and Form W–3 for wages paid during the 2014 calendar year, at a future date. If you have comments about the restrictions on including logos, slogans, and advertising on information returns and employee copies, send or email your comments to: Internal Revenue Service, Attn: Substitute Forms Program, SE:W:CAR:MP:P:TP, 5000 Ellin Road, C6-440, Lanham, MD 20706, or Substituteforms@irs.gov.

.05 The Internal Revenue Service/Information Returns Branch (IRS/IRB) maintains a centralized customer service call site to answer questions related to information returns (Forms W–2, W–3, W–2c, W–3c, 1099 series, 1096, etc.). You can reach the call site at 1-866-455-7438 (toll-free) or 304-263-8700 (not a toll-free number). Persons with a hearing or speech disability with access to Telecommunication Device for the Deaf (TDD) can call 304-579-4827 (not a toll-free number). You may also email questions to mccirp@irs.gov. Do not submit employee information via email, because electronic mail is not secure and the information may be compromised.

IRS/IRB does not process information returns which are filed on paper forms. IRS/IRB does not process Forms W–2 (Copy A). Forms W–2 (Copy A) prepared on paper or electronically must be filed with the SSA. IRS/IRB does, however, process waiver requests (Form 8508, Request for Waiver From Filing Information Returns Electronically) and extension of time to file requests (Form 8809, Application for Extension of Time To File Information Returns) for Forms W–2 (Copy A) and requests for an extension of time to furnish the employee copies of Form W–2. See Publication 1220, Specifications for Electronic Filing of Forms 1097, 1098, 1099, 3921, 3922, 5498, and W–2G, for information on waivers and extensions of time.

.06 The following form instructions and publications provide more detailed filing procedures for certain information returns:

  • General Instructions for Forms W–2 and W–3, (Including Forms W–2AS, W–2CM, W–2GU, W–2VI, W–3SS, W–2c, and W–3c).

  • Publication 1223, General Rules and Specifications for Substitute Forms W–2C and W–3C.

Section 1.2 – What’s New

.01 Editorial changes. We made editorial changes. Redundancies were eliminated as much as possible.

.02 IRS Room Change. Inquiries about the Substitute Forms Program should be sent to:

Internal Revenue Service

Attn: Substitute Forms Program

SE:W:CAR:MP:P:TP

5000 Ellin Rd., C6-440

Lanham, MD 20706

Section 1.3 – General Rules for Paper Forms W–2 and W–3

.01 Employers not filing electronically must file paper Forms W–2 (Copy A) along with Form W–3 with the SSA by using either the official IRS form or a substitute form that exactly meets the specifications shown in Parts 2 and 3 of this revenue procedure.

Note. www.cnmidof.net http//www.hacienda.gobierno.pr. Substitute territorial forms (W–2AS, W–2GU, W–2VI, W–3SS) should also conform to the specifications as outlined in this revenue procedure. These forms require the form designation (“W–2AS,” “W–2GU,” “W–2VI”) on Copy A to be in black ink. If you are an employer in the Commonwealth of the Northern Mariana Islands, you must contact Department of Finance, Division of Revenue and Taxation, Commonwealth of the Northern Mariana Islands, P.O. Box 5234 CHRB, Saipan, MP 96950 or www.cnmidof.net to get Form W–2CM and instructions for completing and filing the form. For information on Forms 499R–2/W–2PR, use this website: http//www.hacienda.gobierno.pr.

Employers who file with the SSA electronically or on paper may design their own statements to furnish to employees. These employee statements designed by employers must comply with the requirements shown in Parts 2 and 3.

.02 Red-ink substitute forms that completely conform to the specifications contained in this revenue procedure may be privately printed without prior approval from the IRS or the SSA. Only the substitute black-and-white Copy A and W–3 forms need to be submitted to the SSA for approval, prior to their use (see Section 2.2 of Part 2).

.03 As in the past, SSA-approved black-and-white Copy A and Form W–3 may be generated using a printer by following all guidelines and specifications (also see Section 2.2 of Part 2). In general, regardless of the method of entering data, using black ink on Forms W–2 and W–3 provides better readability for processing by scanning equipment. Colors other than black are not easily read by the scanner and may result in delays or errors in the processing of Forms W–2 (Copy A) and W–3. The printing of the data should be centered within the boxes. The size of the variable data must be printed in a font no smaller than 10-point.

Note. With the exception of the identifying number, the year, the form number for Form W–3, and the corner register marks, the preprinted form layout for the red-ink Forms W–2 (Copy A) and W–3 must be in Flint J–6983 red OCR dropout ink or an exact match.

.04 Substitute forms filed with the SSA and substitute copies furnished to employees that do not conform to these specifications are unacceptable. Forms W–2 (Copy A) and W–3 filed with the SSA that do not conform may be returned. In addition, penalties may be assessed for not complying with the form specifications.

.05 Substitute red-ink forms should not be submitted to either the IRS or the SSA for specific approval. If you are uncertain of any specification and want clarification, do the following.

1. Submit a letter or email citing the specification to the appropriate address in Section 1.1 of Part 1.

2. State your understanding of the specification.

3. Enclose an example (if appropriate) of how the form would appear if produced using your understanding.

4. Be sure to include your name, complete address, phone number, and if applicable, your email address with your correspondence.

.06 Any questions about the specifications, especially those for the red-ink Form W–2 (Copy A) and Form W–3, should be emailed to: Substituteforms@irs.gov. Please enter “Substitute Forms” on the subject line. Or send your questions to:

Internal Revenue Service

Attn: Substitute Forms Program

SE:W:CAR:MP:P:TP

5000 Ellin Rd., C6-440

Lanham, MD 20706

Any questions about the substitute black-and-white Copy A and W–3 should be emailed to copy.a.forms@ssa.gov or sent to:

Social Security Administration

Data Operations Center

Attn: Substitute Black-and-White Copy A Forms, Room 360

1150 E. Mountain Drive

Wilkes-Barre, PA 18702-7997

Note. You should receive a response within 30 days from either the IRS or the SSA.

.07 Forms W–2 and W–3 are subject to annual review and possible change. Therefore, employers are cautioned against overstocking supplies of privately-printed substitutes.

.08 Separate instructions for Forms W–2 and W–3 are provided in the 2014 General Instructions for Forms W–2 and W–3. Form W–3 should be used only to transmit paper Forms W–2 (Copy A). Form W–3 is a single sheet including only essential filing information. Be sure to make a copy of your completed Form W–3 for your records. You can order current year official IRS Forms W–2, W–2AS, W–2GU, W–2VI, W–3, and W–3SS, and the 2014 General Instructions for Forms W–2 and W–3, online at www.irs.gov/businesses. Click on the Online Ordering for Information Returns and Employer Returns link. You may also order these forms and instructions by calling 1-800-TAX-FORM (1-800-829-3676). The IRS provides only cutsheet sets of Forms W–2 and cutsheets of Form W–3.

.09 Because substitute Forms W–2 (Copy A) and W–3 are machine-imaged and scanned by the SSA, the forms must meet the same specifications as the official IRS Forms W–2 and W–3 (as shown in the exhibits).

Section 1.4 – General Rules for Filing Forms W–2 (Copy A) Electronically

.01 Employers must file Forms W–2 (Copy A) with the SSA electronically if they are required to file 250 or more for a calendar year unless the IRS grants a waiver. For details, get the 2014 General Instructions for Forms W–2 and W–3. The SSA publication EFW2, Specifications for Filing Forms W–2 Electronically, contains specifications and procedures for electronic filing of Form W–2 information with the SSA. Employers are cautioned to obtain the most recent revision of EFW2 (and supplements) due to any subsequent changes in specifications and procedures.

.02 You may obtain a copy of the EFW2 by:

  • Accessing the SSA website at: www.socialsecurity.gov/employer/pub.htm. Enter “EFW2” in the search box.

.03 Electronic filers do not file a paper Form W–3. See the SSA publication EFW2 for guidance on transmitting Form W–2 (Copy A) information to SSA electronically.

.04 Employers filing fewer than 250 Forms W–2 are encouraged to electronically file Forms W–2 (Copy A) with the SSA. Doing so will enhance the timeliness and accuracy of forms processing. You may visit the SSA’s employer website at www.socialsecurity.gov/employer. This helpful site has links to Business Services Online (BSO) and tutorials on registering and using BSO to file your Forms W–2.

.05 Employers who do not comply with the electronic filing requirements for Form W–2 (Copy A) and who are not granted a waiver by the IRS may be subject to penalties. Employers who file Form W–2 information with the SSA electronically must not send the same data to the SSA on paper Forms W–2 (Copy A). Any duplicate reporting may subject filers to unnecessary contacts by the SSA or the IRS.

Part 2 Specifications for Substitute Forms W–2 and W–3

Section 2.1 – Specifications for Red-Ink Substitute Form W–2 (Copy A) and Form W–3 Filed with the SSA

.01 The official IRS-printed red dropout ink Form W–2 (Copy A) and W–3 and their exact substitutes are referred to as red-ink in this revenue procedure. Employers may file substitute Forms W–2 (Copy A) and W–3 with the SSA. The substitute forms must be exact replicas of the official IRS forms with respect to layout and content because they will be read by scanner equipment.

Note. Even the slightest deviation can result in incorrect scanning, and may affect money amounts reported for employees.

