IRS Releases Publication 1586 (4/2017), Reasonable Cause Regulations and Requirements for Missing and Incorrect Name/TINs

I. INTRODUCTION

Purpose

This publication:

Treasury Regulations affecting all persons who may be subject to penalty for failure to comply with the information reporting requirements defined under IRC 6724(d) include, but are not limited to:

Other regulations that apply to specific forms may supersede all or parts of these regulations. Examples of such regulations include, but are not limited to:

IRC 6721, Failure to File Correct Information Returns, imposes a penalty per return for each of the following infractions related to information returns that are defined under IRC 6724(d)(1):

The maximum penalty that may be imposed for one person for all such failures in a calendar year depends on the year in which the return is due. See Section VIII for details on information return penalty rates.

Note: There are no maximum penalty limitations for failures that are due to intentional disregard.

Refer to Part VIII for the applicable penalty rates and maximum penalty amounts depending on when the return is due. These penalty rates and maximum penalty amounts are subject to inflation increases as required by IRC 6721(f) for returns due on or after January 1, 2016. This publication will be updated as necessary to reflect any additional inflation adjustments.

The penalty is not imposed for a de minimis number of failures if the returns are corrected on or before August 1 of the filing year. De minimis criteria apply to the greater of:

The penalty also is not imposed where the error on a timely-filed information return relates to an incorrect dollar amount and the error differs from the correct amount no more than $100 ($25 in the case of incorrect information with respect to an amount of tax withheld). The information return recipients have the option to elect out of this safe harbor and the filers must provide a corrected return.

III. REASONABLE CAUSE

To show that the failure to include a correct TIN was due to reasonable cause and not willful neglect, filers must establish that they acted in a responsible manner both before and after the failure occurred and that:

Except as otherwise stated in this publication, acting in a responsible manner for missing and incorrect TINs generally includes making an initial solicitation (request) for the payee's name and TIN and, if required, annual solicitations. Upon receipt of the newly provided TIN, it must be used on any future information returns filed. Refer to Treas. Reg. 301.6724-1 for all reasonable cause guidelines.

IV. NOTICE 972CG, NOTICE OF PROPOSED CIVIL PENALTY

Proposed Penalty Notice

Notice 972CG proposes an IRC 6721(a) penalty for the information returns that were filed late, filed on incorrect media, or filed with missing or incorrect TIN, or a combination of these failures. For information returns filed with missing or incorrect TIN, Notice 972CG includes a list of the information returns filed with missing or incorrect name/TIN combinations. Filers should compare this list with their records to determine if:

Filers must provide a separate written explanation to substantiate reasonable cause for proposed penalties related to late filing and/or failure to file information returns electronically when required.

Contents of Notice 972CG include:

Interest accrues on the balance due from the date of the CP15/CP215 Notice (unless the penalty is paid within a specified number of days stated on the CP15/CP215) and continues to accrue until the balance is fully paid. Interest charged on any penalty amount that is later decreased will be reduced accordingly.

V. MANNER OF TIN SOLICITATIONS

Generally, a solicitation is a request by a payer for a payee to furnish a correct TIN. An initial solicitation for a payee's correct TIN must be made at the time an account is opened (or a relationship initiated), unless the payer has the payee's TIN and uses that TIN for all transactions with the payee. The solicitations may be made by oral or written request or by electronic communications, depending on how the account is opened. Where a payee's TIN is missing or incorrect after the initial solicitation, the payer generally will need to conduct annual solicitations for a correct TIN. See Treas. Reg. 301.6724-1(e)(1), (f)(1).

A payer who receives backup withholding notices reporting incorrect payee TINs (CP2100 or CP2100A) must make solicitations (sending B notices) pursuant to the backup withholding rules (Treas. Reg. 31.3406(d)-5). If the payer also receives penalty notices for incorrect TINs under IRC 6721, for the same payees, either during the same calendar year or for information returns for the same year, and the payer has sent the required B notices, the payer is not required to also make annual solicitations for correct TINs pursuant to IRC 6724. See Publication 1281, Backup Withholding on Missing and Incorrect Name/TINs (including Instructions for Reading Tape Cartridges and CD/DVD Formats). In addition, payers are required to make solicitations in order to meet reasonable cause criteria as acting in a responsible manner to avoid information reporting penalties.

Generally, annual solicitations may be made in one of the following ways:

Annual Solicitations by Mail

Annual solicitations by mail must include three items to the payee:

If the annual solicitation is for a missing or incorrect name/TIN required to be reported on Form 1099-R,

then Form W-4P,

may be included along with Form W-9.

If the annual solicitation is for a missing or incorrect Social Security Number (SSN) required to be reported on Form W-2, Wage and Tax Statement, then Form W-4, Employee's Withholding Allowance Certificate, may be used.

If the annual solicitation is for a missing or incorrect SSN required to be reported on Form 1098-E, Student Loan Interest Statement, or Form 1098-T, Tuition Statement, then Form W-9S, Request for Student's or Borrower's Taxpayer Identification Number and Certification, may be used.

Annual Solicitations by Telephone

In general, an annual solicitation may be made by phone if the solicitation procedure is designed and carried out in a manner that is conducive to obtaining the payee's TIN. However, telephone solicitations do not apply for missing or incorrect TINs on certain forms such as Form 1098-T. A telephone solicitation may be conducted by:

An annual solicitation is not required to be made for a year if no payments were made to the account for such year or if no information return is required to be filed for the account for the year.

