[Federal Register Volume 66, Number 31 (Wednesday, February 14, 2001)]
[Rules and Regulations]
[Pages 10191-10196]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-1292]
[[Page 10191]]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 1, 31, 301, and 602
[TD 8942]
RIN 1545-AY00
Electronic Payee Statements
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Temporary regulations.
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SUMMARY: This document contains temporary regulations under sections
6041 and 6051 relating to the voluntary electronic furnishing of payee
statements on Forms W-2, ``Wage and Tax Statement,'' and under section
6050S relating to the voluntary electronic furnishing of statements to
individuals for whom Forms 1098-T, ``Tuition Payments Statement,'' and
Forms 1098-E, ``Student Loan Interest Statement,'' are filed. The
regulations will affect persons required by the foregoing Internal
Revenue Code sections to furnish these statements (furnishers) who wish
to furnish these statements electronically. The regulations will also
affect individuals, principally employees, students, and borrowers
(recipients), who consent to receive these statements electronically.
The text of the temporary regulations also serves as the text of the
proposed regulations set forth in the notice of proposed rulemaking on
this subject in the Proposed Rules section of this issue of the Federal
Register. The temporary regulations do not affect the requirement to
file copy A of Forms W-2 with the Social Security Administration or the
requirement to file Forms 1098-T or Forms 1098-E with the IRS.
DATES: Effective Date: These regulations are effective February 14,
2001.
Applicability Date: These regulations apply to statements to
recipients required to be furnished under sections 6041(d), 6050S(d),
and 6051 after December 31, 2000.
FOR FURTHER INFORMATION CONTACT: Laura C. Nash at (202) 622-4910 (not a
toll free number).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
These temporary regulations are being issued without prior notice
and public procedure pursuant to the Administrative Procedure Act (5
U.S.C. 553). For this reason, the collection of information contained
in these regulations has been reviewed, and pending receipt and
evaluation of public comments, approved by the Office of Management and
Budget (OMB) under control number 1545-1729. Responses to this
collection of information are required if a person required by section
6050S(d) to furnish statements to recipients for whom Forms 1098-T or
Forms 1098-E are filed, or a person required by sections 6041(d) and
6051 to furnish payee statements on Forms W-2, wishes to furnish the
statements electronically using website technology.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless the collection of
information displays a valid control number assigned by the Office of
Management and Budget.
For further information concerning this collection of information,
and where to submit comments on the collection of information and the
accuracy of the estimated burden, and suggestions for reducing this
burden, please refer to the preamble to the cross-referencing notice of
proposed rulemaking published in the Proposed Rules section of this
issue of the Federal Register.
Books and records relating to a collection of information must be
retained as long as their contents may become material in the
administration of any internal revenue law. Generally, tax returns and
tax return information are confidential, as required by 26 U.S.C. 6103.
Background
This document contains amendments to the Income Tax Regulations (26
CFR part 1) relating to sections 6041(d) and 6050S(d), to the
Regulations on Employment Taxes and Collection of Income Tax at Source
(26 CFR part 31) relating to section 6051, and to the Regulations on
Procedure and Administration (26 CFR Part 301) relating to section
6724. Sections 6041(d) and 6050S(d) generally require certain persons
to furnish a statement to a person with respect to whom an information
return is required to be filed with the Federal government under
sections 6041(a) and 6050S(a). Section 6051 requires certain persons to
furnish a written statement to an employee regarding remuneration paid
by such person to the employee. The foregoing statements (specified
statements) are generally required to be furnished to recipients on or
before January 31 of the year following the calendar year for which the
related information returns are required to be filed or in which the
wages or other compensation was paid.
These temporary regulations state that furnishers may provide the
written statements required by sections 6041(d), 6050S(d), and 6051 in
an electronic format in lieu of a paper format. In addition, the
temporary regulations provide furnishers with a method of furnishing
these statements electronically using website technology. Furnishers
who use this website technology and satisfy the requirements of the
temporary regulations are treated as timely furnishing the statements
under sections 6041(d), 6050S(d), and 6051.