.02 Paper used for cutsheets and continuous-pinfed forms for substitute Form W–2 (Copy A) and Form W–3 that are to be filed with the SSA must be white 100% bleached chemical wood, 18–20 pound paper only, optical character recognition (OCR) bond produced in accordance with the following specifications:

• Acidity: Ph value, average, not less than 4.5
• Basis weight: 17 x 22 inch 500 cut sheets, pound 18–20
• Metric equivalent—gm./sq. meter (a tolerance of +5 pct. is allowed) 68–75
• Stiffness: Average, each direction, not less than—milligrams
Cross direction 50
Machine direction 80
• Tearing strength: Average, each direction, not less than—grams 40
• Opacity: Average, not less than—percent 82
• Reflectivity: Average, not less than—percent 68
• Thickness: Average—inch 0.0038
Metric equivalent—mm 0.097
(a tolerance of +0.0005 inch (0.0127 mm) is allowed)
Paper cannot vary more than 0.0004 inch (0.0102 mm) from one edge to the other.
• Porosity: Average, not less than—seconds 10
• Finish (smoothness): Average, each side—seconds 20–55
(for information only) the Sheffield equivalent—units 170–d200
• Dirt: Average, each side, not to exceed—parts per million 8

Note. Reclaimed fiber in any percentage is permitted, provided the requirements of this standard are met.

.03 All printing of red-ink substitute Forms W–2 (Copy A) and W–3 must be in Flint red OCR dropout ink except as specified below. The following must be printed in nonreflective black ink:

  • Identifying number “22222” or “33333” at the top of the forms.

  • Tax year at the bottom of the forms.

  • The four (4) corner register marks on the forms.

  • The form identification number (“W–3”) at the bottom of Form W–3.

  • All the instructions below Form W–3 beginning with “Send this entire page....” line to the bottom of Form W–3.

.04 The vertical and horizontal spacing for all federal payment and data boxes on Forms W–2 and W–3 must meet specifications. On Form W–3 and Form W–2 (Copy A), all the perimeter rules must be 1-point (0.014-inch), while all other rules must be one-half point (0.007-inch). Vertical rules must be parallel to the left edge of the form; horizontal rules parallel to the top edge.

.05 The official red-ink Form W–3 and Form W–2 (Copy A) are 7.5 inches wide. Employers filing Forms W–2 (Copy A) with the SSA on paper must also file a Form W–3. Form W–3 must be the same width (7.5 inches) as the Form W–2. One Form W–3 is printed on a standard-size, 8.5 × 11-inch page. Two official Forms W–2 (Copy A) are contained on a single 8.5 × 11-inch page (exclusive of any snap-stubs).

.06 The top, left, and right margins for the Form W–2 (Copy A) and Form W–3 are .5 inches (½ inch). All margins must be free of printing except for the words “DO NOT STAPLE” on red-ink Form W–3. The space between the two Forms W–2 (Copy A) is 1.33 inches.

.07 The identifying numbers are “22222” for Form W–2 (Copies A (and 1)) and “33333” for Form W–3. No printing should appear anywhere near the identifying numbers.

Note. The identifying number must be printed in nonreflective black ink in OCR-A font of 10 characters per inch.

.08 The depth of the individual scannable image on a page must be the same as that on the official IRS forms. The depth from the top line to the bottom line of an individual Form W–2 (Copy A) must be 4.17 inches and the depth from the top line to the bottom line of Form W–3 must be 4.67 inches.

.09 Continuous-pinfed Forms W–2 (Copy A) must be separated into 11-inch deep pages. The pinfed strips must be removed when Forms W–2 (Copy A) are filed with the SSA. The two Forms W–2 (Copy A) on the 11-inch page must not be separated (only the pages are to be separated (burst)). The words “Do Not Cut, Fold, or Staple Forms on This Page” must be printed twice between the two Forms W–2 (Copy A) in Flint red OCR dropout ink. All other copies (Copies 1, B, C, 2, and D) must be able to be distinguished and separated into individual forms.

.10 Box 12 of Form W–2 (Copy A) contains four entry boxes – 12a, 12b, 12c, and 12d. Do not make more than one entry per box. Enter your first code in box 12a (for example, enter Code D in box 12a, not 12d, if it is your first entry). If more than four items need to be reported in box 12, use a second Form W–2 to report the additional items (see “Multiple forms” in the 2014 General Instructions for Forms W–2 and W–3). Do not report the same federal tax data to the SSA on more than one Form W–2 (Copy A). However, repeat the identifying information (employee’s name, address, and SSN; employer’s name, address, and EIN) on each additional form.

.11 The checkboxes in box 13 of Form W–2 (Copy A) must be .14 inches each; the space before the first checkbox is .20 inches; the spacing on each remaining side of the 3 checkboxes is .36 inches (see Exhibit A). The checkboxes in box b of Form W–3 must also be .14 inches.

Note. More than 50% of an applicable checkbox must be covered by an “X.”

.12 All substitute Forms W–2 (Copy A) and W–3 in the red-ink format must have the tax year, form number, and form title printed on the bottom face of each form using type identical to that of the official IRS form. The red-ink substitute Form W–2 (Copy A) and Form W–3 must have the form producer’s EIN entered directly to the left of “Department of the Treasury,” in red.

.13 The words “For Privacy Act and Paperwork Reduction Act Notice, see back of Copy D.” must be printed in Flint red OCR dropout ink in the same location as on the official Form W–2 (Copy A). The words “For Privacy Act and Paperwork Reduction Act Notice, see back of Copy D of Form W–2.” must be printed at the bottom of the page of Form W–3 in black ink.

.14 The Office of Management and Budget (OMB) Number must be printed on substitute Forms W–3 and W–2 (on each ply) in the same location as on the official IRS forms.

.15 All substitute Forms W–3 must include the instructions that are printed on the same sheet below the official IRS form.

.16 The back of substitute Form W–2 (Copy A) and Form W–3 must be free of all printing.

.17 All copies must be clearly legible. Fading must be minimized to assure legibility.

.18 Chemical transfer paper is permitted for Form W–2 (Copy A) only if the following standards are met:

  • Only chemically-backed paper is acceptable for Form W–2 (Copy A). Front and back chemically-treated paper cannot be processed properly by scanning equipment.

  • Chemically-transferred images must be black.

  • Carbon-coated forms are not permitted.

.19 The Government Printing Office (GPO) symbol and the Catalog Number (Cat. No.) must be deleted from substitute Form W–2 (Copy A) and Form W–3.

Section 2.2 – Specifications for Substitute Black-and-White Copy A and W–3 Forms Filed with the SSA

.01 The SSA-approved substitute black-and-white Forms W–2 (Copy A) and W–3 are referred to as substitute black-and-white Copy A and W–3. Specifications for the substitute black-and-white Copy A and W–3 are similar to the red-ink forms (Part 2, Section 2.1) except for the items that follow (see Exhibits E and F). Exhibits are samples only and must not be downloaded to meet tax obligations.

1. Forms must be printed on 8.5 x 11-inch single-sheet paper only. There must be two Forms W–2 (Copy A) printed on a page. There must be no horizontal perforations between the two Forms W–2 (Copy A) on each page.

2. All forms and data must be printed in nonreflective black ink only.

3. The data and forms must be programmed to print simultaneously. Forms cannot be produced separately from wage data entries.

4. The forms must not contain corner register marks.

5. The forms must not contain any shaded areas, including those boxes that are entirely shaded on the red-ink forms.

6. Identifying numbers on both Form W–2 (“22222”) and Form W–3 (“33333”) must be preprinted in 14-point Arial bold font or a close approximation.

7. The form numbers (“W–2” and “W–3”) must be in 18-point Arial font or a close approximation. The tax year (for example, “2014”) on Forms W–2 (Copy A) and W–3 must be in 20-point Arial font or a close approximation.

8. No part of the box titles or the data printed on the forms may touch any of the vertical or horizontal lines, nor should any of the data intermingle

with the box titles. The data should be centered in the boxes.

9. Do not print any information in the margins of the substitute

black-and-white Copy A and W–3 forms (for example, do not print “DO NOT STAPLE” in the top margin of Form W–3).

10. The word “Code” must not appear in box 12 on Form W–2 (Copy A).

11. A 4-digit vendor code preceded by four zeros and a slash (for example, 0000/9876) must appear in 12-point Arial font, or a close approximation, under the tax year in place of the Cat. No. on Form W–2 (Copy A) and in the bottom right corner of the “For Official Use Only” box at the bottom of Form W–3. Do not display the form producer’s EIN to the left of “Department of the Treasury.” The vendor code will be used to identify the form producer.

12. Do not print Catalog Numbers (Cat. No.) on either Form W–2 (Copy A) or Form W–3.

13. Do not print the checkboxes in:

  • Box 13 of Form W–2 (Copy A). The “X” should be programmed to be printed and centered directly below the applicable box title.

14. Do not print dollar signs. If there are no money amounts being reported, the entire field should be left blank.

15. The space between the two Forms W–2 (Copy A) is 1.33 inches.

.02 You must submit samples of your substitute black-and-white Copy A and W–3 forms to the SSA. Only black-and-white substitute Forms W–2 (Copy A) and W–3 for tax year 2014 will be accepted for approval by the SSA. Questions regarding other red-ink forms (that is, red-ink Forms W–2c, W–3c, 1099 series, 1096, etc.) must be directed to the IRS only.