Electronic Solicitations

Requesters may establish an electronic system for payees to receive and respond to solicitations. This also includes responding and receiving solicitations by fax. A requester is anyone required to file an information return. A payee is anyone required to provide a TIN to the requester. Generally, the electronic system must:

While you may establish an electronic system to receive Forms W-4 from your employees, you should make a paper option reasonably available upon request to any employee who has a serious objection to using the electronic system or whose access to or ability to use the system may be limited (for example, as a result of a disability).

VI. ACTIONS FOR MISSING TINS AND INCORRECT NAME/TIN COMBINATIONS

TINs can be a SSN, an Employer Identification Number (EIN), an Individual Taxpayer Identification Number (ITIN), or an Adoption Taxpayer Identification Number (ATIN). Social Security Administration (SSA) assigns SSNs. IRS assigns EINs, ITINs, and ATINs.

Initial and Annual Solicitations -- General Rules

                         Missing TINs               Incorrect TINs

 ----------------------------------------------------------------------

Initial

        • Must be made at the time an  • Must be made at the

Solicitation

     account is opened, unless      time an account is

                  the payer already has the      opened, unless the

                  payee's TIN and uses that      payer already has the

                  TIN for all accounts of the    payee's TIN and uses

                  payee.                         that TIN for all

                                                 accounts of the payee.

                • If a TIN is not received as

                  a result of an initial       • No additional

                  solicitation, filer is         solicitation is

                  required to make up to two     required after the

                  annual solicitations until     filer receives the

                  a TIN is obtained.             TIN unless the IRS, or

                                                 broker, notifies the

                                                 filer that the TIN is

                                                 incorrect.

 ----------------------------------------------------------------------

First Annual

   • Must be made if a TIN is     • Must be made if filer

Solicitation

     not received as a result of    has been notified of

                  an initial solicitation.       an incorrect TIN

                                                 (whether by a broker

                • Must be made on or             or by IRS

                  before December 31             (CP2100/CP2100A or

                  of the year in which           Notice 972CG))

                  the account is opened (for

                  accounts opened before       • Must be made on or

                  December) or January 31 of     before December 31 of

                  the following year (for        the year in which the

                  accounts opened in             filer is notified or

                  preceding December)            by January 31 of the

                  ("annual solicitation          following year if

                  period").                      notified in the

                                                 preceding December (if

                                                 a CP2100/CP2100A is

                                                 received related to

                                                 the same payee &

                                                 information for the

                                                 same year, filer must

                                                 follow solicitation

                                                 rules under IRC

                                                 3406(a)(1)(B)).

 ----------------------------------------------------------------------

Second Annual

  • Must be made if a TIN is     • Must be made if filer

Solicitation

     not received as a result of    is notified in any

                  the first annual               year following the

                  solicitation.                  year of the first

                                                 annual solicitation

                • Must be made after the         that the account of a

                  expiration of the annual       payee contains in

                  solicitation period and on     incorrect TIN.

                  or before December 31 of

                  the year immediately

                  succeeding the calendar

                  year in which the account

                  is opened.

 ----------------------------------------------------------------------

To claim reasonable cause for appropriately conducting the required solicitation, that solicitation that took place must be for the year that the penalty is being proposed. Example: A filer appropriately conducted the initial solicitation during 2015 and included the provided TIN on the 2015 information return. In 2018, the IRS sent a Notice 972CG to the filer proposing a penalty for the 2015 information return with the incorrect TIN. The penalty will be waived since the filer can show it acted in a responsible manner for 2015. The filer can conduct the first annual solicitation for an incorrect TIN now that it has been notified by the IRS in 2018 and can show it acted in a responsible manner for 2018 if another penalty is proposed for 2018 in a future year.

Missing TINs

If a TIN is not provided or is obviously incorrect, it is considered missing. TINs lacking nine numerical digits or containing alpha characters are considered obviously incorrect.

The following requirements apply to payee accounts with missing TINs for payments of designated distributions reported on Forms 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.:

Pending the issuance of final regulations under 1.6055-1, reporting entities filing Form 1095-B,

or Form 1095-C,

will not be subject to penalties for failure to report a TIN if they comply with the requirements of Treas. Reg. 301.6724-1(e) with the following modifications (see

):

Further, for reporting entities filing Form 1095-B, Health Coverage, or Part III of Form 1095-C,

the initial solicitation requirement is satisfied for already enrolled individuals if the reporting entities request enrollee TINs either as part of the application for coverage or at any other point before July 29, 2016. Consistent with the rule above, a reporting entity that makes the first annual solicitation within 75 days of the initial solicitation will be treated as having made the second solicitation within a reasonable time. See Prop. Treas. Reg. 1.6055-1. Reporting entities that have not made an initial solicitation before July 29, 2016, should comply with the first annual solicitation requirement by making a solicitation within a reasonable time of July 29, 2016.

Note: TIN solicitations made to the responsible individual for a policy or plan are treated as TIN solicitations of every covered individual on the policy.

Additionally, a reporting entity is not required to solicit a TIN from an individual whose coverage is terminated.

Reminder: If a TIN is received from the payee, include it on any future information returns filed for that payee. A correction for a return with a missing TIN is not required to be filed unless also correcting a money amount. However, an employer should file a Form W-2c, Corrected Wage and Tax Statement, even if the employer is only filing Form W-2c to report an employee's SSN.