The objective of the temporary regulations is to facilitate the
voluntary electronic furnishing of these statements. This objective is
consistent with the general goals of (i) section 2001 of the Internal
Revenue Service Restructuring and Reform Act of 1998 to eliminate
barriers, provide incentives, and use competitive forces to increase
electronic filing over the next ten years and (ii) the Electronic
Signatures in Global and National Commerce Act (E-SIGN Act) to
facilitate voluntary use of certain electronic records. However,
furnishers are not required to use the website technology described in
the temporary regulations if they wish to continue to provide paper
statements. Thus, the temporary regulations do not require a furnisher
to invest in new delivery systems or to meet any new legal requirements
to furnish a statement.
A major impetus for publishing these temporary regulations was the
large number of requests for published guidance from lenders,
educational institutions, employers and other furnishers who want the
option of delivering statements to recipients in an electronic format.
In addition, the Information Reporting Program Advisory Committee of
the Internal Revenue Service (IRPAC) and the Electronic Tax
Administration Advisory Committee (ETAAC) also strongly support
providing furnishers with the option of furnishing statements
electronically.
At its May 11, 2000, public meeting, IRPAC advocated issuance of
guidance permitting furnishers to use website technology to furnish
statements electronically. The IRS consulted with IRPAC representatives
to ensure that the temporary regulations provide furnishers with clear,
practical, and administrable procedures for the voluntary electronic
furnishing of the specified statements. The temporary regulations
incorporate many of IRPAC's suggestions and those of other furnishers.
[[Page 10192]]
These temporary regulations also strike a balance between
furnishers' desires to reduce costs and modernize business processes by
furnishing statements electronically and the tax administration concern
that employees, students, and borrowers must be able to access
electronic statements so that they can timely file accurate income tax
returns. The consumer consent provisions of section 101(c)(1) of the E-
SIGN Act strike a similar balance between businesses' desire to
transmit records electronically and concerns about consumers' abilities
to access and use those records. Therefore, these temporary regulations
include disclosure provisions that are consistent with the
Congressionally-approved consent provisions of the E-SIGN Act. These
disclosure provisions will ensure that recipients will obtain the
information they need to make an informed choice to receive the
statements electronically and to access them timely.
The IRS and the Treasury Department invite comments about whether
the provisions of these temporary regulations should apply to
statements required to be furnished to recipients under other sections
of the Internal Revenue Code. In addition, comments are invited about
whether furnishers will use other technologies (such as e-mail) to
furnish statements electronically and whether they need guidance on the
conditions under which those statements will be considered timely
furnished. Finally, comments are invited on whether the final
regulations should prescribe standards to ensure confidentiality of
taxpayer information posted on a website. Until final regulations are
issued, the Treasury Department and the IRS expect that furnishers will
take reasonable precautions to ensure confidentiality of taxpayer
information.
Explanation of Provisions
This temporary regulation provides guidance under Secs. 1.6041-
2T(a)(5) (by cross-reference to the regulations under section 6051),
1.6050S-1T(a), 1.6050S-2T(a), and 31.6051-1T(j) regarding the
electronic furnishing of specified statements. The temporary
regulations provide that the written statements required by sections
6041(d), 6050S(d), and 6051 may be furnished in an electronic format.
In addition, the temporary regulations provide that a furnisher that
complies with the consent, required disclosures, format, posting,
notice, and retention provisions of the temporary regulations is
treated as timely furnishing the specified statements under sections
6041(d), 6050S(d), and 6051.
Consent
The temporary regulations provide that a recipient must have
affirmatively consented to receive the statement electronically and
must not have withdrawn that consent before the statement is furnished.
The consent or, alternatively, its confirmation must be made
electronically in a manner that reasonably demonstrates that the
recipient can access the statement in the electronic format in which it
will be furnished to the recipient. A furnisher must take certain
actions, including obtaining from the recipient a new electronic
consent or confirmation of consent to receive the statement
electronically, if a change in the hardware or software needed to
access a statement creates a material risk that the recipient will not
be able to access the statement.
