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CCH® PAYROLL — 07/14/09

IRS issues electronic/magnetic media specs for 1099s

The IRS has released specifications for filing 2009 Forms 1098, 1099, 5498, and W-2G electronically through the IRS FIRE System. These specifications, which will be reprinted as the next revision of IRS Publication 1220, must be used for the preparation of 2009 tax year information returns and information returns for tax years prior to 2009 that will be filed beginning January 1, 2010.

Changes to note

• Three new forms added. Forms 3921, 3922, and 8935. Form 3921, Exercise of a Qualified Incentive Stock Option Under Section 442(b), Form 3922, Transfer of Stock Acquired Through An Employee Stock Plan Under Section 423(c) , and Form 8935, Airline Payments Report.
• Form 1099-R renamed distribution code E to distributions under Employee Plans Compliance System (EPCRS), formerly Excess Annual Additions under Section 415/Certain Excess Amounts Under Section 403(b) Plans.
• See Part A, Sec. 8 for changes in correction procedures. Incorrect taxpayer identification number (TIN), payee name and/or address requires a two step correction.
• Technical security standards added to Part B, Sec. 7.06 for the FIRE System.
• Stricter edits to Combined Federal State Filing processing were put in place which could cause files to be rejected if not properly coded under the guidelines of Part A, Section 10. Test files are recommended for all filers in the program.
• Form 4419 Application for Filing Information Returns Electronically (FIRE), Box 3 must contain an Employer Identification Number (EIN). IRS will no longer issue Transmitter Control Codes (TCC) to a social security number.

Programming changes

• For all Forms, Payment Year, Field Positions 2-5, for the Transmitter "T" Record, Payer "A" Record and Payee "B" Record must be incremented to update the four-digit reporting year (2008 to 2009), unless reporting prior year data.
• In the Payee "B" Record, two amount fields added, Payment Amount F in field positions 223-234, and Payment Amount G in field positions 235-246.
• In the End of Payer "C" Record and State Totals "K" Record, two amount fields added, Control Total F in field positions 268-285, and Control Total G in field positions 286-303.
• For Form 3921 in the Payer "A" Record, added "N" to Type of Return codes to field position 27.
• For Form 3921 in the Payer "A" Record, added Amount Code indicators "3" for Exercise price per share and "4" for Fair market value of share on exercise date in field positions 28-41.
• For the Form 3921 in the Payee "B" Record, added Date Option Granted, field positions 547-554, formatted as YYYYMMDD, added Date Option Exercised field positions 555-562, formatted as YYYYMMDD, added Number of Shares Transferred field positions 563-570, right justify, zero fill, and added Other than Transferor Information field positions 575-614, right justify, blank fill.
• For Form 3922 in the Payer "A" Record, added "Z" to Type of Return codes to field position 27.
• For Form 3922 in the Payer "A" Record, added Amount Code indicators "3" for Fair market value per share on grant date, "4" for Fair market value per share on exercise date, and "5" for Exercise price per share in field positions 28-41.
• For Form 3922 in the Payee "B" Record, added Date Option Granted to Transferor, field positions 547-554, formatted as YYYYMMDD, added Date Option Exercised by Transferor, field positions 555-562, formatted as YYYYMMDD, added Number of Shares Transferred, field positions 563-570, right-justify and zero fill, and added Date Legal Title Transferred by Transferor, field positions 571-578, formatted as YYYYMMDD.
• For Form 8935 in the Payer "A" Record, added "U" to Type of Return codes to field position 27.
• For Form 8935 in the Payer "A" Record, added Amount Code indicators "1" for Total amount reported, "2" for First year of reported payments, "3" for Second year of reported payments, "4" for Third year of reported payments, "5" for Fourth year of reported payments, and "6" for Fifth year of reported payments in field positions 28-41. Amounts reported for codes 2-6 should equal the amount reported for code "1."
• For Form 8935 in the Payee "B" Record, added Year of First Payment, field positions 547-550, Year of Second Payment, field positions 551-554, Year of Third Payment, field positions 555-558, Year of Fourth Payment, field positions 559-562, Year of Fifth Payment, field positions 563-566. All years are formatted as YYYY.
• For the Form 1099-C in the Payee "B" Record, added Personal Liability Indicator in field position 595. Use only a value of "1" if the borrower is personally liable for repayment or a blank if not personally liable.
• For Form 1099-G in the Payer "A" Record, added Amount Code indicator "9" for Market gain commodity credit corp loans repaid on or after Jan. 1, 2007 in field positions 28-41.
• For Form 1099-R in the Payee "B" Record field positions 545-546 added Distribution Code "U" for Distribution from an ESOP under Section 404(k). Code "U" can be paired with code "B."
• For Form W-2G in the Payee "B" Record, changed Field Position 547 Type of Wager code "8" to Poker winnings and added code "9" for Any Other Type of Gambling Winnings.
• For Form 5498 in the Payer "A" Record, added Amount Code indicator "B" for RMD amount, "C" for Postponed contribution, "D" for Repayments and "E" for other contributions in field positions 28-41.
• For Form 5498 in the Payee "B" Record changed field positions 552-555 to Year of Postponed Contribution formatted as YYYY, 556-557 to Postponed Contribution Code, 558-559 to Repayment Code, 560-561 to Bankruptcy Code and 562-569 to RMD Date.
• For Form 1098-E in the Payee "B" Record change in field position 547 to enter a 1 if the amount reported in payment amount does not include loan origination fees and/or capitalized interest. (Rev. Proc. 2009-30, IRB 2009-27, July 6, 2009.)

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