IRS updates specifications for filing Form 1042-S electronically

The IRS has updated the specifications for the electronic filing of Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding. Generally, the boxes on the paper forms do correspond with the fields used for the electronic file, however; if the form and field instructions do not match, the guidance supersedes the form instructions. Electronic reporting of information returns eliminates the need to submit paper documents to the IRS. Do not send copies of paper forms to the IRS for any forms filed electronically as this will result in duplicate filing.

The FIRE System can accept multiple files for the same type of return. For example, if a company has several branches issuing Forms 1042-S, it is not necessary to consolidate all the forms into one transmission. Each file may be sent separately. Do not transmit duplicate data.

What’s new?

• Throughout the publication, revised the time for checking the status of your file from 10 calendar days to 10 business days.
• To reflect changes made to the Form 1042-S instructions updates have been made to several Income Codes throughout the Publication.
• Sec. 9 Penalties Associated with Information Returns – Due to a legislative change, penalty amounts will increase on information returns required to be filed, and statements required to be furnished, after December 31. Refer to 2015 General Instructions for Certain Information Returns for additional information on penalty specifications and guidelines.
• Part B, Section 7.01, Accuracy of Data updated as follows: (1) Income Code 20 was added to the Income Code table. (2) Income Code 15 was removed from the same table. (3) Under unknown recipient changed Chapter 3 Status code from 24 to 21.
• Part B, Section 7.02, Income Codes updated as follows: 13 is now 14; 14 is now 15; 15 is now 16; 16 is now 17; 17 is now 18; 18 is now 19; 19 is now 20; 20 is now 23; 51 is now 54. The following income codes have been added: 13 – Royalties paid on certain publicly offered securities; 51 – Interest paid on certain actively traded or publicly offered securities; 52 – Dividends paid on certain actively traded or publicly offered securities; 53 – Substitute payments-dividends from certain actively traded or publicly offered securities. Part B Section 7.03 Common Formatting Errors: (1) Item 5, Chapter 3 Recipient Code changed from 24 to 21; and Chapter 4 Recipient Code from 32 to 29 (2) Item 6, Recipient Code changed from 24 to 21 (3) Item 10e, changed Exemption Code from 01-09 to 01-12.
• Withholding Agent “W” Record has been updated as follows: (1) Field Position 13 the word “Required” has been removed from the General Field Description column (2) Field Position 811-819 has been expanded to 811-832 with a length of 22 (3) Field Position 820-1010 has been decreased to 833 – 1010 with a length of 178.
• Recipient “Q” Record has been updated as follows: Field Position 18-29, removed Income Code 15 from the General Field Description; Field Position 54-55, changed Exemption Code 21 to 22; Field Position 94-133, changed Recipient Code 20 to 24; Field Position 340-348, removed the reference to “Numeric characters only”; Field Position 358, removed the word “Required” from the General Field Description; Field Position 819-830, renamed Field Title to Tax Paid by Withholding Agent; Field Position 811-818, changed format of recipient’s date of birth (DoB) to YYYYMMDD; Field Position 895-934 and 975-983 added, ”Required if reporting an amount in Field Positions 371-382”.
• Part B, Section 5 .01 File Definitions added the following file type information: (1) Original File – Contains information returns that have not been previously reported to the IRS. (2) Test File – Contains data (fictitious or real) that is formatted to the specifications in the Publication 1187 and can only be sent through the FIRE Test System.
• Part A, Section 6 .01 Filing Requirements has been updated as follows: (1) Removed the following from the 4th paragraph; “For filers other than those that have a withholding agreement with the IRS.”
• Part A, Section 8 Form 8508, Request for Waiver from Filing Information Returns Electronically, removed the following parenthetical statement from the 1st paragraph; “other than a filer that has a withholding agreement with the IRS.” (1) Added the following information regarding the use of substitute Form 1042-S: If the waiver is approved to file a paper Form 1042-S the official Form 1042-S should be used. If the filer intends to use a paper substitute for Form 1042-S it must conform to every aspect (format and size) of the official Form 1042- S. The substitute form may be used without prior approval from the Internal Revenue Service. The withholding agent must ensure that all fields on the substitute Form 1042-S Copy B, C, and D, which are to be provided to the recipient, contain the exact information provided to the IRS on Copy A of Form 1042-S. For details on the requirements of substitute forms, see Publication 1179, General Rules and Specifications for Substitute Forms 1096, 1098, 1099, 5498, and Certain Other Information Returns.
• Part A, Section 10 .01 General Information clarified what information to use to file a prior year return.
• This publication should be used in conjunction with the following forms and publications: Form 1042-S, http://www.irs.gov/pub/irs-pdf/f1042s.pdf, Foreign Person’s U.S. Source Income Subject to Withholding; Instructions for Form 1042-S, http://www.irs.gov/pub/irs-pdf/f1042s.pdf, Foreign Person’s U.S. Source Income Subject to Withholding; Publication 515, http://www.irs.gov/pub/irs-pdf/p515.pdf, Withholding of Tax on Nonresident Aliens and Foreign Entities; Publication 1179, http://www.irs.gov/pub/irs-pdf/p1179.pdf, General Rules and Specifications for Substitute Forms 1096, 1098, 1099, 5498, and Certain Other Information Returns.
• To support the revision of the Form 4419 a new section has been added to Part B, Section 1 .04 titled Updating Information Form 4419. The changes to the Form 4419, Application for Filing Information Returns Electronically (FIRE) are as follows: (1) Added check box to indicate a revised Form 4419 check box and a box to provide current Transmitter Control Code (TCC) (2) Box 8 – Removed questions pertaining to the use of software or a software provider (3) Box 8 – Added check box to confirm applicant has read the affidavit and is authorized to sign the document on behalf of the transmitter and/or payer (4) Instructions – Added information to revise current TCC information.
• Publication 1187 was updated to reflect the current reporting four digit reporting year, 2015.
• FIRE Production System is available from January 19, 2016 to December 9, 2016. (IRS Pub. 1187, Specifications for Electronic Filing of Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding For Tax Year 2015, (2-2016).)

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