Incorrect TINs

A name/TIN combination is incorrect when it does not match or cannot be found on IRS files that contain EINs, SSNs, and ITINs. However, a filer of the information return required under Treas. Reg. 1.6055-1 may receive an error message from the IRS indicating that a TIN and name provided on the return do not match IRS records. An error message is neither a Notice 972CG, Notice of Proposed Civil Penalty, nor a requirement that the filer must solicit a TIN in response to the error message.

The following requirements apply to payee accounts with incorrect TINs for payments of designated distributions reported on Forms 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. For payee accounts with incorrect TINs:

Pending the issuance of final regulations under 1.6055-1, reporting entities filing Form 1095-B,

or Form 1095-C,

will not be subject to penalties for the inclusion of an incorrect TIN if they comply with the requirements of Treas. Reg. 301.6724-1(f) with the following modifications:

Further, for reporting entities filing Form 1095-B,

or Part III of Form 1095-C,

the initial solicitation requirement is satisfied for already enrolled individuals if the reporting entities request enrollee TINs either as part of the application for coverage or at any other point before July 29, 2016. Consistent with the rule above, a reporting entity that makes the first annual solicitation within 75 days after receipt of a notice of incorrect TIN will be treated as having made the second solicitation within a reasonable time. See Prop. Treas. Reg. 1.6055-1. Reporting entities that have not made an initial solicitation before July 29, 2016, should comply with the first annual solicitation requirement by making a solicitation within a reasonable time of July 29, 2016.

Note: TIN solicitations made to the responsible individual for a policy or plan are treated as TIN solicitations of every covered individual on the policy.

Additionally, a reporting entity is not required to solicit a TIN from an individual whose coverage is terminated.

Reminder: If a corrected TIN is received from the payee, include it on any future information return filed for that payee. A correction for a return with an incorrect TIN is not required unless also correcting a money amount. However, an employer should file a Form W-2c, Corrected Wage and Tax Statement, even if the employer is only filing Form W-2c to correct an employee's SSN.

In addition to the forms referenced in Part V, the following is a list of other commonly used forms for when the IRS requires an annual solicitation:

In most cases, following the preceding rules will be considered as acting in a responsible manner for reasonable cause for a penalty related to missing/incorrect TINs. However, there are exceptions to the requirement for two annual solicitations:

In general, the solicitation rules are the same as discussed in sections V and VI. An employer must make an initial solicitation for the employee's SSN at the time the employee begins work. The initial solicitation of the employee's SSN may be made in person, by oral request, or by written request. The SSN may also be requested through other communications, by mail, telephone, or other electronic means. The employer may rely in good faith on the number provided by the employee and use it when filling out the employee's Form W-2. Employees are required to complete Form I-9, Employment Eligibility Verification, to establish that they are legally eligible to work in the U.S.

An employer has an obligation to ask for Form W-4 from a new employee. Under IRC3402(f)(2)(A), on commencement of employment, an employee must provide a signed Form W-4 (or a substitute form) on commencement of employment, stating the number of withholding exemptions claimed by the employee.

Since the employee is required to furnish Form W-4 to the employer on commencement of employment, Form W-4 may be used for the initial solicitation of the employee's SSN. An employer who retains the Form W-4 in its records will be able to document that an initial solicitation of a TIN was made, verifying that it acted in a responsible manner.

Employers may use the SSA's SSN verification systems to verify the employee's name and SSN, but there is no IRS requirement (regulation) to do so. These options are useful for employers to identify potential discrepancies and correct SSNs before receiving a penalty notice. For more information, go to http://www.socialsecurity.gov/employer.

Generally, SSA and IRS records are consistent. However, it is important to note that the database used by SSA to match names and SSNs may not be identical to the IRS database. IRS penalty notices relating to mismatched TINs are based and issued exclusively on IRS system information. Mismatches reported under SSA verification systems are not considered IRS notices and do not trigger any further solicitation requirements under IRS rules for reasonable cause waivers. However, if an employer receives a mismatch notice from SSA, the employer may wish to re-solicit the employee's SSN and try to obtain correct information prior to filing the Form W-2.

VIII. INFORMATION RETURN PENALY RATES

Increases in Information Return Penalties

The Small Business Jobs Act (SBJA) of 2010, section 2102, increased the amounts of IRC 6721(a) and IRC 6722(a) penalties from $50 to $100 for each return for failure to comply with information return filing requirements. The calendar year maximum limitations for large and small businesses also increased. The SBJA of 2010 changes apply to information returns required to be filed and furnished on or after January 1, 2011.

The Trade Preferences Extension Act (TPEA) of 2015, section 806, increased the IRC 6721 and IRC 6722 penalty rates and calendar year maximum penalties for both large and small businesses. In addition, IRC 6721(f) and IRC 6722(f) provide for annual inflationary adjustments to the IRC 6721 and IRC 6722 penalty rates and calendar year maximum penalties for returns required to be filed and furnished on or after January 1, 2016.