Required Disclosures
Prior to or at the time a recipient consents to receive a statement
electronically, the furnisher must provide a clear and conspicuous
statement to the recipient containing certain disclosures. These
required disclosures are similar to the consumer consent provisions in
the E-SIGN Act and, like those provisions, require a furnisher to
inform a recipient about, for example, the scope and duration of a
consent to receive an electronic statement, the ability to revoke that
consent, the hardware and software required to access, print, and
retain an electronic statement, and the ability to obtain a paper
statement.
Format
The temporary regulations require that the electronic version of a
statement furnished to a recipient contain all required information and
comply with applicable revenue procedures relating to substitute
statements.
Posting
The temporary regulations generally require that the furnisher post
the statements on a website accessible to recipients on or before
January 31 of the year following the calendar year to which the
statements relate.
Notice
The temporary regulations generally require the furnisher to notify
a recipient that the statement is posted on a website on or before
January 31 of the year following the calendar year to which the
statement relates. The notice may be delivered by mail, electronic
mail, or in person and must provide instructions to the recipient on
how to access and print the statement. If a furnisher later posts
corrected statements on the website, the furnisher must notify the
recipients of that posting within 30 days after the posting.
Retention
The temporary regulations generally require the furnisher to
maintain access to the statements on the website through October 15 of
the year following the calendar year to which the statements relate. In
addition, the furnisher generally must maintain access to corrected
statements that are posted on the website through October 15 of the
year following the calendar year to which the statements relate or for
90 days after that posting, whichever is later.
Special Analyses
It has been determined that this temporary regulation is not a
significant regulatory action as defined in Executive Order 12866.
Therefore, a regulatory assessment is not required. It has also been
determined that section 553(b) of the Administrative Procedure Act (5
U.S.C. Chapter 5) does not apply to these regulations.
Because no preceding notice of proposed rulemaking is required for
this temporary regulation, the provisions of the Regulatory Flexibility
Act do not apply. However, an initial Regulatory Flexibility Analysis
was prepared for the proposed regulations published elsewhere in this
issue of the Federal Register. Pursuant to section 7805(f) of the
Internal Revenue Code, that notice of proposed rulemaking will be
submitted to the Chief Counsel for Advocacy of the Small Business
Administration for comment on its impact on small business.
Drafting Information
The principal author of these temporary regulations is Eric Lucas,
formerly of the Office of Associate Chief Counsel (Procedure and
Administration). However, other personnel from the IRS and Treasury
Department participated in their development.
List of Subjects
26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
26 CFR Part 31
Employment taxes, Income taxes, Penalties, Pensions, Railroad
retirement, Reporting and recordkeeping
[[Page 10193]]
requirements, Social security, Unemployment compensation.
26 CFR Part 301
Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income
taxes, Penalties, Reporting and recordkeeping requirements.
26 CFR Part 602
Reporting and recordkeeping requirements.
Amendments to the Regulations
Accordingly, 26 CFR parts 1, 31, 301, and 602 are amended as
follows:
PART 1--INCOME TAXES
Paragraph 1. The authority citation for part 1 is amended by adding
entries in numerical order to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.6041-2T also issued under 26 U.S.C. 6041(d). * * *
Section 1.6050S-1T also issued under 26 U.S.C. 6050S(g).
Section 1.6050S-2T also issued under 26 U.S.C. 6050S(g). * * *
Par. 2. Section 1.6041-2T is added to read as follows:
Sec. 1.6041-2T Return of information as to payments to employees
(temporary).
(a)(1) through (4) [Reserved]
(5) Statement for employees. An employer that is required under
Sec. 1.6041-2(a) to file Form W-2 with respect to an employee is also
required under section 6041(d) and 6051 to furnish a written statement
to the employee. This written statement must be furnished on Form W-2
in accordance with section 6051 and the regulations.
(b) and (c). For further guidance, see Sec. 1.6041-2(b) and (c).
Par. 3. Sections 1.6050S-1T and 1.6050S-2T are added to read as
follows:
Sec. 1.6050S-1T Information reporting for payments and reimbursements
or refunds of qualified tuition and related expenses (temporary).