.03 You will be required to send one set of blank and one set of dummy-data substitute black-and-white Copy A and W–3 forms for approval. Sample data entries should be filled in to the maximum length for each box entry, preferably using numeric data or alpha data, depending upon the type required to be entered. Include in your submission the name, telephone number, fax number, and email address of a contact person who can answer questions regarding your sample forms.

.04 To receive approval, you may first contact the SSA at copy.a.forms@ssa.gov to obtain a template and further instructions in PDF or Excel format. You may also send your 2014 sample substitute black-and-white Copy A and W–3 forms to:

Social Security Administration

Data Operations Center

Attn: Substitute Black-and-White Copy A Forms, Room 360

1150 E. Mountain Drive

Wilkes-Barre, PA 18702-7997

Send your sample forms via private mail carrier or certified mail in order to verify their receipt. You can expect approval (or disapproval) by the SSA within 30 days of receipt of your sample forms.

.05 The 4-digit vendor code preceded by four zeros and a slash (0000/9876) must be preprinted on the sample substitute black-and-white Copy A and W–3 forms. Forms not containing a vendor code will be rejected and will not be submitted for testing or approval. If you have a valid vendor code provided to you through the National Association of Computerized Tax Processors, you should use that code. If you do not have a valid vendor code, contact the Social Security Administration at copy.a.forms@ssa.gov to obtain an SSA-issued code. (Additional information on vendor codes may be obtained from the SSA or the National Association of Computerized Tax Processors (NACTP) via email at president@nactp.org.)

Note. Vendor codes from the NACTP are required by those companies producing the W–2 family of forms as part of a product for resale to be used by multiple employers and payroll professionals. Employers developing Forms W–2 or W–3 to be used only for their individual company require a vendor code issued by Social Security Administration.

.06 If you use forms produced by a vendor and have questions concerning approval, do not send the forms to the SSA for approval. Instead, you may contact the software vendor to obtain a copy of SSA’s dated approval notice supplied to that vendor.

.07 In response to feedback from the user community, the SSA (and the IRS) have added a 2–D barcoded version for the substitute Form W–2 and Form W–3 to the list of acceptable submission formats. This version is an optional alternative to the non-barcoded substitute Forms W–2 and W–3. Both versions are fully supported by the SSA. At this time, neither the IRS nor the SSA mandates the use of 2–D barcoded substitute forms.

Note. The data contained in the barcode must not differ from the data displayed on the form. If they differ, the data in the barcode will be ignored and the data displayed on the form will be considered the submission. This also occurs when the barcode is not read correctly.The information on the form needs to be manually keyed into the database.

To get the barcode information:

  • See the SSA’s BSO website at http://www.socialsecurity.gov/bso,

  • Get the pdf version of the specifications at copy.a.forms@ssa.gov,

  • Download the “TY 14 Substitute W3/W2 2–D Barcoding Standards” from http://www.socialsecurity.gov/employer/subBarCodeStd.pdf.

Section 2.3 – Requirements for Substitute Forms Furnished to Employees (Copies B, C, and 2 of Form W–2)

Note. rules in Part 2, Section 2.3 (this section), apply only to employee copies of Form W–2 (Copies B, C, and 2). Printers are cautioned that the paper filers who send Forms W–2 (Copy A) to the SSA must follow the requirements in Part 2, Sections 2.1and/or 2.2 above.

.01 All employers (including those who file electronically) must furnish employees with at least two copies of Form W–2 (three or more for employees required to file a state, city, or local income tax return). The following rules are guidelines for preparing employee copies.

The dimensions of these copies (Copies B, C, and 2), but not Copy A, may differ from the dimensions of the official IRS form to allow space for reporting additional information, including additional entries such as withholding for health insurance, union dues, bonds, or charity in box 14. The limitation of a maximum of four items in box 12 of Form W–2 applies only to Copy A, which is filed with the SSA.

Note. Payee statements (Copies B, C, and 2 of Form W–2) may be furnished electronically if employees give their consent (as described in Treasury Regulations Section 31.6051–1(j)). See also Publication 15–A, Employer’s Supplemental Tax Guide.

.02 The minimum dimensions for employee copies only (not Copy A) of Form W–2 should be 2.67 inches deep by 4.25 inches wide. The maximum dimensions should be no more than 6.5 inches deep by no more than 8.5 inches wide.

Note. The maximum and minimum size specifications in this document are for tax year 2014 only and may change in future years.

.03 Either horizontal or vertical format is permitted (see Exhibit D).

.04 The paper for all copies must be white and printed in black ink. The substitute Copy B, which employees are instructed to attach to their federal income tax returns, should be at least 9-pound paper (basis 17 × 22−500). Other copies furnished to employees should also be at least 9-pound paper (basis 17 × 22−500) unless a state, city, or local government provides other specifications.

.05 Employee copies of Form W–2 (Copies B, C, and 2), including those that are printed on a single sheet of paper, must be easily separated. The best method of separation is to provide perforations between the individual copies. Each copy should be easily distinguished whatever method of separation is used.

Note. Perforation does not apply to printouts of copies of Forms W–2 that are furnished electronically to employees (as described in Treasury Regulations Section 31.6051–1(j)). However, these employees should be cautioned to carefully separate the copies of Form W–2. See Publication 15–A, Employer’s Supplemental Tax Guide, for information on electronically furnishing Forms W–2 to employees.

.06 Interleaved carbon and chemical transfer paper employee copies must be clearly legible. Fading must be minimized to assure legibility.

.07 The electronic tax logo on the IRS official employee copies is not required on any of the substitute form copies. To avoid confusion and questions by employees, employers are encouraged to delete the identifying number (“22222”) from the employee copies of Form W–2.

.08 All substitute employee copies must contain boxes, box numbers, and box titles that match the official IRS Form W–2. Boxes that do not apply can be deleted. However, certain core boxes must be included. The placement, numbering, and size of this information is specified as follows:

  • The items and box numbers that constitute the core data are: The core boxes must be printed in the exact order shown on the official IRS form.

    Box 1 — Wages, tips, other compensation,

    Box 2 — Federal income tax withheld,

    Box 3 — Social security wages,

    Box 4 — Social security tax withheld,

    Box 5 — Medicare wages and tips, and

    Box 6 — Medicare tax withheld.

  • The core data boxes (1 through 6) must be placed in the upper right of the form. Substitute vertical-format copies may have the core data across the top of the form. Boxes or other information will definitely not be permitted to the right of the core data.

  • The form title, number, or copy designation (B, C, or 2) may be at the top of the form. Also, a reversed or blocked-out area to accommodate a postal permit number or other postal considerations is allowed in the upper-right.

  • Boxes 1 through 6 must each be a minimum of 1⅛ inches wide × L inch deep.

  • Other required boxes are:

    a) Employee’s social security number,

    b) Employer identification number (EIN),

    c) Employer’s name, address, and ZIP code,

    e) Employee’s name, and

    f) Employee’s address and ZIP code.

Identifying items must be present on the form and be in boxes similar to those on the official IRS form. However, they may be placed in any location other than the top or upper right. You do not need to use the lettering system (a–c, e–f) used on the official IRS form. The employer identification number (EIN) may be included with the employer’s name and address and not in a separate box.

Note. Box d (“Control number”) is not required.

.09 All copies of Form W–2 furnished to employees must clearly show the form number, the form title, and the tax year prominently displayed together in one area of the form. The title of Form W–2 is “Wage and Tax Statement.” It is recommended (but not required) that this be located on the bottom left of substitute Forms W–2. The reference to the “Department of the Treasury — Internal Revenue Service” must be on all copies of substitute Forms W–2 furnished to employees. It is recommended (but not required) that this be located on the bottom right of Form W–2.

.10 If the substitute employee copies are labeled, the forms must contain the applicable description:

  • “Copy B, To Be Filed With Employee’s FEDERAL Tax Return.”

  • “Copy C, For EMPLOYEE’S RECORDS.”

  • “Copy 2, To Be Filed With Employee’s State, City, or Local Income Tax Return.”

It is recommended (but not required) that these be located on the lower left of Form W–2. If the substitute employee copies are not labeled as to the disposition of the copies, then written notification using similar wording must be provided to each employee.

.11 The tax year (for example, 2014) must be clearly printed on all copies of substitute Form W–2. It is recommended (but not required) that this information be in the middle at the bottom of the Form W–2. The use of 24-pt. OCR-A font is recommended (but not required).

.12 Boxes 1 and 2 (if applicable) on Copy B must be outlined in bold 2-point rule or highlighted in some manner to distinguish them. If “Allocated tips” are being reported, it is recommended (but not required) that box 8 also be outlined. If reported, “Social security tips” (box 7) must be shown separately from “Social security wages” (box 3).

Note. Boxes 8 and 9 may be omitted if not applicable.

.13 If employers are required to withhold and report state or local income tax, the applicable boxes are also considered core information and must be placed at the bottom of the form. State information is included in:

  • Box 15 (State, Employer’s state ID number)

  • Box 16 (State wages, tips, etc.)

  • Box 17 (State income tax)

Local information is included in:

  • Box 18 (Local wages, tips, etc.)