IRC 6721 & IRC 6722 - Large Businesses with Gross Receipts of More Than $5 Million (Average annual gross receipts for the most recent 3 taxable years)

                               Due           Due           Due

                               01-01-2016    01-01-2017    01-01-2018

                               thru          thru          thru

                  Due          12-31-2016    12-31-2017    12-31-2018

                  01-01-2011   (with         (with         (with

                  thru         inflation     inflation     inflation

 Time of filing   12-31-2015   adjustments)  adjustments)  adjustments)

 ----------------------------------------------------------------------

Not more than

    $30 per      $50 per       $50 per       $50 per

30 days late

     return or    return or     return or     return or

                  statement    statement     statement     statement

                  $250,000     $529,500      $532,000      $536,000

                  maximum      maximum       maximum       maximum

 ----------------------------------------------------------------------

31 days late -

   $60 per      $100 per      $100 per      $100 per

August 1

         return or    return or     return or     return or

                  statement    statement     statement     statement

                  $500,000     $1,589,000    $1,596,500    $1,609,000

                  maximum      maximum       maximum       maximum

 ----------------------------------------------------------------------

After August 1

   $100 per     $260 per      $260 per      $260 per

                  return or    return or     return or     return or

                  statement    statement     statement     statement

                  $1,500,000   $3,178,500    $3,193,000    $3,218,500

                  maximum      maximum       maximum       maximum

 ----------------------------------------------------------------------

Intentional

      $250 per     $520 per      $530 per      $530 per

disregard

        return or    return or     return or     return or

                  statement    statement     statement     statement

                  No maximum   No maximum    No maximum    No maximum

 ----------------------------------------------------------------------

Increased penalty amounts may apply for certain failures in the case of intentional disregard. See IRC

and IRC

.

IRC 6721 & IRC 6722 - Small Businesses with Gross Receipts $5 million or Less (Average annual gross receipts for the most recent 3 taxable years)

                               Due           Due           Due

                               01-01-2016    01-01-2017    01-01-2018

                               thru          thru          thru

                  Due          12-31-2016    12-31-2017    12-31-2018

                  01-01-2011   (with         (with         (with

                  thru         inflation     inflation     inflation

 Time of filing   12-31-2015   adjustments)  adjustments)  adjustments)

 ----------------------------------------------------------------------

Not more than

    $30 per      $50 per       $50 per       $50 per

30 days late

     return or    return or     return or     return or

                  statement    statement     statement     statement

                  $75,000      $185,000      $186,000      $187,500

                  maximum      maximum       maximum       maximum

 ----------------------------------------------------------------------

31 days late -

   $60 per      $100 per      $100 per      $100 per

August 1

         return or    return or     return or     return or

                  statement    statement     statement     statement

                  $200,000     $529,500      $532,000      $536,000

                  maximum      maximum       maximum       maximum

 ----------------------------------------------------------------------

After August 1

   $100 per     $260 per      $260 per      $260 per

                  return or    return or     return or     return or

                  statement    statement     statement     statement

                  $500,000     $1,059,500    $1,064,000    $1,072,500

                  maximum      maximum       maximum       maximum

 ----------------------------------------------------------------------

Intentional

      $250 per     $520 per      $530 per      $530 per

disregard

        return or    return or     return or     return or

                  statement    statement     statement     statement

                  No maximum   No maximum    No maximum    No maximum

 ----------------------------------------------------------------------

Increased penalty amounts may apply for certain failures in the case of intentional disregard. See IRC

and IRC

.

IX. IRS MATCHING PROCESS AND NAME CONTROLS

This section provides an overview of the IRS TIN matching process and the development of name controls on returns submitted electronically.

All information returns filed must include a correct name/TIN combination to allow for the matching of the information reported against the income included on the payee's income tax return. A verification check is performed to determine whether a name/TIN combination is correct by matching it against a file containing all SSNs issued by SSA and against a file containing all EINs and other TINs issued by IRS.

The name control (if provided) on an electronically filed information return is compared to the name control on file. If a name control is not provided or is provided incorrectly, one is developed from the name(s) provided on the first two name lines (up to 40 characters for each name line including spaces) of the information return. If a match can be made, it is considered correct. If a match is not found, the name/TIN combination is considered incorrect.

A name control usually consists of up to four characters. To help ensure that the name/TIN combination for an account matches the name/TIN combination on SSA or IRS files, use the following information when filing information returns:

Individuals

A name control for an individual is generally the first four characters of the last name on the information return.

 ----------------------------------------

Examples -- Individuals

 ----------------------------------------

Name                        Name Control

 ----------------------------------------

 Ralph Teak                  TEAK

 ----------------------------------------

 Dorothy Willow              WILL

 ----------------------------------------

 Joe McCedar                 MCCE

 ----------------------------------------

 Brandy Cedar-Hawthorn       CEDA

 ----------------------------------------

 Victoria Windsor-Maple      WIND

 ----------------------------------------

 Joseph Ash & Linda Birch    ASH

 ----------------------------------------

 Edward & Joan Maple         MAPL

 ----------------------------------------

If a payee's last name has been changed, for instance, due to marriage, advise the payee to contact SSA. SSA will issue a new social security card reflecting the payee's new name and will automatically send IRS the new name. To change the name shown on a social security card, the payee should complete SSA Form SS-5,

Form SS-5 is available at

or by calling SSA at 1-800-772-1213 (TTY 1-800-325-0778) or by visiting a local SSA office.

Sole Proprietors (not including Single-Member LLCs)

 ----------------------------------------------------------------------

Examples -- Sole Proprietors

 ----------------------------------------------------------------------

Name

         Name            Control                 Comment

 ----------------------------------------------------------------------

 True Name: Arthur        ASPE    The name control for a sole

 P. Aspen                         proprietor's name is the first four

                                  significant characters of the last

 Trade Name: Sunshine             name.

