SERVICE PROVIDES GUIDANCE FOR BANKS ACTING AS FIDUCIARIES WITH RESPECT TO TAXABLE TRUSTS FOR MAKING ESTIMATED TAX PAYMENTS.

Rev. Proc. 89-49

SECTION 1. PURPOSE

01 The purpose of this revenue procedure is to outline the requirements and instructions for certain banks and financial institutions, acting as fiduciaries with respect to taxable trusts (Generally, a bank or fiduciary of a trust must pay estimated tax if the trust is expected to owe, after subtracting its withholding and credits, at least $500 in tax for a taxable year. This deems the trust account a "taxable" trust), and who are authorized depositaries for Federal taxes, to submit quarterly estimated income tax payment information through the Federal Tax Deposit System on magnetic tape. The requirements are promulgated by the regulations issued under the authority of Section 6302(c) of the Internal Revenue Code. All Federal Tax Deposit payments are required to be deposited through a qualified federal tax depositary, as defined in 31 CFR Part 203.

02 Under the provisions of this revenue procedure, those fiduciaries that have a Treasury Tax and Loan (TT&L) account for deposited federal taxes ("TT&L fiduciaries") and that administer at least 200 "taxable" trusts, will be REQUIRED to submit estimated tax payment information on magnetic tape.

03 Authorizations will also be extended to those fiduciaries which have at least 50 but fewer than 200 taxable trusts with or without a TT&L account and wish to submit estimated tax payment information for a large number of trusts. However, once authorized into the magnetic tape program, such fiduciary must continue to submit federal tax deposit information under the provisions of this revenue procedure.

04 Requests for discontinuing the submission of federal tax deposit information under the guidelines of this revenue procedure will be disallowed.

SEC. 2. BACKGROUND

01 The provisions of this revenue procedure are in accordance with the amendment to the Income Tax Regulations under Section 6302(c) of the Internal Revenue Code. The amendment pertains to deposits of certain quarterly estimated income tax payments required to be made by trusts under Section 6654(1) of the Code.

SEC. 3. FTD PAYMENT INFORMATION SUBMITTED BY BANKS AND FIDUCIARIES

01 All FTD payments prepared by an authorized fiduciary must be submitted to the service center which has an established working relationship with the depositary or Federal Reserve Bank that has agreed to allow such fiduciary to use its Treasury Tax and Loan (TT&L) account. Form 2284, Advice of Credit (AOC), must be prepared by the fiduciary and presented to the depositary on or before the quarterly estimated tax due date. See Exhibit 11. Cash, check, money order or other form of payment must accompany the AOC when presented to the depositary. The funds presented to the depositary must match the amount listed on the AOC(s). The depositary must transmit the AOC to the Federal Reserve for further processing. The AOC will be issued to the participating fiduciaries and will contain an American Bankers Association Number along with a unique Branch Code designation. The AOC issued to the fiduciary should only be used for making quarterly estimated tax payments and should not be used for making other type Federal tax deposit payments. Part 3 of the AOC must be mailed to IRS with the magnetic tape. The only acceptable fiduciary-prepared deposit tapes are those relating to Form 1041-ES Estimated Tax Vouchers. Although it is preferred that the magnetic tape be transmitted to the IRS the same day the AOC is presented to the depositary, the Service will allow up to 5 calendar days from the depositary receipt of the AOC and IRS receipt. See Section 8.02.

02 Individual trust account information listed on the "Listing of Trusts" and update listing must be validated by the IRS for this program. (See Section 4.03 for "Listing of Trusts" and Section 6.01 for update listing.) Trust account information not validated by the IRS in time for inclusion on magnetic tape must make quarterly payment by means of the Form 1041-ES (Estimated Tax Voucher).

03 Banks and/or fiduciaries experiencing systemic problems producing a magnetic tape or providing accurate data on trust accounts must submit timely payments to a depositary by means of the pre-printed forms provided by IRS. Appropriate penalty and interest charges may be proposed for deposits not made timely.

SEC. 4. ITEMS REQUIRED FOR ACCEPTANCE INTO THE FTD MAGNETIC TAPE PROGRAM

01 TT&L fiduciaries who are required by regulations under Section 6302(c) to make FTD payments and submit FTD information on magnetic tape must first file a "Letter of Notification" with the Director of the Internal Revenue Service Center where the deposits will be processed. (Non-TT&L fiduciaries who wish to enter into the FTD magnetic tape program must also adhere to the instructions and procedures set forth in this revenue procedure.) In most cases this will be the same service center that processes the related tax forms. The IRS will review and process each "Letter of Notification" within thirty calendar days of receiept. See Section 9 for a list of service centers and their addresses. The "Letter of Notification" should include a brief statement by the bank or fiduciary stating that in accordance with the amendment to the Income Tax Regulations under Section 6302(c) of the Internal Revenue Code they are required to file estimated tax payments through the magnetic tape media. The "Letter of Notification" must include the following information:

          1. The full name (as established with IRS), address and

03 A listing of each taxable trust who will have their FTDs prepared by the fiduciary must be attached to the "Letter of Notification". The "Listing of Trusts" must contain the following information:

          1. Trust name.

05 The initial "Listing of Trusts" submitted by a fiduciary must contain a list of 200 or more trusts.

06 Each fiduciary applying for acceptance into the FTD Magnetic Tape Program with fewer than 200 but no fewer than 50 trusts must also attach a signed agreement that it agrees to be bound by and subject to all the provisions of Section 1.6302-3 of the Income Tax Regulations as if it were a fiduciary described in paragraph (b) of that section. See Exhibit 2 of this revenue procedure for a sample format of the fiduciary's agreement.

SEC. 5. ACCEPTANCE OF BANK AND FIDUCIARY APPLICATION

01 Approximately 30 calendar days after the submission of the bank's or fiduciary's "Letter of Notification", one copy of the "Listing of Trusts" will be returned with a letter from the IRS granting the bank or fiduciary the authority to submit Federal tax deposit information on magnetic tape for the designated trusts. Each taxpayer on the "Listing of Trusts" will be assigned a business name control currently on file with the IRS. If no name control has been established at the time of the submission of the "Listing of Trusts", the IRS will assign a name control. If there is a discrepancy between the trust EIN and trust name, the IRS will also provide the trust name control as it is maintained on record with the IRS. Corrections will be indicated by a line through the fiduciary's information, with the corrected information written above. If, for any reason, a particular taxpayer whose name is listed on the "Listing of Trusts" is not accepted by the IRS under this program, the name of the trust will be circled out and the reason for non-acceptance will be given.

02 A fiduciary must not change the validated employer identification number, name control or service center code except when notified to do so by the Internal Revenue Service.

03 The name control must appear in tape positions 14-17 on the FTD record. An IRS service center code will be provided to the fiduciary for each trust and must appear in tape positions 18-19 of the FTD record. See Exhibit 4 for the Federal Tax Deposit Record Layout.

04 Once the authorization letter is issued to the fiduciary, it can begin the submission of the test data to the IRS. Listed is the information needed for the testing phase:

          1. A tape of test data using the fiduciary validated

06 Fiduciaries who submit data on magnetic tape and are located in IRS regions having more than one IRS center have the option to consolidate and file FTDs at only one service center. Only those fiduciaries using magnetic tape are allowed this option. If a fiduciary deals with more than one service center and wishes to consolidate, the fiduciary must write to the Director of the IRS center where they wish to consolidate and obtain approval prior to filing at that service center.

SEC. 6. UPDATES TO THE BANK AND FIDUCIARY "LISTING OF TRUSTS"

01 After acceptance of the bank's and/or fiduciary's initial "Listing of Trusts", all additions and deletions must be reported to the service center. New trusts must not be included in the preparation of FTDs by a fiduciary until they are accepted and the entity information (EIN, name control, service center code, and filing requirements) is validated and provided to the fiduciary by the IRS. If the fiduciary chooses to make a deposit for a new trust prior to being accepted, the fiduciary must use Form 1041-ES (Estimated Tax Voucher).

02 The IRS will process updates to the fiduciary's addition listing within two weeks of receipt. The update listing should be in the same format as the initial listing. Two copies of this listing should be submitted. One listing will be returned to the fiduciary with the assigned name control. The second listing will be retained by the Service. The service center will process the additions on an expedite basis and in the same manner as the initial listing. The deletion list should be in the same format as the initial listing and sent to the service center annually in December.

03 The fiduciary must send a consolidated listing of their trusts currently accepted by the Service within 14 calendar days after the end of each quarter. This listing must not include current additions or deletions, which must be sent separately. The consolidated listing is for information only and will not be returned.

SEC. 7. PREPARATION OF THE MAGNETIC TAPE DATA

01 The magnetic tape specifications are listed below:

1. Type of tape 1/2 inch Mylar base, oxide coated

03 The Advice of Credit record layout is an 81 character record. See Exhibit 3 for the AOC Record Layout. The data elements include the following:

     1. Problem code, 1 position, numeric, always zero.

     1. Problem code, 1 position, numeric, always zero.

06 Affix an external label to each tape box. The label must state:

             EXPEDITE

01 The magnetic tape containing Federal tax deposit information must be prepared as specified in Section 7 of this revenue procedure.