  • Box 19 (Local income tax)

  • Box 20 (Locality name)

.14 Boxes 7 through 14 may be omitted from substitute employee copies unless the employer must report any of that information to the employee. For example, if an employee did not have “Social security tips” (box 7), the form could be printed without that box. But if an employer provided dependent care benefits, the amount must be reported separately, shown in box 10, and labeled “Dependent care benefits.”

.15 Employers may enter more than four codes in box 12 of substitute Copies B, C, and 2 (and 1 and D) of Form W–2, but each entry must use Codes A–EE (see the 2014 General Instructions for Forms W–2 and W–3).

.16 If an employer has employees in any of the three categories in box 13, all checkbox headings must be shown and the proper checkmark made, when applicable.

.17 Employers may use box 14 for any other information that they wish to give to their employees. Each item must be labeled. (See the instructions for box 14 in the 2014 General Instructions for Forms W–2 and W–3.)

.18 The front of Copy C of a substitute Form W–2 must contain the note “This information is being furnished to the Internal Revenue Service. If you are required to file a tax return, a negligence penalty or other sanction may be imposed on you if this income is taxable and you fail to report it.”

.19 Instructions similar to those contained on the back of Copies B, C, and 2 of the official IRS Form W–2 must be provided to each employee. An employer may modify or delete instructions that do not apply to its employees. (For example, remove Railroad Retirement Tier 1 and Tier 2 compensation information for nonrailroad employees or information about dependent care benefits that the employer does not provide.)

.20 Employers must notify their employees who have no income tax withheld that they may be able to claim a tax refund because of the earned income credit (EIC). They will meet this notification requirement if they furnish a substitute Form W–2 with the EIC notice on the back of Copy B, IRS Notice 797, Possible Federal Tax Refund Due to the Earned Income Credit (EIC), or on their own statement containing the same wording. They may also change the font on Copies B, C, and 2 so that the EIC notification and Form W–2 instructions fit differently. For more information about notification requirements, see Notice 1015, “Have You Told Your Employees About the Earned Income Credit (EIC)?”

Note. An employer does not have to notify any employee who claimed exemption from withholding on Form W–4, Employee’s Withholding Allowance Certificate, for the calendar year.

Section 2.4 – Electronic Delivery of Form W–2 and W–2c Recipient Statements

.01 If you are required to furnish a written statement (Copy B or an acceptable substitute) to a recipient, then you may furnish the statement electronically instead of on paper. This includes furnishing the statement to recipients of Forms W–2 and W–2c.

If you meet the requirements listed below, you are treated as furnishing the statement timely.

.02 The recipient must consent in the affirmative and not have withdrawn the consent before the statement is furnished. The consent by the recipient must be made electronically in a way that shows that he or she can access the statement in the electronic format in which it will be furnished.

You must notify the recipient of any hardware or software changes prior to furnishing the statement. A new consent to receive the statement electronically is required after the new hardware or software is put into service.

Prior to furnishing the statement electronically, the employer must provide to the employee a clear and conspicuous disclosure statement containing each of the disclosures described in Regulations Section 31.6051–1 or Publication

15–A.

  • If the recipient does not consent to receive the statement electronically, a paper copy will be provided.

  • The scope and duration of the consent. For example, whether the consent applies to every year the statement is furnished or only until January 31 immediately following the date of the consent.

  • How to obtain a paper copy after giving consent.

  • How to withdraw the consent. The consent may be withdrawn at any time by furnishing the withdrawal in writing (electronically or on paper) to the person whose name appears on the statement. Confirmation of the withdrawal also will be in writing (electronically or on paper).

  • Notice of termination. The notice must state under what conditions the statements will no longer be furnished to the recipient.

  • Procedures to update the recipient’s information.

  • A description of the hardware and software required to access, print and retain a statement, and a date the statement will no longer be available on the website.

.03 Additionally, you must:

  • Ensure the electronic format contains all the required information and complies with the guidelines in this document.

  • If posting the statement on a website, post it for the recipient to access on or before the January 31 due date through October 15 of that year.

  • Inform the recipient, in person, electronically or by mail, of the posting and how to access and print the statement.

Part 3 Additional Instructions

Section 3.1 – Additional Instructions for Form Printers

.01 If electronic media is not used for filing with the SSA, the substitute copies of Forms W–2 (either red-ink or substitute black-and-white forms) should be assembled in the same order as the official IRS Forms W–2. Copy A should be first, followed sequentially by perforated sets (Copies 1, B, C, 2, and D).

.02 The substitute form to be filed by the employer with the SSA must carry the designation “Copy A.”

Note. Electronic filers do not submit either red-ink or substitute black-and-white paper Form W–2 (Copy A) or Form W–3 to the SSA.

.03 Substitute forms (red-ink or substitute black-and-white Copy A or W–3) do not require a copy to be retained by employers (Copy D of Form W–2). However, employers must retain copies of the Forms W–2 filed with SSA or have the ability to reconstruct the data for at least four years. Employers must be able to generate a facsimile of Form W–2 (Copy A), in case of loss.

.04 Except for copies in the official assembly, no additional copies that may be prepared by employers should be placed ahead of Form W–2 (Copy C) “For EMPLOYEE’S RECORDS.”

.05 You must provide instructions similar to those contained on the back of Copies B, C, and 2 of the official IRS Form W–2 to each employee. You may print them on the back of the substitute Copies B, C, and 2 or provide them to employees on a separate statement. You do not need to use the back of Copy 2. If you do not use Copy 2, you may include all the information that appears on the back of the official Copies B, C, and 2 on the back of your substitute Copies B and C only. As an example, you may use the “Note” on the back of the official Copy C as the dividing point between the text for your substitute Copies B and C. Do not print these instructions on the back of Copy 1. Any Forms W–2 (Copy A) and W–3 that are filed with the SSA must have no printing on the reverse side.

Section 3.2 – Instructions for Employers

.01 Only originals of Form W–2 (Copy A) and Form W–3 may be filed with the SSA. Carbon copies and photocopies are unacceptable.

.02 Employers should type or machine-print data entries on plain paper forms whenever possible. Ensure good quality by using a high-quality type face, inserting data in the middle of blocks that are well separated from other printing and guidelines, and taking any other measures that will guarantee clear, sharp images. Black ink must be used with no script type, inverted font, italics or dual-case alpha characters.

Note. 12-point Courier font is preferred by the SSA.

.03 Form W–2 (Copy A) requires decimal entries for wage data. Dollar signs should not be printed with money amounts on the Forms W–2 (Copy A) and W–3.

.04 The employer must provide a machine-scannable Form W–2 (Copy A). The employer must also provide employee copies (Copies B, C, and 2) that are legible and able to be photocopied (by the employee). Do not print any data in the top margin of the payee copies of the forms.

.05 Any printing in box d (Control number) on Form W–2 or box a on Form W–3 may not touch any vertical or horizontal lines and should be centered in the box.

.06 The filer’s employer identification number (EIN) must be entered in box b of Form W–2 and box e of Form W–3. The EIN entered on Form(s) W–2 (box b) and Form W–3 (box e) must be the same as on Forms 941, 941–SS, 943, 944, CT–1, Schedule H (Form 1040), or any other corresponding forms filed with the IRS. Be sure to use EIN format (00-0000000) rather than SSN format (000-00-0000).

.07 The employer’s name, address, and EIN may be preprinted.

Section 3.3 – OMB Requirements for Both Red-Ink and Black-and-White Copy A and W–3 Substitute Forms

.01 The Paperwork Reduction Act (the Act) of 1995 (Public Law 104–13) requires the following:

  • The Office of Management and Budget (OMB) approves all IRS tax forms that are subject to the Act.

  • Each IRS form contains (in or near the upper right corner) the OMB approval number, if assigned. (The official OMB numbers may be found on the official IRS printed forms and are also shown on the forms in Exhibits A, B, C, E, and F.)

  • Each IRS form (or its instructions) states:

1. Why the IRS needs the information,

2. How it will be used, and

3. Whether or not the information is required to be furnished to the IRS.

.02 This information must be provided to any users of official or substitute IRS forms or instructions.

.03 The OMB requirements for substitute IRS Form W–2 (Copy A) and Form W–3 are the following.

  • Any substitute form or substitute statement to a recipient must show the OMB number as it appears on the official IRS form.

  • The OMB number (1545-0008) must appear exactly as shown on the official IRS form.

  • For any copy of Form W–2 other than Copy A, the OMB number must use one of the following formats:

1. OMB No. 1545–xxxx (preferred) or

2. OMB # 1545–xxxx (acceptable).

.04 Any substitute Form W–2 (Copy A only) and Form W–3, must state “For Privacy Act and Paperwork Reduction Act Notice, see back of Copy D.” If no instructions are provided to users of your forms, you must furnish them with the exact text of the Privacy Act and Paperwork Reduction Act Notice.

Section 3.4 – Order Forms and Instructions

.01 You can order IRS Forms W–2, Forms W–3, the General Instructions for Forms W–2 and W–3 and other tax material, online at IRS.gov. Click on the Forms and Pubs link and then the Order Forms and Pubs link, or by calling 1-800-TAX-FORM (1-800-829-3676).

.02 Copies of Form W–2 (Copy A) and Form W–3 downloaded from irs.gov cannot be used for filing with the SSA. These copies of Forms W–2 and W–3 are for information purposes only.

Section 3.5 – Effect on Other Documents.

.01 Publication 1141, Revised 05–2014, is superseded.