 Restaurant

 ----------------------------------------------------------------------

 Maiden Name: Jane        JONE    When two last names are used but are

 Smith Married                    not hyphenated, the name control is

                                  the first four characters of the

 Name: Jane Smith Jones           second last name.

 -------------------------------

 Jane Smith-Jones         SMIT

 ----------------------------------------------------------------------

 Elena de la Rosa         DELA    The Spanish phrases "de", "De",

                                  "del", and "de la" are part of the

                                  name control.

 ----------------------------------------------------------------------

 Juan Garza Morales       GARZ    For Spanish names, when an individual

 -------------------------------  has two last names, the name control

 Maria Lopez Moreno       LOPE    is the first four characters of the

                                  first last name.

 ----------------------------------------------------------------------

 Sunny Ming Lo             LO     For last names that have only two

                                  letters the last two spaces will be

                                  "blank".

                                  Blanks may be present only as the

                                  last three positions of the name

                                  control.

 ----------------------------------------------------------------------

 Kim Van Nguyen           NGUY    Vietnamese names will often have a

                                  middle name of Van (male) or Thi

                                  (female).

 ----------------------------------------------------------------------

Partnerships (including Single-Member LLCs)

The name control for a partnership will usually result in the following order of selection:

 ----------------------------------------------------------------------

Examples -- Partnerships

 ----------------------------------------------------------------------

Name

                              Name                              Control

 ----------------------------------------------------------------------

 Rosie's Restaurant                                               ROSI

 ----------------------------------------------------------------------

 Burgandy_Olive & Cobalt_Ptrs                                     BURG

 ----------------------------------------------------------------------

 The Hemlock                                                      THEH

 ----------------------------------------------------------------------

 John Willow and James Oak Partnership (EIN assigned online)      JOHN

 ----------------------------------------------------------------------

 A.S. Green_(The) Oak Tree                                        OAKT

 ----------------------------------------------------------------------

 K.L. Black & O. H. Brown                                         BLAC

 ----------------------------------------------------------------------

 Bob Orange and Carol Black_ et al. Prs. Dba The Merry Go Round   MERR

 ----------------------------------------------------------------------

Corporations

The name control for a corporation is the first four significant characters of the corporate name.

 ----------------------------------------------------------------------

Examples -- Corporations

 ----------------------------------------------------------------------

Name

        Name              Control                Comment

 ----------------------------------------------------------------------

 The Meadowlark Company    MEAD    Omit the word "The" when followed by

                                   more than one word.

 ----------------------------------------------------------------------

 The Flamingo              THEF    Include the word "The" in the name

                                   control when followed by only one

                                   word.

 ----------------------------------------------------------------------

 George Giraffe PSC        GEOR    Corporate name control rules apply

                                   if an individual name contains the

                                   abbreviations PC (Professional

                                   Corporation), SC (Small

                                   Corporation), PA (Professional

                                   Association), PS (Professional

                                   Service), or PSC (Personal

                                   Service Corporation).

 ----------------------------------------------------------------------

 Kathryn Canary Memorial   KATH    When the organization name contains

 Foundation                        the words "Fund" or "Foundation",

                                   corporate name control rules apply.

 ----------------------------------------------------------------------

 Barbara J. Zinnia ZZ      ZZGR    When an individual name and a

 Grain                             corporate name appear, the name

                                   control is the first four characters

                                   of the corporation name.

 ----------------------------------------------------------------------

Estates, Trusts, and Fiduciaries

The name control for estates is the first four characters of the last name of the decedent. The last name of the decedent must have the word "Estate" after the first four characters in the primary name line.

The name control for trusts and fiduciaries results in the following:

 ----------------------------------------------------------------------

Examples -- Estates, Trusts, and Fiduciaries

 ----------------------------------------------------------------------

Name                               Name Control

 ----------------------------------------------------------------------

 Name: Howard J. Smith Dec'd                                   SMIT

 Name: Howard J Smith, Estate

 ----------------------------------------------------------------------

 Name: Howard J. Smith Dec'd                                   HOWA

 Name: Howard J Smith, Estate (EIN assigned online)

 ----------------------------------------------------------------------

 Name: Michael T Azalea Revocable Trust                        AZAL

 Name: Michael T Azalea Rvoc Tr

 ----------------------------------------------------------------------

 Name: Sunflower Company Employee Benefit Trust                SUNF

 ----------------------------------------------------------------------

 Jonathan Periwinkle Memory Church Irrevocable Trust           JONA

 (EIN assigned online)

 ----------------------------------------------------------------------

 Trust for the benefit of Bob Jones (EIN assigned online)      BOBJ

 ----------------------------------------------------------------------

 Trust for the benefit of Bob Jones                            JONE

 ----------------------------------------------------------------------

Other Organizations

Compliance with the following will facilitate the computer programs in identifying the correct name control:

 ---------------------------------------------------------------

Examples -- Other Organizations

 ---------------------------------------------------------------

Name                         Name Control

 ---------------------------------------------------------------

 Parent Teachers Association Congress of Georgia        PTAG

 ---------------------------------------------------------------

 Church of All                                          CHUR

 ---------------------------------------------------------------

 Committee to Elect Patrick Dole:                       PATR

 ---------------------------------------------------------------

 Green Door Kabushik Kaisha                             GREE

 ---------------------------------------------------------------

Questions related to accessing CD/DVD (see parts XI and XII) or recreating Notice 972CG may be directed to the Technical Service Operation (TSO) Centralized Call Site at 1-866-455-7438 or from outside the U.S. at 1-304-263-8700. Other questions and correspondence related to reasonable cause are to be sent to the address provided on the notice.