02 The funds must be deposited in the Treasury Tax and Loan (TT&L) account of an authorized depositary on or before the deposit due date. The bank or fiduciary will establish and maintain procedures to ensure next business day delivery of the Advice of Credit to the Federal Reserve Bank of the district. Delivery must be prior to the Federal Reserve Bank's cutoff time for processing such Advice of Credit. The transaction data contained on the magnetic tape must be received at the IRS service center within 5 calendar days of the date of credit to the TT&L account of the authorized depositary. The 5 calendar day period will allow the fiduciary to make any necessary corrections to the magnetic tape prior to its shipment to the IRS Service Center. If an adjustment is required which ultimately affects the total deposit amount for a particular block of work, the fiduciary must contact the FTD Interagency Coordinator at the IRS Service Center within 24 hours after the adjustment is found. The IRS will schedule the processing to the FTD data no later than 2 workdays form the date of service center receipt. If IRS rejects a magnetic tape, a correct tape must be resubmitted within 24 hours of reject notification.

03 Requests by banks or fiduciaries to adjust taxpayer accounts after the magnetic tape has been processed by IRS will not be processed by the Federal Reserve Bank (FRB) or IRS. These types of adjustments are described as:

     1. Requests for a refund of an overpayment of tax;

05 A microfiche must be provided listing specific deposit information. It should be titled FTD PROOF LIST and must be sent with the magnetic tape. See Exhibit 6. Also refer to Section 8.06 for microfiche specifications. The FTD PROOF LIST microfiche must contain the following information:

     1. Deposit date, 6 positions, MMDDYY format.

07 Form 8482, Transmittal of Magnetic Tape of Federal Tax Deposits, will be sued for transmitting tapes and microfiche data between the service center and the fiduciary. The initial supply of Forms 8482 will be provided upon receipt of the bank's or fiduciary's letter of notification to prepare deposit tapes. Additional forms can be obtained from the service center of jurisdiction. See Exhibit 8.

08 Each tape must be clearly identified by affixing a completed Form 3298, File Identity Label. See Exhibit 9. The initial supply will be provided by the service center. Each tape box must have an EXPEDITE label. The label must state:

             EXPEDITE

10 Tapes will be retained at the IRS Service Center for 14 calendar days for verification purposes. The tapes will then be returned.

11 Upon receipt of the deposit tapes, the IRS will send an acknowledgment of receipt. If no acknowledgment of receipt is received within seven calendar days, the bank or fiduciary should contact the Interagency Coordinator immediately.

SEC. 9. TERMINATION OF THIS AUTHORIZATION AND CONTACT INFORMATION

The Service reserves the right to terminate this agreement with fiduciaries as a result of possible systemic changes which may preclude the use of magnetic tapes. Request for additional copies of this revenue procedure, applications to prepare FTDs, and update listings of authorized trusts, should be addressed to the Director, Internal Revenue Service Center, ATTN:FTD Interagency Coordinator, at one of the following addresses:

     1. NORTH ATLANTIC REGION

     1. NORTH ATLANTIC REGION

The consolidated listing is to be submitted 14 calendar days after the end of each quarter:

     1st quarter (Jan-Mar) April 14

Deposit requirements can be found in Circular E, Employer's Tax Guide, and applicable tax form instructions.

SEC. 11. EFFECTIVE DATE

This revenue procedure is effective December 15, 1989.

SEC. 12. EFFECT ON OTHER DOCUMENTS

Revenue Procedure 87-64, 1987-2 C.B. 828, is modified and, as modified, is superseded.

SEC. 13. DRAFTING INFORMATION

The principal authors of this revenue procedure are Carol Wallace and Tony Martinez of Returns Processing and Accounting Division (Federal Tax Deposit Section). For further information regarding this revenue procedure, contact Carol Wallace or Tony Martinez on (202) 566-3884 (not a toll-free call).

                              EXHIBIT 1

As referenced in Exhibit 5, a RECORD is equal to 81 characters and a BLOCK is equal to 20 RECORDS. Therefore, a maximum of 1,620 characters (blank spaces must also be included) can be housed within the BLOCK. The last block contained on the tape may be less than 1,620 characters depending on the number of FTD records in that block. The operating system will then create a Filemark and begin the EOF1, EOF2, Filemark, Filemark routine.

For those operating systems that cannot short block, after the last FTD RECORD, key in ** in the first two positions of the next RECORD in the BLOCK. The remainder of the block should be blank filled until the block reaches 1,620 characters. The operating system will then be able to execute properly.

A tape may be transmitted for multiple organizations. To use this option, data for one organization may stop within the block and the succeeding organization's data can be submitted on the same tape by entering data in the next available space.

                               EXHIBIT 6

/**/ List Deposit Date

                              EXHIBIT 9