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Department of the Treasury · Internal Revenue Service
Washington, D.C. 20224
SMALL BUSINESS/SELF-EMPLOYED DIVISION
February, 2003
Elimination of Magnetic Tape Programs
Dear Magnetic Media Filers:
This letter is to inform you of our future plans to eliminate the acceptance of magnetic tape for Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return and Form 941, Employer’s Quarterly Federal Tax Return (FICA) for current users, at the Fresno and Andover Submission Processing Centers.

Internal Revenue Service has started the transition plan to eliminate all Magnetic Media processing. This letter is in line with our agreement to keep businesses informed and to ensure a smooth migration to more effective and efficient electronic programs.

In the near term, we will continue to support the processing of 940/941 via magnetic tape at Fresno and Andover Submission Processing Centers through the fourth quarter of TY2003. However, we expect to stop accepting business tax returns on Magnetic Media by February 10, 2004. We recognize making this decision may cause some inconvenience to some of our partners however, this decision is necessary due to a redistribution of tax returns assigned to our processing centers and the need to provide a more modernized and efficient method of receiving 940/941 returns. We have enclosed information on several alternatives that will meet the needs of current magnetic tape filers and allow for a smooth transition to the Electronic Management System method of filing.

If you have any concerns regarding the discontinuance of Magnetic Media filing at Fresno or Andover Submission Processing Centers effective February 10, 2004, please submit your detailed reply by January 15, 2003. You may submit your requests via e-mail, fax, or normal mail at the addresses/numbers provided below.

Your concerns must include a detailed explanation addressing the technological obstacles and associated costs that would be incurred for filers to convert to the EMS method of filing Forms 941/940. We will review your comments and will respond to you within 10 days. The review may include contacting you and/or members of your staffs to discuss solutions that may result in an easier transition to EMS.

As filers in the e-file program, you have been an active participant in helping the IRS reach its goal of 80% of all returns filed electronically by 2007, and your participation has been greatly appreciated. As we retire older systems, we hope that you will continue to participate by filing your tax returns electronically via our new systems. Information on several alternatives for e-filing and On-Line filing for Forms 941/940 is provided in the enclosure.

If you have questions regarding this letter, please contact Lillie Price of my staff at 202-283-0563 and Regina Frazier-Dean at 202-283-0094. You may also contact Greg Robinson of the Fresno Submission Processing Center at 559 456-5333,( if you are currently filing at Fresno) or Dianne Doherty at Andover Submission Processing Center at 978 474-1374, (if you are currently filing at Andover).
Sincerely,
Larry Faulkner
Senior Manager,
Small Business/Self Employed
Electronic Business Returns and
E-Payment Products
E-mail: lillie.h.price@irs.gov regina.f.dean@irs.gov
Fax: 202-283-4785
U.S. Mail IRS
5000 Ellin Road
Lanham, MD 20607
Attention: Lillie H.Price      Regina F. Dean
S:CAS:PBR:E    C4-258    C4-177
We have included a list of alternatives for filing your electronic 940’s and 941’s.

You can contact the Memphis Electronic Filing Help Desk at (901) 546-2690 for general inquiries for the 940/941e-file Programs and contact the Austin Help Desk at (512) 460-8900 for general inquiries for the 940/941 On-Line Filing Programs. For questions regarding Letters of Application or Form 9041, call the Austin Service Center at (512) 460-8900. Also, see www.irs.gov for information about all of the alternatives for electronic filing.
940/941e-file and On-Line Filing Programs
An application (Letter of Application or Form 9041, Application/Registration for Filing Business Returns) is required for each program. All applicants will be notified of their acceptance within 45 days of the receipt of their application. To electronically file tax returns, a successful test transmission must be completed prior to the due date of the return.
941e-file Program
The same process for 940e-file applies to the 941e-file program. New participants should contact the e-file Help Desk in Austin, Texas and for technical questions, applicants should contact the e-file Help Desk at:
Internal Revenue Service
Tennessee Computing Center
IRS Electronic Filing Help Desk
P.O. Box 30309 AMF
Memphis, TN 38130
ATTN: Electronic Filing Unit, Stop 37
941 On-Line Filing Program
The 941 On-Line Filing Program allows the business filers to use a web-based system to prepare, sign and file Form 941, Employer’s Quarterly Tax Return, using a Third Party Transmitter. The Transmitter batches and transmits returns to the IRS (see www.irs.gov for a list of authorized transmitters).