Section 3.6 – Exhibits

Exhibit A — Form W–2 (Copy A) (Red-Ink) 2014

Exhibit B — Form W–2 (Copy A) (Red-Ink) 2014

Exhibit C — Form W–2 (Copy B) 2014

Exhibit D — Form W–2 Alternative Employee Copies (Illustrating Horizontal and Vertical Formats)

Exhibit E — Form W–2 (Copy A) (Substitute Black-and-White) 2014

Exhibit F — Form W–2 (Copy A) (Substitute Black-and-White) 2014

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Part IV. Items of General Interest

REG–136676–13

Notice of Proposed Rulemaking
Removal of the 36-month Non-payment Testing Period Rule

AGENCY:

Internal Revenue Service (IRS), Treasury.

ACTION:

Notice of proposed rulemaking.

SUMMARY:

This document contains proposed regulations that will remove a rule that a deemed discharge of indebtedness for which a Form 1099–C, “Cancellation of Debt,” must be filed occurs at the expiration of a 36-month non-payment testing period. The Department of the Treasury and the IRS are concerned that the rule creates confusion for taxpayers and does not increase tax compliance by debtors or provide the IRS with valuable third-party information that may be used to ensure taxpayer compliance. The proposed regulations will affect certain financial institutions and governmental entities.

DATES:

Comments and requests for a public hearing must be received by January 13, 2015.

ADDRESSES:

Send submissions to: CC:PA:LPD:PR (REG–136676–13), room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand-delivered Monday through Friday between the hours of 8:00 a.m. and 4:00 p.m. to CC:PA:LPD:PR (REG–136676–13), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, NW., Washington, DC 20224. Alternatively, taxpayers may submit comments electronically via the Federal eRulemaking Portal at www.regulations.gov (IRS REG–136676–13).

FOR FURTHER INFORMATION CONTACT:

Concerning the proposed regulations, Hollie Marx, (202) 317-6844; concerning the submission of comments and requests for a public hearing, Oluwafunmilayo Taylor, (202) 317-6901 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

This document contains proposed regulations to amend certain Income Tax Regulations (26 CFR Part 1) issued under section 6050P of the Internal Revenue Code (Code), which provide that the 36-month non-payment testing period is an identifiable event triggering an information reporting obligation for discharge of indebtedness by certain entities. The proposed regulations would remove the 36-month non-payment testing period as an identifiable event.

Statutory Provisions

Section 61(a)(12) provides that income from discharge of indebtedness is includible in gross income. Section 6050P was added to the Code by section 13252 of the Omnibus Budget Reconciliation Act of 1993, Public Law 103–66 (107 Stat. 312, 531–532 (1993)). Section 6050P was enacted in part “to encourage taxpayer compliance with respect to discharged indebtedness” and to “enhance the ability of the IRS to enforce the discharge of indebtedness rules.” H.R. Rep. No. 103–111, at 758 (1993). As originally enacted, section 6050P generally required applicable financial entities (generally financial institutions, credit unions, and Federal executive agencies) that discharge (in whole or in part) indebtedness of $600 or more during a calendar year to file information returns with the IRS and to furnish information statements to the persons whose debt is discharged. In addition to other information prescribed by regulations, an applicable financial entity is required to include on the information return the debtor’s name, taxpayer identification number, the date of the discharge, and the amount discharged. See 26 U.S.C. 6050P(a) (1994).

The Debt Collection Improvement Act of 1996 (1996 Act), Public Law 104–134 (110 Stat. 1321, 1321–368 through 1321–369 (1996)) was enacted on April 26, 1996. Section 31001(m)(2)(B)(i) and (ii) of the 1996 Act amended section 6050P to expand the reporting requirement to cover “applicable entities,” which includes any executive, judicial, or legislative agency, not just federal executive agencies, and any previously covered applicable financial entity. Effective for discharges of indebtedness occurring after December 31, 1999, section 533(a) of the Ticket to Work and Work Incentives Improvement Act of 1999 (1999 Act), Public Law 106–170 (113 Stat. 1860, 1931 (1999)), added subparagraph (c)(2)(D) to section 6050P, to further expand entities covered by the reporting requirements to include any organization the “significant trade or business of which is the lending of money.”

On April 4, 2000, the IRS released Notice 2000–22 (2000–1 CB 902) to provide penalty relief to organizations that were newly made subject to section 6050P by the 1999 Act (organizations with a significant trade or business of lending money and agencies other than Federal executive agencies). The relief applied to penalties for failure to file information returns or furnish payee statements for discharges of indebtedness occurring before January 1, 2001. On December 26, 2000, the IRS released Notice 2001–8 (2001–1 CB 374) to extend the penalty relief for organizations described in Notice 2000–22 for discharges of indebtedness that occurred prior to the first calendar year beginning at least two months after the date that appropriate guidance is issued.

Regulatory History

On December 27, 1993, temporary regulations under section 6050P relating to the reporting of discharge of indebtedness were published in the Federal Register (TD 8506) (58 FR 68301). The temporary regulations provided that an applicable financial entity must report a discharge of indebtedness upon the occurrence of an identifiable event that, considering all the facts and circumstances, indicated the debt would never have to be repaid. The temporary regulations provided a non-exhaustive list of three identifiable events that would give rise to the reporting requirement under section 6050P: (1) a discharge of indebtedness under title 11 of the United States Code (Bankruptcy Code); (2) an agreement between the applicable financial entity and the debtor to discharge the indebtedness, provided that the last event to effectuate the agreement has occurred; and (3) a cancellation or extinguishment of the indebtedness by operation of law. These regulations were effective for discharges of indebtedness occurring after December 31, 1993.

A concurrently published notice of proposed rulemaking (IA–63–93) (58 FR 68337) proposed to adopt those and other rules in the temporary regulations. Written comments were received in response to the notice of proposed rulemaking, and testimony was given at a public hearing held on March 30, 1994. In response to the comments and testimony, the IRS provided, in Notice 94–73 (1994–2 CB 553), interim relief from penalties for failure to comply with certain of the reporting requirements of the temporary regulations for discharges of indebtedness occurring before the later of January 1, 1995, or the effective date of final regulations under section 6050P.

On January 4, 1996, prior to the amendments made by the 1996 Act, final regulations relating to the information reporting requirements of applicable financial entities for discharges of indebtedness were published in the Federal Register (TD 8654) (61 FR 262) (1996 final regulations). The final regulations were generally effective for discharges of indebtedness occurring after December 21, 1996, although applicable financial entities at their discretion could apply the final regulations to any discharge of indebtedness occurring on or after January 1, 1996, and before December 22, 1996. Further, the preamble to these regulations provided that the temporary regulations and the interim relief provided in Notice 94–73 remained in effect until December 21, 1996. Finally, the 36-month non-payment testing period identifiable event would not occur prior to December 31, 1997. See § 1.6050P–1(b)(2)(iv)(C) of the 1996 final regulations.

In response to objections by commenters, the 1996 final regulations did not adopt the facts and circumstances test to determine whether a discharge of indebtedness had occurred and information reporting was required. Instead, the 1996 final regulations provided that a debt is deemed to be discharged for information reporting purposes only upon the occurrence of an identifiable event specified in an exhaustive list under § 1.6050P–1(b)(2), whether or not an actual discharge has occurred on or before the date of the identifiable event. See § 1.6050P–1(a)(1).

Section 1.6050P–1(b)(2) of the 1996 final regulations listed eight identifiable events that trigger information reporting obligations on the part of an applicable financial entity: (1) a discharge of indebtedness under the Bankrutpcy Code; (2) a cancellation or extinguishment of an indebtedness that renders the debt unenforceable in a receivership, foreclosure, or similar proceeding in a federal or state court, as described in section 368(a)(3)(A)(ii) (other than a discharge under the Bankruptcy Code); (3) a cancellation or extinguishment of an indebtedness upon the expiration of the statute of limitations for collection (but only if, and only when, the debtor’s statute of limitations affirmative defense has been upheld in a final judgment or decision in a judicial proceeding, and the period for appealing it has expired) or upon the expiration of a statutory period for filing a claim or commencing a deficiency judgment proceeding; (4) a cancellation or extinguishment of an indebtedness pursuant to an election of foreclosure remedies by a creditor that statutorily extinguishes or bars the creditor’s right to pursue collection of the indebtedness; (5) a cancellation or extinguishment of an indebtedness that renders a debt unenforceable pursuant to a probate or similar proceeding; (6) a discharge of indebtedness pursuant to an agreement between an applicable entity and a debtor to discharge indebtedness at less than full consideration; (7) a discharge of indebtedness pursuant to a decision by the creditor, or the application of a defined policy of the creditor, to discontinue collection activity and discharge debt; (8) the expiration of a 36-month non-payment testing period.

The first seven identifiable events are specific occurrences that typically result from an actual discharge of indebtedness. The eighth identifiable event, the expiration of a 36-month non-payment testing period, may not result from an actual discharge of indebtedness. The 36-month non-payment testing period was added to the final regulations in 1996 as an additional identifiable event in response to concerns of creditors that the facts and circumstances approach taken in the temporary and proposed regulations was unclear regarding the effect of continuing collection activity. Creditors proposed (among other things) that the final regulations require reporting after a fixed time period during which there had been no collection efforts.