(a) Electronic furnishing of statements--(1) In general. A person
required by section 6050S(d) to furnish a written statement (furnisher)
to the individual to whom it is required to be furnished (recipient)
may furnish the statement in an electronic format in lieu of a paper
format. A furnisher who meets the requirements of paragraphs (a)(2)
through (7) of this section is treated as furnishing the statement in a
timely manner.
(2) Consent--(i) In general. The recipient must have affirmatively
consented to receive the statement in an electronic format and must not
have withdrawn that consent before the statement is furnished. The
consent must be made electronically in a manner that reasonably
demonstrates that the recipient can access the statement in the
electronic format in which it will be furnished to the recipient.
Alternatively, the consent may be made in a different manner (for
example, in an e-mail or in a paper document) if it is confirmed
electronically in the manner described in the preceding sentence.
(ii) Change in hardware or software requirements. If a change in
the hardware or software required to access the statement creates a
material risk that the recipient will not be able to access the
statement, the furnisher must, prior to changing the hardware or
software, provide the recipient with a notice. The notice must describe
the revised hardware and software required to access the statement and
inform the recipient that a new consent to receive the statement in the
revised electronic format must be provided to the furnisher. After
implementing the revised hardware and software, the furnisher must
obtain from the recipient, in the manner described in paragraph
(a)(2)(i) of this section, a new consent or confirmation of consent to
receive the statement electronically.
(iii) Example. The following example illustrates the rules of this
paragraph (a)(2):
Example. Furnisher F sends Recipient R an e-mail stating that R
may consent to receive statements required by section 6050S(d)
electronically on a website instead of in a paper format. The e-mail
contains an attachment instructing R how to consent to receive the
statements electronically. The e-mail attachment uses the same
electronic format that F will use for the electronically furnished
statements. R opens the attachment, reads the instructions, and
submits the consent in the manner provided in the instructions. R
has consented to receive the statements electronically in the manner
described in paragraph (a)(2)(i) of this section.
(3) Required disclosures--(i) In general. Prior to, or at the time
of, a recipient's consent, the furnisher must provide to the recipient
a clear and conspicuous disclosure statement containing each of the
disclosures described in paragraphs (a)(3)(ii) through (viii) of this
section.
(ii) Paper statement. The recipient must be informed that the
statement will be furnished on paper if the recipient does not consent
to receive it electronically.
(iii) Scope and duration of consent. The recipient must be informed
of the scope and duration of the consent. For example, the recipient
must be informed whether the consent applies to statements furnished
every year after the consent is given until it is withdrawn in the
manner described in paragraph (a)(3)(v)(A) of this section or only to
the statement required to be furnished on or before the January 31
immediately following the date on which the consent is given.
(iv) Post-consent request for a paper statement. The recipient must
be informed of any procedure for obtaining a paper copy of the
recipient's statement after giving the consent described in paragraph
(a)(2)(i) of this section.
(v) Withdrawal of consent. The recipient must be informed that--
(A) The recipient may withdraw a consent at any time by furnishing
the withdrawal in writing (electronically or on paper) to the person
whose name, mailing address, telephone number, and e-mail address is
provided in the disclosure statement;
(B) The furnisher will confirm the withdrawal in writing (either
electronically or on paper); and
(C) A withdrawal of consent does not apply to a statement that was
furnished electronically in the manner described in this paragraph (a)
before the withdrawal of consent is furnished.
(vi) Notice of termination. The recipient must be informed of the
conditions under which a furnisher will cease furnishing statements
electronically to the recipient.
(vii) Updating information. The recipient must be informed of the
procedures for updating the information needed by the furnisher to
contact the recipient.
(viii) Hardware and software requirements. The recipient must be
provided with a description of the hardware and software required to
access, print, and retain the statement, and the date when the
statement will no longer be available on the website.
(4) Format. The electronic version of the statement must contain
all required information and comply with applicable revenue procedures
relating to substitute statements to recipients.
(5) Posting. The furnisher must on or before January 31 of the year
following the calendar year to which the statement relates (or such
other date permitted or required for furnishing the statement) post it
on a website accessible to the recipient.
