Magnetic media - deadline for filing hardship waivers.

• Author: Campbell, Michael A.

Persons who file 250 or more information returns (e.g., Form 1099) of the same type with the IRS for a calendar year must file those returns on magnetic media (i.e., magnetic tape, magnetic cartridges, or 5 1/4" or 3 1/2" diskettes) instead of paper forms. The 250-or-more threshold is an annual determination, and it is determined on a type-of-return basis. For example, if a taxpayer files 300 Forms 1099-DIV and 50 Forms 1099-MISC for 1990, the taxpayer must use magnetic media to file the Forms 1099-DIV, but the Forms 1099-MISC may be filed either on paper or magnetic media, whichever the taxpayer desires.

The requirement to use magnetic media can be waived by the Service's Martinsburg Computing Center (MCC) if hardship is shown. A taxpayer seeking a waiver from using magnetic media to file information returns with the IRS must file Form 8508, Request for Waiver From Filing Information Returns on Magnetic Media, by Jan. 15, 1992. Failure to use magnetic media without an approved waiver is tantamount to failing to file the information return and may subject the taxpayer to a maximum $50 per return penalty, unless reasonable cause can be shown. The Service aggresively asserts this penalty as a matter of course.

Filing for hardship waiver

Regs. Sec. 301.6011-2(c)(4) provides for advance waivers for taxpayers that would suffer hardship if forced to use magnetic media. Generally, cost is the chief factor considered in determining whether hardship exists, although other factors are also considered. Form 8508 must be completed and filed with the MCC. IRS Publication 1220, Specifications for Filing Form 1098, 1099, 5498, and W-2G Electronically or on Magnetic Tape, Tape Cartridge, and 5 1/4-, 3 1/2- and 8-Inch Magnetic Diskettes, contains additional information about magnetic media reporting generally and the waiver request process...