Section 1.6050P–1(b)(2)(iv) of the 1996 regulations sets forth the 36-month non-payment testing period rule (the 36-month rule). Under that rule, a rebuttable presumption arises that an identifiable event has occurred if a creditor does not receive a payment within a 36-month testing period. The creditor may rebut the presumption if the creditor engaged in significant bona fide collection activity at any time within the 12-month period ending at the close of the calendar year or if the facts and circumstances existing as of January 31 of the calendar year following the expiration of the non-payment testing period indicate that the indebtedness has not been discharged. A creditor’s decision not to rebut the presumption that an identifiable event has occurred pursuant to the 36-month rule is not an indication that it has discharged the debt. Concluding that the debts have, in fact, been discharged, some taxpayers may include in income the amounts reported on Forms 1099–C even though creditors may continue to attempt to collect the debt after issuing a Form 1099–C as required by the 36-month rule. See § 1.6050P–1(a)(1) and (b)(iv).

On October 25, 2004, final regulations reflecting the amendments to section 6050P(c) were published in the Federal Register (TD 9160) (69 FR 62181). These regulations describe circumstances in which an organization has a significant trade or business of lending money and provide three safe harbors under which organizations will not be considered to have a significant trade or business of lending money.

On November 10, 2008, final and temporary regulations were published in the Federal Register (TD 9430) (73 FR 66539) (2008 regulations) to amend the regulations under section 6050P to exempt from the 36-month rule entities that were not within the scope of section 6050P as originally enacted (organizations with a significant trade or business of lending money and agencies other than Federal executive agencies). The changes made by the 2008 regulations reduced the burden on these entities and protected debtors from receiving information returns that reported discharges of indebtedness from these entities before a discharge had occurred. The 2008 regulations also added § 1.6050P–1(b)(2)(v), which provided that, for organizations with a significant trade or business of lending money and agencies other than federal executive agencies that were required to file information returns pursuant to the 36-month rule in a tax year prior to 2008 and failed to file them, the date of discharge would be the first identifiable event, if any, described in § 1.6050P–1(b)(2)(i)(A) through (G) that occurs after 2007. On September 17, 2009, final regulations were published in the Federal Register (TD 9461) (74 FR 47728–01) adopting the 2008 regulations without change.

Notice 2012–65

Even after the amendments to the regulations in 2008 and 2009, concerns continued to arise about the 36-month rule, and taxpayers remained confused regarding whether the receipt of a Form 1099–C represents cancellation of debt that must be included in gross income. To address those concerns, in Notice 2012–65 (2012–52 IRB 773 (Dec. 27, 2012)), the Treasury Department and the IRS requested comments from the public regarding whether to remove or modify the 36-month rule as an identifiable event for purposes of information reporting under section 6050P. Ten comments were received, all recommending removal or revision of the 36-month rule. Several commenters generally expressed concerns that the expiration of a 36-month non-payment testing period does not necessarily coincide with an actual discharge of the indebtedness, leading to confusion on the part of the debtor and, in some instances, uncertainty on the part of the creditor regarding whether it may lawfully continue to pursue the debt. Additionally, commenters noted that the IRS’s ability to collect tax on discharge of indebtedness income may be undermined if the actual discharge occurs in a different year than the year of information reporting.

Explanation of Provisions

The Treasury Department and the IRS agree that information reporting under section 6050P should generally coincide with the actual discharge of a debt. Because reporting under the 36-month rule may not reflect a discharge of indebtedness, a debtor may conclude that the debtor has taxable income even though the creditor has not discharged the debt and continues to pursue collection. Issuing a Form 1099–C before a debt has been discharged may also cause the IRS to initiate compliance actions even though a discharge has not occurred. Additionally, § 1.6050P–1(e)(9) provides that no additional reporting is required if a subsequent identifiable event occurs. Therefore, in cases in which the Form 1099–C is issued because of the 36-month rule but before the debt is discharged, the IRS does not subsequently receive third-party reporting when the debt is discharged. The IRS’s ability to enforce collection of tax for discharge of indebtedness income may, thus, be diminished when the information reporting does not reflect an actual cancellation of indebtedness. After considering the public comments and the effects on tax administration, the Treasury Department and the IRS propose to remove the 36-month rule.

In addition to the comments recommending removal of the 36-month rule, commenters made other suggestions to change this rule, which were not adopted. One commenter suggested that the rule should be revised to require information reporting after 24 months of non-payment, without regard to the creditor’s collection efforts. The commenter suggested that most debts are not collectible after 24 months of non-payment and that requiring information reporting after 24 months would allow the IRS time to assess. This commenter also suggested that the Form 1099–C should be revised to clarify that the issuance of a Form 1099–C does not mean that the debt is discharged, and that creditors should be required to issue corrected Forms 1099–C if they receive payments after the first Form 1099–C is issued.

The revisions proposed by the commenter do not alleviate the problems to debtors, creditors, and the IRS caused by the 36-month rule. There is no indication that merely shortening the time before a Form 1099–C is required to be issued more closely comports with the actual discharge of indebtedness. For example, even if the debt has actually been discharged, the amount reported on the Form 1099–C may not be the same as the amount that the taxpayer is required to report as income because, for instance, the taxpayer may be entitled to claim an exclusion or an exemption. In addition, the Instructions for Debtor on Form 1099–C already explain that the issuance of a Form 1099–C does not necessarily mean that the debtor must include the cancellation of debt in gross income. As a result, such revisions would fail to address the fact that issuance of a Form 1099–C pursuant to the 36-month rule does not necessarily coincide with a discharge of indebtedness. Also, the commenter’s suggestion that creditors be required to issue a corrected Form 1099–C if they later receive a payment from the debtor would not reduce the debtor’s confusion about what receipt of a Form 1099–C issued pursuant to the 36-month rule means. The issuance of a corrected Form 1099–C after the debtor has already reported discharge of indebtedness income with respect to the discharge that is reported on the corrected Form 1099–C could require the debtor to file amended returns to report the reduced amount of cancellation indebtedness and the debtor may be entitled to a refund. Issuance of a corrected Form 1099–C would increase, not decrease, the debtor’s confusion regarding how to proceed.

One commenter suggested that the rule should be retained because it eliminates the possibility of a “permanent deferral” of information reporting of a discharged debt. This commenter noted two recent Tax Court cases, Kleber v. Commissioner, T.C. Memo. 2011–233, and Stewart v. Commissioner, T.C. Sum. Op. 2012–46, in which the court used the 36-month rule to determine the year in which a debt was discharged. In both cases, the court determined that the statute of limitations for assessment had expired before a Form 1099–C was issued. The commenter stated that confusion could result if the 36-month rule is eliminated for information reporting purposes, but the court continues to use it to determine whether there has been an actual discharge. The commenter viewed this as a reason to retain the rule in a modified form. The commenter suggested that the Treasury Department and the IRS modify the 36-month rule and § 1.6050P–1(b)(2)(i)(G) by: (1) treating a creditor’s decision to discontinue collection activities as an identifiable event, whether or not that decision coincides with an actual discharge; (2) placing a 36-month time limit on a creditor’s defined policy for discharging a debt under § 1.6050P–1(b)(2)(i)(G); (3) prohibiting creditors from issuing Forms 1099–C while collection activities are ongoing or while the creditor is considering selling the debt; and (4) requiring creditors to issue corrected Forms 1099–C if they engage in subsequent collection activities or receive a payment on the debt.

Because the revisions suggested by this commenter would not require information reporting only upon an actual discharge of indebtedness, the revisions would not eliminate the problems associated with issuance of Forms 1099–C under the 36-month rule. Adopting these changes could increase, not decrease, confusion, because they would modify another identifiable event, § 1.6050P–1(b)(2)(i)(G), to require that a debtor’s policy for discharging debt incorporate a 36-month discharge rule. Additionally, as explained in this preamble, requiring creditors to issue corrected Forms 1099–C would neither improve tax compliance nor reduce debtors’ confusion. Eliminating the 36-month rule for information reporting purposes, moreover, is likely to lead courts to cease using it as an identifiable event for purposes of determining when an actual discharge occurs, thereby eliminating the issue of the IRS being precluded from assessing tax on discharge of indebtedness before the information return has been issued.

Effective Date

Sections 1.6050P–1(b)(2)(i)(H), § 1.6050P–1(b)(2)(iv), and § 1.6050P–1(b)(2)(v) would be removed on the date these regulations are published as final regulations in the Federal Register. Conforming amendments to § 1.6050P–1(h)(1) necessary as a result of the removal of the above-referenced sections would be effective on the same date.

Special Analyses

It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866, as supplemented by Executive Order 13563. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations. Because the regulations do not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Code, this notice of proposed rulemaking has been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

Comments and Requests for a Public Hearing

Before these proposed regulations are adopted as final regulations, consideration will be given to any comments that are submitted timely to the IRS as prescribed in this preamble under the “Addresses” heading. The Treasury Department and the IRS request comments on all aspects of the proposed rules. All comments will be available at www.regulations.gov or upon request.

A public hearing will be scheduled if requested by any person who timely submits comments. If a public hearing is scheduled, notice of the date, time, and place for the hearing will be published in the Federal Register.

Drafting Information

The principal author of these proposed regulations is Hollie Marx of the Office of Associate Chief Counsel (Procedure and Administration).