To order Publication 1635, Understanding Your EIN; Form W-9, Request for Taxpayer Identification Number and Certification; and/or Publication 15 (Circular E), Employer's Tax Guide, call the IRS at 1-800-829-3676.

The above referenced forms, publications, and additional information are also available on the IRS website at http://www.irs.gov.

XI. FORM 10301, CD/DVD ENCRYPTION CODE AUTHORIZATION FOR CP2100/972CG NOTICES

Form 10301 is used by filers of information returns to self-assign a Personal Identification Number (PIN) that will be used in conjunction with an encryption code (obtained by calling 1-866-455-7438) to access the information contained on the CD/DVD. To obtain the form, select Forms & Pubs on http://www.irs.gov. The form should be mailed to:

Internal Revenue Service Information Reporting Program 230 Murall Drive Mail Stop 4360 Kearneysville, WV 25430

It may also be submitted via fax to: 1-877-477-0572 or from outside the U.S. 304-579-4105.

Note: It will take the IRS five business days to process the forms upon receipt.

XII. INSTRUCTIONS FOR READING CD/DVDs

Information about the CD/DVD

Payers who filed in excess of 250 Incorrect TIN payee "B" records will have data delivered on a CD (for data files of 750Mb or less). Greater than 750Mb will be provided on a DVD. The correct reader type is required to access the media (CD or DVD) type.

The files described below are on each CD/DVD:

** nnnnn is the CD/DVD transmittal number.

The files are .txt files. Reading them with Notepad, word processing software, etc. will reflect the Pipe Codes "|" as separate characters between each field. Opening them in Excel software will allow reading them as a delimited file setting the delimiters as pipes "|". The files will be laid out without the Pipe Codes "|", exactly as laid out in prior year cartridges.

Note: If using certain software, be careful to set or convert fields to text so that leading zeros are not truncated or blanked out.

The enclosed CD/DVD is encrypted for security purposes and an encryption code is needed to unlock it. The table below provides instructions on how to receive an encryption code and how to extract the files.

 ----------------------------------------------------------------------

Step                              Action

 ----------------------------------------------------------------------

        Gather the company name, the TIN, a primary or secondary

        contact, and your self-assigned PIN number. A Form 10301,

        CD/DVD Encryption Code Authorization for CP2100/972CG Notices,

        should have been previously completed and submitted to the IRS.

        This form notifies the IRS of the self-selected PIN that will

        be used.

 ----------------------------------------------------------------------

  1     Insert the CD/DVD in the appropriate drive on your computer.

 ----------------------------------------------------------------------

  2     Call the IRS at 1-866-455-7438 or 304-263-8700 to receive a

        random-generated encryption code.

        a) If the "Auto-Run" feature is turned on, the system will

           bring up a pop-up window with the message: "Please contact

           the IRS at 1-866-455-7438 or 304-263-8700 to receive an

           encryption code."

        b) If "Auto-Run" is not turned on, the pop-up window will not

           appear, but the IRS must still be contacted at

           1-866-455-7438 or 304-263-8700 to receive an encryption

           code.

 ----------------------------------------------------------------------

  3     Input the random-generated encryption code by double-clicking

        on the .exe file on the CD/DVD. (The CD/DVD contains only one

        file on the initial start up.)

 ----------------------------------------------------------------------

  4     Put in the random generated encryption code and click "OK". The

        next screen will provide instructions for browsing the folder

        tree and selecting where to extract the files.

 ----------------------------------------------------------------------

  5     Click on "OK" to begin the process of extracting and importing

        the files.

 ----------------------------------------------------------------------

The information can be imported into an existing database or into other types of databases. The information can also be accessed via an Excel spreadsheet or a similar type of software. However, we have included instructions for importing the information into a Microsoft Office Access database because Access is capable of supporting a large file while some of the other software programs have column or row limitations.

Note: The Internal Revenue Service does not endorse or recommend the use of any particular software.

Importing the CD/DVD to Access Information

 ----------------------------------------------------------------------

Step                              Action

 ----------------------------------------------------------------------

  1     Open a new Microsoft Office Access database from your start

        menu or open an existing Microsoft Access database.

 ----------------------------------------------------------------------

  2     Select "Create a new file"

 ----------------------------------------------------------------------

  3     In "New File", select "Blank database". Choose where to save

        DVD information (i.e. "Documents"/"Desktop" folder). Note: It

        is important to remember where this information is saved as

        this will be the folder used to import the files later in the

        application.

 ----------------------------------------------------------------------

  4     Select "Create". A dialog box with "(File name) Database"

        appears.

 ----------------------------------------------------------------------

  5     Go to "File" on the "Toolbar" and select "Get External Data"

        and "Import".

 ----------------------------------------------------------------------

  6     In "Import", browse drop down screen to location of text file.

        Select file. Under "Files of Type", browse drop down screen and

        select "Text File".

 ----------------------------------------------------------------------

  7     Select the text file to import.

 ----------------------------------------------------------------------

  8     Click "Import", which opens "Import Text Wizard".

 ----------------------------------------------------------------------

  9     In "Import Text Wizard", select "Delimited", then select

        "Next".

 ----------------------------------------------------------------------

 10     Select "Other" and insert a "Pipe" ("Shift and Backslash"

        keys-usually above "Enter" on the keyboard) in the box next

        to "Other". Text qualifier should be "{none}". Select "Next".