(6) Notice--(i) In general. The furnisher must on or before January
31 of the year following the calendar year to which the statement
relates (or such other date permitted or required for furnishing the
statement) notify the
[[Page 10194]]
recipient that the statement is posted on a website. The notice may be
delivered by mail, electronic mail, or in person. The notice must
provide instructions on how to access and print the statement. The
notice must include the following statement in capital letters,
``IMPORTANT TAX RETURN DOCUMENT AVAILABLE.'' If the notice is provided
by electronic mail, the foregoing statement should be on the subject
line of the electronic mail and sent with high importance.
(ii) Undeliverable electronic address. If an electronic notice
described in paragraph (a)(6)(i) of this section is returned as
undeliverable, and the correct electronic address cannot be obtained
from the furnisher's records or from the recipient, then the furnisher
must furnish the notice by mail or in person within 30 days after the
electronic notice is returned.
(iii) Corrected statements. A furnisher must notify a recipient
that it has posted corrected statements on a website within 30 days of
such posting in the manner described in paragraph (a)(6)(i) of this
section. This notice must be furnished by mail or in person if--
(A) An electronic notice of the website posting of an original
statement was returned as undeliverable; and
(B) The recipient has not provided a new e-mail address.
(7) Retention. The furnisher must maintain access to the statements
on the website through October 15 of the year following the calendar
year to which the statements relate (or the first business day after
such October 15, if October 15 falls on a Saturday, Sunday, or legal
holiday). The furnisher must maintain access to corrected statements
that are posted on the website through October 15 of the year following
the calendar year to which the statements relate (or the first business
day after such October 15, if October 15 falls on a Saturday, Sunday,
or legal holiday) or the date 90 days after the corrected statements
are posted, whichever is later.
(b) Effective date. This section applies to statements required to
be furnished under section 6050S(d) after December 31, 2000.
Sec. 1.6050S-2T Information reporting for payments of interest on
qualified education loans (temporary).
(a) Electronic furnishing of statements--(1) In general. A person
required by section 6050S(d) to furnish a written statement (furnisher)
to the individual to whom it is required to be furnished (recipient)
may furnish the statement in an electronic format in lieu of a paper
format. A furnisher who meets the requirements of paragraphs (a)(2)
through (7) of this section is treated as furnishing the statement in a
timely manner.
(2) Consent--(i) In general. The recipient must have affirmatively
consented to receive the statement in an electronic format and must not
have withdrawn that consent before the statement is furnished. The
consent must be made electronically in a manner that reasonably
demonstrates that the recipient can access the statement in the
electronic format in which it will be furnished to the recipient.
Alternatively, the consent may be made in a different manner (for
example, in an e-mail or in a paper document) if it is confirmed
electronically in the manner described in the preceding sentence.
(ii) Change in hardware or software requirements. If a change in
the hardware or software required to access the statement creates a
material risk that the recipient will not be able to access the
statement, the furnisher must, prior to changing the hardware or
software, provide the recipient with a notice. The notice must describe
the revised hardware and software required to access the statement and
inform the recipient that a new consent to receive the statement in the
revised electronic format must be provided to the furnisher. After
implementing the revised hardware and software, the furnisher must
obtain from the recipient, in the manner described in paragraph
(a)(2)(i) of this section, a new consent or confirmation of consent to
receive the statement electronically.
(iii) Example. The following example illustrates the rules of this
paragraph (a)(2):
Example. Furnisher F sends Recipient R an e-mail stating that R
may consent to receive statements required by section 6050S(d)
electronically on a website instead of in a paper format. The e-mail
contains an attachment instructing R how to consent to receive the
statements electronically. The e-mail attachment uses the same
electronic format that F will use for the electronically furnished
statements. R opens the attachment, reads the instructions, and
submits the consent in the manner provided in the instructions. R
has consented to receive the statements electronically in the manner
described in paragraph (a)(2)(i) of this section.
(3) Required disclosures--(i) In general. Prior to, or at the time
of, a recipient's consent, the furnisher must provide to the recipient
a clear and conspicuous disclosure statement containing each of the
disclosures described in paragraphs (a)(3)(ii) through (viii) of this
section.
(ii) Paper statement. The recipient must be informed that the
statement will be furnished on paper if the recipient does not consent
to receive it electronically.