* * * * *

Proposed Amendments to the Regulations

Accordingly, 26 CFR part 1 is proposed to be amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation for part 1 continues to read in part as follows:

Authority: 26 U.S.C. 7805. * * *

Par. 2. Section 1.6050P–1 is amended by

1. Removing paragraphs (b)(2)(i)(H), (b)(2)(iv), and (b)(2)(v).

2. Revising paragraph (h) to read as follows:

§ 1.6050P–1 Information reporting for discharge of indebtedness by certain entities.

* * * * *

(h) Effective/applicability date— The rules in this section apply to discharges of indebtedness after December 21, 1996, except paragraphs (e)(1) and (e)(3) of this section, which apply to discharges of indebtedness after December 31, 1994, and except paragraph (e)(5) of this section, which applies to discharges of indebtedness occurring after December 31, 2004.

John Dalrymple, Deputy Commissioner for Services and Enforcement.

Note

(Filed by the Office of the Federal Register on October 14, 2014, 8:45 a.m., and published in the issue of the Federal Register for October 15, 2014, 79 F.R. 61791)

Definition of Terms and Abbreviations

Definition of Terms

Revenue rulings and revenue procedures (hereinafter referred to as “rulings”) that have an effect on previous rulings use the following defined terms to describe the effect:

Amplified describes a situation where no change is being made in a prior published position, but the prior position is being extended to apply to a variation of the fact situation set forth therein. Thus, if an earlier ruling held that a principle applied to A, and the new ruling holds that the same principle also applies to B, the earlier ruling is amplified. (Compare with modified, below).

Clarified is used in those instances where the language in a prior ruling is being made clear because the language has caused, or may cause, some confusion. It is not used where a position in a prior ruling is being changed.

Distinguished describes a situation where a ruling mentions a previously published ruling and points out an essential difference between them.

Modified is used where the substance of a previously published position is being changed. Thus, if a prior ruling held that a principle applied to A but not to B, and the new ruling holds that it applies to both A and B, the prior ruling is modified because it corrects a published position. (Compare with amplified and clarified, above).

Obsoleted describes a previously published ruling that is not considered determinative with respect to future transactions. This term is most commonly used in a ruling that lists previously published rulings that are obsoleted because of changes in laws or regulations. A ruling may also be obsoleted because the substance has been included in regulations subsequently adopted.

Revoked describes situations where the position in the previously published ruling is not correct and the correct position is being stated in a new ruling.

Superseded describes a situation where the new ruling does nothing more than restate the substance and situation of a previously published ruling (or rulings). Thus, the term is used to republish under the 1986 Code and regulations the same position published under the 1939 Code and regulations. The term is also used when it is desired to republish in a single ruling a series of situations, names, etc., that were previously published over a period of time in separate rulings. If the new ruling does more than restate the substance of a prior ruling, a combination of terms is used. For example, modified and superseded describes a situation where the substance of a previously published ruling is being changed in part and is continued without change in part and it is desired to restate the valid portion of the previously published ruling in a new ruling that is self contained. In this case, the previously published ruling is first modified and then, as modified, is superseded.

Supplemented is used in situations in which a list, such as a list of the names of countries, is published in a ruling and that list is expanded by adding further names in subsequent rulings. After the original ruling has been supplemented several times, a new ruling may be published that includes the list in the original ruling and the additions, and supersedes all prior rulings in the series.

Suspended is used in rare situations to show that the previous published rulings will not be applied pending some future action such as the issuance of new or amended regulations, the outcome of cases in litigation, or the outcome of a Service study.

Abbreviations

The following abbreviations in current use and formerly used will appear in material published in the Bulletin.

A—Individual.

Acq.—Acquiescence.

B—Individual.

BE—Beneficiary.

BK—Bank.

B.T.A.—Board of Tax Appeals.

C—Individual.

C.B.—Cumulative Bulletin.

CFR—Code of Federal Regulations.

CI—City.

COOP—Cooperative.

Ct.D.—Court Decision.

CY—County.

D—Decedent.

DC—Dummy Corporation.

DE—Donee.

Del. Order—Delegation Order.

DISC—Domestic International Sales Corporation.

DR—Donor.

E—Estate.

EE—Employee.

E.O.—Executive Order.

ER—Employer.

ERISA—Employee Retirement Income Security Act.

EX—Executor.

F—Fiduciary.

FC—Foreign Country.

FICA—Federal Insurance Contributions Act.

FISC—Foreign International Sales Company.

FPH—Foreign Personal Holding Company.

F.R.—Federal Register.

FUTA—Federal Unemployment Tax Act.

FX—Foreign corporation.

G.C.M.—Chief Counsel’s Memorandum.

GE—Grantee.

GP—General Partner.

GR—Grantor.

IC—Insurance Company.

I.R.B.—Internal Revenue Bulletin.

LE—Lessee.

LP—Limited Partner.

LR—Lessor.

M—Minor.

Nonacq.—Nonacquiescence.

O—Organization.

P—Parent Corporation.

PHC—Personal Holding Company.

PO—Possession of the U.S.

PR—Partner.

PRS—Partnership.

PTE—Prohibited Transaction Exemption.

Pub. L.—Public Law.

REIT—Real Estate Investment Trust.

Rev. Proc.—Revenue Procedure.

Rev. Rul.—Revenue Ruling.

S—Subsidiary.

S.P.R.—Statement of Procedural Rules.

Stat.—Statutes at Large.

T—Target Corporation.

T.C.—Tax Court.

T.D.—Treasury Decision.

TFE—Transferee.

TFR—Transferor.

T.I.R.—Technical Information Release.

TP—Taxpayer.

TR—Trust.

TT—Trustee.

U.S.C.—United States Code.

X—Corporation.

Y—Corporation.

Z—Corporation.

Numerical Finding List

Numerical Finding List

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2014–01 through 2014–26 is in Internal Revenue Bulletin 2014–26, dated June 30, 2014.

Bulletins 2014–27 through 2014–45

Announcements:

Article Issue Link Page
2014-2 2014-28 I.R.B. 2014-28 120
2014-28 2014-34 I.R.B. 2014-34 391
2014-29 2014-35 I.R.B. 2014-35 452


Notices:

Article Issue Link Page
2014-40 2014-27 I.R.B. 2014-27 100
2014-41 2014-27 I.R.B. 2014-27 97
2014-42 2014-34 I.R.B. 2014-34 387
2014-43 2014-31 I.R.B. 2014-31 249
2014-44 2014-32 I.R.B. 2014-32 270
2014-45 2014-34 I.R.B. 2014-34 388
2014-46 2014-36 I.R.B. 2014-36 520
2014-47 2014-36 I.R.B. 2014-36 522
2014-48 2014-36 I.R.B. 2014-36 523
2014-49 2014-41 I.R.B. 2014-41 665
2014-50 2014-40 I.R.B. 2014-40 590
2014-51 2014-40 I.R.B. 2014-40 594
2014-52 2014-42 I.R.B. 2014-42 712
2014-53 2014-43 I.R.B. 2014-43 739
2014-54 2014-41 I.R.B. 2014-41 670
2014-55 2014-41 I.R.B. 2014-41 672
2014-56 2014-41 I.R.B. 2014-41 674
2014-57 2014-42 I.R.B. 2014-42 723
2014-58 2014-44 I.R.B. 2014-44 746
2014-59 2014-44 I.R.B. 2014-44 747
2014-60 2014-43 I.R.B. 2014-43 743
2014-61 2014-43 I.R.B. 2014-43 746
2014-62 2014-44 I.R.B. 2014-44 749
2014-63 2014-45 I.R.B. 2014-45 759
2014-64 2014-45 I.R.B. 2014-45 759


Proposed Regulations:

Article Issue Link Page
REG-104579-13 2014-33 I.R.B. 2014-33 370
REG-120756-13 2014-31 I.R.B. 2014-31 252
REG-105067-14 2014-34 I.R.B. 2014-34 391
REG-110948-14 2014-30 I.R.B. 2014-30 239
REG-121542-14 2014-28 I.R.B. 2014-28 119
REG-107012-14 2014-33 I.R.B. 2014-33 371
REG-123286-14 2014-33 I.R.B. 2014-33 377
REG-209459-78 2014-31 I.R.B. 2014-31 253
REG-129507-14 2014-38 I.R.B. 2014-38 561
REG-129786-14 2014-38 I.R.B. 2014-38 562
REG-105739-11 2014-41 I.R.B. 2014-41 704
REG-136676-13 2014-45 I.R.B. 2014-45 814


Revenue Procedures:

Article Issue Link Page
2014-26 2014-27 I.R.B. 2014-27 26
2014-27 2014-27 I.R.B. 2014-27 41
2014-29 2014-28 I.R.B. 2014-28 105
2014-37 2014-33 I.R.B. 2014-33 363
2014-38 2014-29 I.R.B. 2014-29 132
2014-39 2014-29 I.R.B. 2014-29 151
2014-40 2014-30 I.R.B. 2014-30 229
2014-41 2014-33 I.R.B. 2014-33 364
2014-42 2014-29 I.R.B. 2014-29 193
2014-43 2014-32 I.R.B. 2014-32 273
2014-44 2014-32 I.R.B. 2014-32 274
2014-45 2014-34 I.R.B. 2014-34 388
2014-46 2014-33 I.R.B. 2014-33 367
2014-47 2014-35 I.R.B. 2014-35 393
2014-48 2014-36 I.R.B. 2014-36 527
2014-49 2014-37 I.R.B. 2014-37 535
2014-50 2014-37 I.R.B. 2014-37 540
2014-51 2014-37 I.R.B. 2014-37 543
2014-52 2014-38 I.R.B. 2014-38 560
2014-53 2014-39 I.R.B. 2014-39 573
2014-54 2014-41 I.R.B. 2014-41 675
2014-55 2014-44 I.R.B. 2014-44 753
2014-56 2014-45 I.R.B. 2014-45 762
2014-57 2014-45 I.R.B. 2014-45 777
2014-58 2014-45 I.R.B. 2014-45 793