 ----------------------------------------------------------------------

 11     Select "In a New Table". Select "Next".

 ----------------------------------------------------------------------

 12     Selecting one column at a time, highlight the field in the

        "Import Text Wizard" table (shown below as Field1, Field2,

        through Field15 (the "Field Name" box will change to match the

        name of the Field column that is being highlighted) and ensure

        "Text" is selected as the "Data Type" for each Field. If not,

        change the "Data Type" field (using the drop down screen) to

        "Text". This must be done in all 15 columns. Ensure that all 15

        fields' "Data Type" is "Text". Accept all other defaults.

        (Note: At this time, you can name/customize each field with

        the type of data that will be populated in it). Select "Next".

        [graphic omitted]

        Select "No Primary Key" (imports the data exactly). If "Add

        primary key" is selected, it will add a field in the first

        column and will number the rows. Select "Next".

        "Import to Table" should have the name of the file. Select

        "Finish".

        An "Import Text Wizard" box appears that says "Finished

        importing file. . . . . . ." Click on "Ok". Double click on

        Table Name.

        Table should appear.

Note: To "Auto Format" each field, double click on the line in

        between the boxes.

 ----------------------------------------------------------------------

Record Layouts--CD/DVD

 ----------------------------------------------------------------------

Position   Field Title     Length        Description and Remarks

 ----------------------------------------------------------------------

     1      RECORD TYPE       1     AN "A" WILL BE ENTERED

 ----------------------------------------------------------------------

     2       Pipe Code        1     "|"

 ----------------------------------------------------------------------

    3-17     ACCESS KEY       15    NUMBER USED BY THE IRS TO GROUP A

                                    PAYER'S INFORMATION RETURN

                                    TRANSMITTAL

 ----------------------------------------------------------------------

     18      Pipe Code        1     "|"

 ----------------------------------------------------------------------

   19-20   SERVICE CAMPUS     2     TWO DIGIT SERVICE CAMPUS CODE

                                    BROOKHAVEN=19

                                    CINCINNATI = 17

                                    MEMPHIS = 49

                                    OGDEN = 29

                                    PHILADELPHIA = 28

 ----------------------------------------------------------------------

     21      Pipe Code        1     "|"

 ----------------------------------------------------------------------

   22-30    PAYER'S TIN       9     THE NINE-DIGIT NUMBER ASSIGNED BY

                                    THE IRS

 ----------------------------------------------------------------------

     31      Pipe Code        1     "|"

 ----------------------------------------------------------------------

   32-71   PAYER'S NAME       40    SELF-EXPLANATORY

 ----------------------------------------------------------------------

     72      Pipe Code        1     "|"

 ----------------------------------------------------------------------

   73-80     NUMBER OF        8     THE NUMBER OF INFORMATION RETURNS

             DOCUMENTS              WITH MISSING AND INCORRECT TINS

                                    ASSOCIATED WITH THIS PAYER. IT WILL

                                    BE RIGHT JUSTIFIED AND ZERO FILLED

 ----------------------------------------------------------------------

     81      Pipe Code        1     "|"

 ----------------------------------------------------------------------

   82-89   BWH TIN STATUS     8     THE NUMBER OF DOCUMENTS SENT TO THE

               1 CNT                PAYER WITH A BWH-TIN-STATUS-IND

                                    EQUAL TO "1" (SEE PAYER "B"

                                    RECORD). IT WILL BE RIGHT JUSTIFIED

                                    AND ZERO FILLED

 ----------------------------------------------------------------------

     90      Pipe Code        1     "|"

 ----------------------------------------------------------------------

   91-98   BWH TIN STATUS     8     THE NUMBER OF DOCUMENTS SENT TO THE

               2 CNT                PAYER WITH A BWH-TIN-STATUS-IND

                                    EQUAL TO "2" (SEE PAYER "B" RECORD)

                                    IT WILL BE RIGHT JUSTIFIED AND ZERO

                                    FILLED.

 ----------------------------------------------------------------------

     99      Pipe Code        1     "|"

 ----------------------------------------------------------------------

  100-107  BWH TIN STATUS     8     THE NUMBER OF DOCUMENTS SENT TO THE

               3 CNT                PAYER WITH A BWH-TIN-STATUS-IND

                                    EQUAL TO "3" (SEE PAYER "B" RECORD)

                                    IT WILL BE RIGHT JUSTIFIED AND ZERO

                                    FILLED.