(iii) Scope and duration of consent. The recipient must be informed
of the scope and duration of the consent. For example, the recipient
must be informed whether the consent applies to statements furnished
every year after the consent is given until it is withdrawn in the
manner described in paragraph (a)(3)(v)(A) of this section or only to
the statement required to be furnished on or before the January 31
immediately following the date on which the consent is given.
(iv) Post-consent request for a paper statement. The recipient must
be informed of any procedure for obtaining a paper copy of the
recipient's statement after giving the consent described in paragraph
(a)(2)(i) of this section.
(v) Withdrawal of consent. The recipient must be informed that--
(A) The recipient may withdraw a consent at any time by furnishing
the withdrawal in writing (electronically or on paper) to the person
whose name, mailing address, telephone number, and e-mail address is
provided in the disclosure statement;
(B) The furnisher will confirm the withdrawal in writing (either
electronically or on paper); and
(C) A withdrawal of consent does not apply to a statement that was
furnished electronically in the manner described in this paragraph (a)
before the withdrawal of consent is furnished.
(vi) Notice of termination. The recipient must be informed of the
conditions under which a furnisher will cease furnishing statements
electronically to the recipient.
(vii) Updating information. The recipient must be informed of the
procedures for updating the information needed by the furnisher to
contact the recipient.
(viii) Hardware and software requirements. The recipient must be
provided with a description of the hardware and software required to
access, print, and retain the statement, and the date when the
statement will no longer be available on the website.
(4) Format. The electronic version of the statement must contain
all required information and comply with applicable revenue procedures
relating to substitute statements to recipients.
(5) Posting. The furnisher must on or before January 31 of the year
following the calendar year to which the statement relates (or such
other date permitted or required for furnishing the statement) post it
on a website accessible to the recipient.
[[Page 10195]]
(6) Notice--(i) In general. The furnisher must on or before January
31 of the year following the calendar year to which the statement
relates (or such other date permitted or required for furnishing the
statement) notify the recipient that the statement is posted on a
website. The notice may be delivered by mail, electronic mail, or in
person. The notice must provide instructions on how to access and print
the statement. The notice must include the following statement in
capital letters, ``IMPORTANT TAX DOCUMENT RETURN AVAILABLE.'' If the
notice is provided by electronic mail, the foregoing statement should
be on the subject line of the electronic mail and sent with high
importance.
(ii) Undeliverable electronic address. If an electronic notice
described in paragraph (a)(6)(i) of this section is returned as
undeliverable, and the correct electronic address cannot be obtained
from the furnisher's records or from the recipient, then the furnisher
must furnish the notice by mail or in person within 30 days after the
electronic notice is returned.
(iii) Corrected statements. A furnisher must notify a recipient
that it has posted corrected statements on a website within 30 days of
such posting in the manner described in paragraph (a)(6)(i) of this
section. This notice must be furnished by mail or in person if--
(A) An electronic notice of the website posting of an original
statement was returned as undeliverable; and
(B) The recipient has not provided a new e-mail address.
(7) Retention. The furnisher must maintain access to the statements
on the website through October 15 of the year following the calendar
year to which the statements relate (or the first business day after
such October 15, if October 15 falls on a Saturday, Sunday, or legal
holiday). The furnisher must maintain access to corrected statements
that are posted on the website through October 15 of the year following
the calendar year to which the statements relate (or the first business
day after such October 15, if October 15 falls on a Saturday, Sunday,
or legal holiday) or the date 90 days after the corrected statements
are posted, whichever is later.
(b) Effective date. This section applies to statements required to
be furnished under section 6050S(d) after December 31, 2000.
PART 31--EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE
Par. 4. The authority citation for part 31 is amended to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 31.6051-1T also issued under 26 U.S.C. 6051. * * *
Par. 5. Section 31.6051-1T is added to read as follows:
Sec. 31.6051-1T Statements for employees (temporary).
(a) through (i) [Reserved]. For further guidance, see Sec. 31.6051-
1(a) through (i).