Revenue Rulings:

Article Issue Link Page
2014-14 2014-27 I.R.B. 2014-27 12
2014-19 2014-32 I.R.B. 2014-32 266
2014-20 2014-28 I.R.B. 2014-28 101
2014-21 2014-34 I.R.B. 2014-34 381
2014-22 2014-37 I.R.B. 2014-37 523
2014-23 2014-40 I.R.B. 2014-40 575
2014-24 2014-37 I.R.B. 2014-37 529
2014-25 2014-40 I.R.B. 2014-40 574
2014-26 2014-41 I.R.B. 2014-41 663
2014-26 2014-41 I.R.B. 2014-41 663
2014-28 2014-45 I.R.B. 2014-45 756


Treasury Decisions:

Article Issue Link Page
9664 2014-32 I.R.B. 2014-32 254
9668 2014-27 I.R.B. 2014-27 1
9669 2014-28 I.R.B. 2014-28 103
9670 2014-29 I.R.B. 2014-29 121
9671 2014-29 I.R.B. 2014-29 124
9672 2014-30 I.R.B. 2014-30 196
9673 2014-30 I.R.B. 2014-30 212
9674 2014-30 I.R.B. 2014-30 225
9675 2014-31 I.R.B. 2014-31 242
9676 2014-32 I.R.B. 2014-32 260
9677 2014-31 I.R.B. 2014-31 241
9678 2014-32 I.R.B. 2014-32 262
9679 2014-32 I.R.B. 2014-32 267
9680 2014-32 I.R.B. 2014-32 254
9681 2014-33 I.R.B. 2014-33 340
9682 2014-33 I.R.B. 2014-33 342
9683 2014-33 I.R.B. 2014-33 330
9684 2014-33 I.R.B. 2014-33 345
9685 2014-34 I.R.B. 2014-34 379
9686 2014-34 I.R.B. 2014-34 382
9687 2014-36 I.R.B. 2014-36 486
9688 2014-36 I.R.B. 2014-36 482
9689 2014-36 I.R.B. 2014-36 456
9690 2014-38 I.R.B. 2014-38 548
9691 2014-38 I.R.B. 2014-38 547
9692 2014-40 I.R.B. 2014-40 574
9693 2014-41 I.R.B. 2014-41 596
9694 2014-41 I.R.B. 2014-41 626
9695 2014-42 I.R.B. 2014-42 707
9696 2014-43 I.R.B. 2014-43 727
9697 2014-43 I.R.B. 2014-43 729


Effect of Current Actions on Previously Published Items

Finding List of Current Actions on Previously Published Items

A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2014–01 through 2014–26 is in Internal Revenue Bulletin 2014–26, dated June 30, 2014.

Bulletins 2014–27 through 2014–45

Announcements:

Old Article Action New Article Issue Link Page
2012-11 Supplemented by Ann. 2014-2 2014-28 I.R.B. 2014-28 120
2013-11 Supplemented by Ann. 2014-2 2014-28 I.R.B. 2014-28 120
2010-41 Obsoleted by Rev. Proc. 2014-43 2014-32 I.R.B. 2014-43 273


Revenue Procedures:

Old Article Action New Article Issue Link Page
1981-38 Superseded by Rev. Proc. 2014-42 2014-29 I.R.B. 2014-29 193
93-37 Modified and Superseded by Rev. Proc. 2014-43 2014-32 I.R.B. 2014-43 273
1981-38 Modified by Rev. Proc. 2014-42 2014-29 I.R.B. 2014-29 193
2000-12 Superseded by Rev. Proc. 2014-39 2014-29 I.R.B. 2014-29 151
2002-23 Superseded by Rev. Proc. 2014-55 2014-44 I.R.B. 2014-44 753
2002-55 Revoked by Rev. Proc. 2014-39 2014-29 I.R.B. 2014-29 151
2003-64 Superseded by Rev. Proc. 2014-47 2014-35 I.R.B. 2014-35 393
2003-75 Superseded by Rev. Proc. 2014-55 2014-44 I.R.B. 2014-44 753
2004-21 Superseded by Rev. Proc. 2014-47 2014-35 I.R.B. 2014-35 393
2005-77 Superseded by Rev. Proc. 2014-47 2014-35 I.R.B. 2014-35 393
2011-14 Modified by Rev. Proc. 2014-48 2014-36 I.R.B. 2014-36 527
2011-14 Modified by Rev. Proc. 2014-54 2014-41 I.R.B. 2014-41 675
2011-16 Superseded by Rev. Proc. 2014-51 2014-37 I.R.B. 2014-37 543
2011-16 Modified by Rev. Proc. 2014-51 2014-51 I.R.B. 2014-51 543
2012-38 Superseded by Rev. Proc. 2014-27 2014-27 I.R.B. 2014-27 26
2012-46 Superseded by Rev. Proc. 2014-26 2014-27 I.R.B. 2014-27 41
2014-4 Amplified by Rev. Proc. 2014-40 2014-30 I.R.B. 2014-30 229
2014-4 Modified by Rev. Proc. 2014-41 2014-41 I.R.B. 2014-41 675
2014-5 Amplified by Rev. Proc. 2014-40 2014-30 I.R.B. 2014-30 229
2014-8 Amplified by Rev. Proc. 2014-40 2014-30 I.R.B. 2014-30 229
2014-9 Amplified by Rev. Proc. 2014-40 2014-30 I.R.B. 2014-30 229
2014-10 Amplified by Rev. Proc. 2014-40 2014-30 I.R.B. 2014-30 229
2014-13 Modified by Rev. Proc. 2014-38 2014-29 I.R.B. 2014-29 132
2014-13 Superseded by Rev. Proc. 2014-38 2014-29 I.R.B. 2014-29 132
2014-16 Superseded by Rev. Proc. 2014-51 2014-37 I.R.B. 2014-37 543
2014-16 Modified by Rev. Proc. 2014-51 2014-37 I.R.B. 2014-37 543
2014-12 Modified by Rev. Proc. 2014-54 2014-41 I.R.B. 2014-41 675
2014-17 Modified by Rev. Proc. 2014-54 2014-41 I.R.B. 2014-41 675


Revenue Rulings:

Old Article Action New Article Issue Link Page
2008-40 Modified by Rev. Rul. 2014-24 2014-37 I.R.B. 2014-37 529
2011-1 Modified by Rev. Rul. 2014-24 2014-37 I.R.B. 2014-37 529
2012-6 Modified by Rev. Rul. 2014-24 2014-37 I.R.B. 2014-37 529


Notices:

Old Article Action New Article Issue Link Page
2010-62 Amplified by Notice 2014-58 2014-44 I.R.B. 2014-44 746
2013-1 Modified by Notice 2014-61 2014-43 I.R.B. 2014-43 746
2013-1 Superseded by Notice 2014-61 2014-43 I.R.B. 2014-43 746
2013-11 Modified by Notice 2014-48 2014-36 I.R.B. 2014-36 523
2013-23 Modified by Notice 2014-48 2014-36 I.R.B. 2014-36 523
2013-28 Modified by Notice 2014-48 2014-36 I.R.B. 2014-36 523
2013-29 Modified by Notice 2014-46 2014-36 I.R.B. 2014-36 520
2013-29 Clarified by Notice 2014-46 2014-36 I.R.B. 2014-36 520
2013-32 Modified by Notice 2014-48 2014-36 I.R.B. 2014-36 523
2013-37 Modified by Notice 2014-48 2014-36 I.R.B. 2014-36 523
2013-38 Superseded by Notice 2014-61 2014-43 I.R.B. 2014-43 746
2013-51 Obsoleted by Notice 2014-42 2014-34 I.R.B. 2014-34 387
2013-60 Modified by Notice 2014-46 2014-36 I.R.B. 2014-36 520
2013-60 Clarified by Notice 2014-46 2014-36 I.R.B. 2014-36 520
2013-65 Superseded by Notice 2014-57 2014-42 I.R.B. 2014-42 723
2013-38 Superseded by Notice 2014-61 2014-43 I.R.B. 2014-43 746
2014-44 Supplemented by Notice 2014-45 2014-34 I.R.B. 2014-34 388


Treasury Decisions:

Old Article Action New Article Issue Link Page
2005-47 Obsoleted by T.D. 9668 2014-27 I.R.B. 2014-27 1
2010-51 Obsoleted by T.D. 9684 2014-33 I.R.B. 2014-33 345
2010-71 Obsoleted by T.D. 9684 2014-33 I.R.B. 2014-33 345
2011-6 Obsoleted by T.D. 9684 2014-33 I.R.B. 2014-33 345
2011-9 Obsoleted by T.D. 9684 2014-33 I.R.B. 2014-33 345


INTERNAL REVENUE BULLETIN

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