The Business taxpayer must apply for a Personal Identification Number (PIN) by completing an electronic LOA using a Third Party Transmitter. The Transmitter will batch and electronically transmit to the Service.

After the LOA is processed, the business taxpayer will receive a PIN to be used to sign the return(s). The Transmitter receives an Electronic Transmitter Identification Number (ETIN), password and unique access code that is used to sign on to the processing system.

The Transmitter will batch the files for transmission to the IRS. Within two (2) business days after submission of the LOA, transmitters will retrieve an acknowledgment file that verifies the submission of the LOA.

The Transmitters act as the intermediary for acknowledgments and rejections transmitted from the Service to the Business Taxpayer.
940e-file Program
The 940e-file program is an option designed for electronic filing of Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return by Reporting Agents who are filing this form on behalf of business taxpayers.

The Reporting Agents should already have a Form 8655 on file with IRS to be recognized as an authorized representative of the taxpayer. The IRS will issue Reporting Agents a Personal Identification Number (PIN), Electronic Transmitter Identification Number (ETIN) and password upon acceptance to logon to the processing system.

Reporting Agents who are prospective participants in the program must file a paper Form 9041 to:
Internal Revenue Service
P.O. Box 1231
Austin, TX 78767
ATTN: AUSPC Help Desk, Stop 6380 AUSPC
940 On-Line Filing Program
The 940 On-Line Filing Program is designed to facilitate the electronic filing of Form 940 by business taxpayers submitting one or more Form 940 for themselves to IRS using an approved Third Party Transmitter. The program requires the business taxpayer to use a web-based system to prepare, sign and file Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return using a Third Party Transmitter (see www.irs.gov for a list of authorized transmitters).

After the LOA is processed, the business taxpayer will receive a Personal Identification Number (PIN) to be used to sign the return(s). The Transmitter receives an Electronic Transmitter Identification Number (ETIN), password and unique access code that is used to sign on to the processing system.

The Transmitter will batch the files for transmission to the IRS. Within two (2) business days after submission of the LOA, transmitters will retrieve an acknowledgment file that verifies the submission of the LOA.

The Transmitters act as the intermediary for acknowledgments and rejections transmitted from the Service to the Business Taxpayer.
New Employment Tax e-file System
A new Employment Tax e-file System, scheduled for release in January 2003 will allow e-filing of Form 940 (Employer’s Annual Unemployment Tax Return) and Form 941 (Employer’s Quarterly Federal Tax Return) in a standard "XML Format"(Extensible Markup Language). The Employment Tax e-file System provides greater flexibility for Trading Partners to file Business returns electronically. See www.irs.gov for more information on the New Employment Tax e-file system (XML) and how it can improve your filing process.
Software Developers
Software Developers will need to ensure that the type of software provided conforms to the current Technical Specifications for electronic filing of Forms 940/941 and LOA, to allow for filing at Tennessee Computing Center (TCC) or Austin Service Center (AUSC).

The IRS informally grants Software Developers permission to act as an electronic Filer and/or Transmitter whose interchange transmission indicates "Test" mode. Their application should contain the brand name of the software package and whether the software is a stand-alone or interfaces with a named payroll package.

Acceptance of a Software Developer establishes only that the test transmission was formatted properly and could be processed by the Service. A Software Developer is not entitled to electronically file Forms 940/941 unless a separate application has been submitted and approved.