(j) Electronic furnishing of statements--(1) In general. A person
required by section 6051 to furnish a written statement on Form W-2
(furnisher) to the individual to whom it is required to be furnished
(recipient) may furnish the Form W-2 in an electronic format in lieu of
a paper format. A furnisher who meets the requirements of paragraphs
(j)(2) through (7) of this section is treated as furnishing the Form W-
2 in a timely manner.
(2) Consent--(i) In general. The recipient must have affirmatively
consented to receive the Form W-2 in an electronic format and must not
have withdrawn that consent before the Form W-2 is furnished. The
consent must be made electronically in a manner that reasonably
demonstrates that the recipient can access the Form W-2 in the
electronic format in which it will be furnished to the recipient.
Alternatively, the consent may be made in a different manner (for
example, in an e-mail or in a paper document) if it is confirmed
electronically in the manner described in the preceding sentence.
(ii) Change in hardware or software requirements. If a change in
hardware or software required to access the Form W-2 creates a material
risk that the recipient will not be able to access the Form W-2, the
furnisher must, prior to changing the hardware or software, provide the
recipient with a notice. The notice must describe the revised hardware
and software required to access the Form W-2 and inform the recipient
that a new consent to receive the Form W-2 in the revised electronic
format must be provided to the furnisher. After implementing the
revised hardware and software, the furnisher must obtain from the
recipient, in the manner described in paragraph (j)(2)(i) of this
section, a new consent or confirmation of consent to receive the Form
W-2 electronically.
(iii) Example. The following example illustrates the rules of this
paragraph (j)(2):
Example. Furnisher F sends Recipient R an e-mail stating that R
may consent to receive Forms W-2 electronically on a website instead
of in a paper format. The e-mail contains an attachment instructing
R how to consent to receive Forms W-2 electronically. The e-mail
attachment uses the same electronic format that F will use for its
electronically furnished Forms W-2. R opens the attachment, reads
the instructions, and submits the consent in the manner provided in
the instructions. R has consented to receive Forms W-2
electronically in the manner described in paragraph (j)(2)(i) of
this section.
(3) Required disclosures--(i) In general. Prior to, or at the time
of, a recipient's consent, the furnisher must provide to the recipient
a clear and conspicuous disclosure statement containing each of the
disclosures described in paragraphs (j)(3)(ii) through (viii) of this
section.
(ii) Paper statement. The recipient must be informed that the Form
W-2 will be furnished on paper if the recipient does not consent to
receive it electronically.
(iii) Scope and duration of consent. The recipient must be informed
of the scope and duration of the consent. For example, the recipient
must be informed whether the consent applies to Forms W-2 furnished
every year after the consent is given until it is withdrawn in the
manner described in paragraph (j)(3)(v)(A) of this section or only to
the Form W-2 required to be furnished on or before the January 31
immediately following the date on which the consent is given.
(iv) Post-consent request for a paper statement. The recipient must
be informed of any procedure for obtaining a paper copy of the
recipient's Form W-2 after giving the consent described in paragraph
(j)(2)(i) of this section.
(v) Withdrawal of consent. The recipient must be informed that--
(A) The recipient may withdraw a consent at any time by furnishing
the withdrawal in writing (electronically or on paper) to the person
whose name, mailing address, telephone number, and e-mail address is
provided in the disclosure statement;
(B) The furnisher will confirm the withdrawal in writing (either
electronically or on paper); and
(C) A withdrawal of consent does not apply to a Form W-2 that was
furnished electronically in the manner described in this paragraph (j)
before the withdrawal of consent is furnished.
(vi) Notice of termination. The recipient must be informed of the
conditions under which a furnisher will cease furnishing statements
electronically to the recipient (for example, termination of the
recipient's employment with furnisher-employer).
(vii) Updating information. The recipient must be informed of the
procedures for updating the information needed by the furnisher to
contact the recipient.
[[Page 10196]]
(viii) Hardware and software requirements. The recipient must be
provided with a description of the hardware and software required to
access, print, and retain the Form W-2, and the date when the Form W-2
will no longer be available on the website. The recipient must be
informed that the Form W-2 may be required to be printed and attached
to a Federal, State, or local income tax return.
(4) Format. The electronic version of the Form W-2 must contain all
required information and comply with applicable revenue procedures
relating to substitute statements to recipients.