 ----------------------------------------------------------------------

    108      Pipe Code        1     "|"

 ----------------------------------------------------------------------

    109       FILLER          1     BLANK FILLED

 ----------------------------------------------------------------------

    110      Pipe Code        1     "|"

 ----------------------------------------------------------------------

  111-114     TAX YEAR        4     TAX YEAR DOCUMENTS WERE SUBMITTED

 ----------------------------------------------------------------------

 ----------------------------------------------------------------------

Position   Field Title     Length        Description and Remarks

 ----------------------------------------------------------------------

     1      RECORD TYPE       1     A "B" WILL BE ENTERED

 ----------------------------------------------------------------------

     2       Pipe Code        1     "|"

 ----------------------------------------------------------------------

    3-11        TIN           9     THE PAYEE'S TIN

 ----------------------------------------------------------------------

     12      Pipe Code        1     "|"

 ----------------------------------------------------------------------

     13    BWH TIN STATUS     1     "1" MISSING TIN

                                    "2" NOT CURRENTLY ISSUED

                                    "3" INCORRECT NAME/TIN

 ----------------------------------------------------------------------

     14      Pipe Code        1     "|"

 ----------------------------------------------------------------------

   15-19        TCC           5     TRANSMITTER CONTROL CODE

 ----------------------------------------------------------------------

     20      Pipe Code        1     "|"

 ----------------------------------------------------------------------

   21-22     DOC TYPE         2     "02" = Form 1042-S

                                    "10" = Form 1099-K

                                    "25" = Form 3921

                                    "26" = Form 3922

                                    "32" = Form W2-G

                                    "71" = Form 1099-H

                                    "75" = Form 1099-S

                                    "79" = Form 1099-B

                                    "80" = Form 1099-A

                                    "81" = Form 1098

                                    "83" = Form 1098-T

                                    "84" = Form 1098-E

                                    "85" = Form 1099-C

                                    "86" = Form 1099-G

                                    "91" = Form 1099-DIV

                                    "92" = Form 1099-INT

                                    "93" = Form 1099-LTC

                                    "95" = Form 1099-MISC

                                    "96" = Form 1099-OID

                                    "97" = Form 1099-PATR

                                    "98" = Form 1099-R

 ----------------------------------------------------------------------

     23      Pipe Code        1     "|"

 ----------------------------------------------------------------------

   24-43     ACCT NUMB        20    PAYEE'S ACCOUNT NUMBER FROM PAYER

 ----------------------------------------------------------------------

     44      Pipe Code        1     "|"

 ----------------------------------------------------------------------

   45-84     NAME LINE        40    PAYEE'S NAME LINE 1

 ----------------------------------------------------------------------

     85      Pipe Code        1     "|"

 ----------------------------------------------------------------------

   86-125    NAME LINE        40    PAYEE'S NAME LINE 2

 ----------------------------------------------------------------------

    126      Pipe Code        1     "|"

 ----------------------------------------------------------------------

  127-166  STR. ADDRESS       40    PAYEE'S STREET ADDRESS

 ----------------------------------------------------------------------

    167      Pipe Code        1     "|"

 ----------------------------------------------------------------------

  168-197      CITY           30    PAYEE'S CITY

 ----------------------------------------------------------------------

    198      Pipe Code        1     "|"

 ----------------------------------------------------------------------

  199-200    STATE CODE       2     PAYEE'S STATE CODE

 ----------------------------------------------------------------------

    201      Pipe Code        1     "|"

 ----------------------------------------------------------------------

  202-206    ZIP CODE         5     PAYEE'S STATE CODE

 ----------------------------------------------------------------------

    207      Pipe Code        1     "|"

 ----------------------------------------------------------------------

    208    TIN INDICATOR      1     "1" = Payer indicated EIN "2"

                                    = Payer indicated SSN "0" = no TIN

                                    indicated

 ----------------------------------------------------------------------

    209      Pipe Code        1     "|"

 ----------------------------------------------------------------------

  210-213     FILLER          4     BLANK FILLED

 ----------------------------------------------------------------------

    214      Pipe Code        1     "|"

 ----------------------------------------------------------------------

  215-222    SEQUENCE         8     NUMBER OF THE RECORD AS IT APPEARED

                                    IN THE FILE

 ----------------------------------------------------------------------

 ----------------------------------------------------------------------

Position   Field Title     Length        Description and Remarks

 ----------------------------------------------------------------------

     1      RECORD TYPE       1     A "C" WILL BE ENTERED

 ----------------------------------------------------------------------

     2       Pipe Code        1     "|"

 ----------------------------------------------------------------------

    3-10     NUMBER OF        8     THE NUMBER OF INFORMATION RETURNS

             DOCUMENTS              WITH MISSING AND INCORRECT TINS

                                    ASSOCIATED WITH THIS PAYER. IT WILL

                                    BE RIGHT JUSTIFIED AND ZERO FILLED

 ----------------------------------------------------------------------

     11      Pipe Code        1     "|"

 ----------------------------------------------------------------------

   12-19   BWH TIN STATUS     8     THE NUMBER OF DOCUMENTS SENT TO THE

               1 CNT                PAYER WITH A BWH-TIN-STATUS-IND

                                    EQUAL TO "1" (SEE PAYER "B"

                                    RECORD). IT WILL BE RIGHT JUSTIFIED

                                    AND ZERO FILLED

 ----------------------------------------------------------------------

     20      Pipe Code        1     "|"

 ----------------------------------------------------------------------

   21-28   BWH TIN STATUS     8     THE NUMBER OF DOCUMENTS SENT TO THE

               2 CNT                PAYER WITH A BWH-TIN-STATUS-IND

                                    EQUAL TO "2" (SEE PAYER "B" RECORD)

                                    IT WILL BE RIGHT JUSTIFIED AND ZERO

                                    FILLED.

 ----------------------------------------------------------------------

     29      Pipe Code        1     "|"

 ----------------------------------------------------------------------

   30-37   BWH TIN STATUS     8     THE NUMBER OF DOCUMENTS SENT TO THE

               3 CNT                PAYER WITH A BWH-TIN-STATUS-IND

                                    EQUAL TO "3" (SEE PAYER "B" RECORD)

                                    IT WILL BE RIGHT JUSTIFIED AND ZERO

                                    FILLED.

 ----------------------------------------------------------------------