(5) Posting. The furnisher must on or before January 31 of the year
following the calendar year to which the Form W-2 relates (or such
other date permitted or required for furnishing the Forms W-2) post it
on a website accessible to the recipient.
(6) Notice--(i) In general. The furnisher must on or before January
31 of the year following the calendar year to which the Form W-2
relates (or such other date permitted or required for furnishing the
Form W-2) notify the recipient that the Form W-2 is posted on a
website. The notice may be delivered by mail, electronic mail, or in
person. The notice must provide instructions on how to access and print
the statement. The notice must include the following statement in
capital letters, ``IMPORTANT TAX RETURN DOCUMENT AVAILABLE.'' If the
notice is provided by electronic mail, the foregoing statement should
be on the subject line of the electronic mail and sent with high
importance.
(ii) Undeliverable electronic address. If an electronic notice
described in paragraph (j)(6)(i) of this section is returned as
undeliverable, and the correct electronic address cannot be obtained
from the furnisher's records or from the recipient, then the furnisher
must furnish the notice by mail or in person within 30 days after the
electronic notice is returned.
(iii) Corrected Forms W-2. A furnisher must notify a recipient that
it has posted corrected Forms W-2 on a website within 30 days of such
posting in the manner described in paragraph (j)(6)(i) of this section.
This notice must be furnished by mail or in person if--
(A) An electronic notice of the website posting of an original Form
W-2 was returned as undeliverable; and
(B) The recipient has not provided a new e-mail address.
(7) Retention. The furnisher must maintain access to the Forms W-2
on the website through October 15 of the year following the calendar
year to which the Forms W-2 relate (or the first business day after
October 15, if October 15 falls on a Saturday, Sunday, or legal
holiday). The furnisher must maintain access to corrected Forms W-2
that are posted on the website through October 15 of the year following
the calendar year to which the Forms W-2 relate (or the first business
day after such October 15, if October 15 falls on a Saturday, Sunday,
or legal holiday) or the date 90 days after the corrected forms are
posted, whichever is later.
(k) Effective date. Paragraph (j) of this section applies to Forms
W-2 required to be furnished under section 6051 after December 31,
2000.
PART 301--PROCEDURE AND ADMINISTRATION
Par. 6. The authority citation for part 301 continues to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 7. Section 301.6724-1T is added to read as follows:
Sec. 301.6724-1T Reasonable cause (temporary).
(a) through (d)(2) [Reserved]. For further information, see
Sec. 301.6724-1 (a) through (d)(2).
(d)(3) Special rule for furnishers of electronic statements. A
filer may seek a waiver for reasonable cause pursuant to Sec. 301.6724-
1(c)(6), for failing to timely furnish a statement in the following
situation. If the recipient of the statement withdraws a consent to
receive the statement in an electronic format, the filer will be deemed
to have acted in a responsible manner under Sec. 301.6724-1(d) if the
filer furnishes a paper statement on or before the date 30 days after
the date the withdrawal of consent is received.
(e) through (n) [Reserved]. For further guidance, see
Sec. 301.6724-1(e) through (n).
PART 602--OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT
Par. 8. The authority citation for part 602 continues to read as
follows:
Authority: 26 U.S.C. 7805.
Par. 9. In Sec. 602.101, paragraph (b) is amended by adding entries
to the table in numerical order to read as follows:
Sec. 602.101 OMB Control numbers.
* * * * *
(b) * * *
------------------------------------------------------------------------
Current OMB
CFR part or section where identified and described control No.
------------------------------------------------------------------------
* * * * *
1.6041-2T............................................... 1545-1729
* * * * *
1.6050S-1T.............................................. 1545-1729
1.6050S-2T.............................................. 1545-1729
* * * * *
31.6051-1T.............................................. 1545-1729
* * * * *
------------------------------------------------------------------------
Robert E. Wenzel,
Deputy Commissioner of Internal Revenue.
Approved: January 10, 2001.
Jonathan Talisman,
Assistant Secretary of the Treasury.
[FR Doc. 01-1292 Filed 2-13-01; 8:45 am]
BILLING CODE 4830-01-P