Td 9114

Federal Register / Vol. 69, No. 32 / Wednesday, February 18, 2004 / Rules and Regulations
(3) Copies may be obtained from Boeing
Commercial Airplanes, P.O. Box 3707,
Seattle, Washington 98124–2207. Copies may
be inspected at the FAA, Transport Airplane
Directorate, 1601 Lind Avenue, SW., Renton,
Washington; or at the Office of the Federal
Register, 800 North Capitol Street, NW., suite
700, Washington, DC.
Effective Date
(e) This amendment becomes effective on
March 24, 2004.
Issued in Renton, Washington, on February
9, 2004.
Ali Bahrami,
Acting Manager, Transport Airplane
Directorate, Aircraft Certification Service.
[FR Doc. 04–3348 Filed 2–17–04; 8:45 am]
BILLING CODE 4910–13–P

DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 1, 31, 301, and 602
[TD 9114]
RIN 1545–AY50

Electronic Payee Statements
AGENCY: Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulations and removal of
temporary regulations.
SUMMARY: This document contains final
regulations relating to the voluntary
electronic furnishing of statements on
Forms W–2, ‘‘Wage and Tax Statement,’’
under sections 6041 and 6051, and
statements on Forms 1098–T, ‘‘Tuition
Statement,’’ and Forms 1098–E,
‘‘Student Loan Interest Statement,’’
under section 6050S. These final
regulations affect businesses, other forprofit institutions, and eligible
educational institutions that wish to
furnish these required statements
electronically. The regulations will also
affect individuals (recipients),
principally employees, students, and
borrowers, who consent to receive these
statements electronically.
DATES: Effective Date: These regulations
are effective February 18, 2004.
Applicability Date: These regulations
apply to statements and reports required
to be furnished after February 13, 2004.
The rules relating to maintenance of
access to Web site statements also apply
to statements and reports required to be
furnished after December 31, 2003.
FOR FURTHER INFORMATION CONTACT:
Michael E. Hara at (202) 622–4910 (not
a toll free number).
SUPPLEMENTARY INFORMATION:

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Paperwork Reduction Act
The collection of information
contained in these final regulations has
been reviewed and approved by the
Office of Management and Budget in
accordance with the Paperwork
Reduction Act (44 U.S.C. 3507) under
control number 1545–1729. Responses
to this collection of information are
required to obtain the benefit of
providing payee statements
electronically.
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.
The estimated annual burden per
respondent or recordkeeper varies
depending on individual circumstances,
with an estimated average of 6 minutes.
Comments concerning the accuracy of
this burden estimate and suggestions for
reducing this burden should be sent to
the Internal Revenue Service, Attn: IRS
Reports Clearance Officer,
SE:W:CAR:MP:T:SP Washington, DC
20224, and to the Office of Management
and Budget, Attn: Desk Officer for the
Department of the Treasury, Office of
Information and Regulatory Affairs,
Washington, DC 20503.
Books or records relating to this
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
On February 14, 2001, the IRS
published a notice of proposed
rulemaking (by cross reference to
temporary regulations) and a notice of
public hearing, (REG–107186–00) (66
FR 10247). The regulations proposed to
permit the voluntary electronic
furnishing of (1) statements on Form W–
2 under sections 6041 and 6051, (2)
‘‘Tuition Statements’’ (Form 1098–T)
under section 6050S, and (3) ‘‘Student
Loan Interest Statements’’ (Form 1098–
E) under section 6050S. These proposed
amendments were intended (1) to
increase electronic filing consistent with
section 2001 of the Internal Revenue
Service Restructuring and Reform Act of
1998, Public Law 105–206 (July 22,
1998); and (2) to facilitate the use of
electronic communication and record
keeping consistent with the Electronic
Signatures in Global and National
Commerce Act (E–SIGN Act) Public Law
No. 106–229, 114 Stat. 464 (2000), 15

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U.S.C. sections 7001 through 7006
(2000). The IRS received written
comments on the proposed regulations.
A public hearing was held on July 25,
2001. After consideration of all the
comments, the proposed regulations are
adopted as revised by this Treasury
Decision. The temporary regulations
under sections 6041, 6050S, 6051, and
6724 are removed.
On December 18, 2002, final
regulations were issued under section
6050S (TD 9029), addressing
information reporting for qualified
tuition payments and reimbursements;
TD 9029 also renumbered the
regulations under section 6050S.
Explanation of Revisions and Summary
of Comments
1. Expansion to Additional Statements,
Notices, and Reports
Five commentators recommended that
the regulations be expanded to allow the
electronic furnishing of additional
statements and reports, including Forms
5498 and 1099–R. After the IRS issued
the proposed regulations, Congress
enacted the Job Creation and Worker
Assistance Act of 2002 (JCWAA), Public
Law 107–147 (March 9, 2002). Section
401 of JCWAA permits the electronic
furnishing of any statement required
under subpart B of part III of subchapter
A of chapter 61 of Title 26 (sections
6041 through 6050T). Section 401 of
JCWAA specifically eliminated the firstclass-mailing requirement that
prevented electronic furnishing of
statements under sections 6042(c),
6044(e), and 6049(c)(2). In addition,
Congress expressed its support for
electronic furnishing of all statements
required by the Code. See Joint
Committee on Taxation Staff, Technical
Explanation of the ‘‘Job Creation and
Worker Assistance Act of 2002,’’ 107th
Cong., 2d Sess. (2002) at page 27.
Section 401 of JCWAA permits the
electronic furnishing of all statements
required under sections 6041 through
6050T, if the recipient consents to
receive the statement in a manner
similar to the one permitted by
regulations under section 6051 or in
such other manner as provided by the
Secretary. Because section 401 of
JCWAA authorizes the electronic
furnishing of all statements required
under sections 6041 through 6050T,
final regulations are not necessary to
allow the voluntary electronic
furnishing of statements required under
sections 6041 through 6050T, as long as
the recipient consents to receive the
statement in a manner similar to the one
permitted under these final regulations.
In addition, Notice 2004–10 permits

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electronic furnishing of the Form 1099–
R, Distributions from Pensions,
Annuities, Retirement or Profit-Sharing
Plans, IRA, Insurance Contracts, Form
1099–MSA, Distributions From an
Archer MSA or Medicare+Choice MSA,
Form 1099–Q, Payments from Qualified
Education Programs (Under Section 529
or 530), Form 5498, Individual
Retirement Arrangement Contribution
Information, Form 5498–ESA, Coverdell
ESA Contribution Information, and
Form 5498–MSA, Archer MSA or
Medicare+Choice MSA Information,
payee statements.
2. Electronic Mail Attachments
The only method of electronic
furnishing specifically authorized by the
proposed regulations required posting
on Web sites. Two commentators
recommended that the regulations allow
taxpayers to send statements as
attachments to e-mail. One commentator
stated that some organizations might not
wish to provide tax statements by e-mail
because of security and privacy
concerns.
The final regulations do not restrict
furnishers solely to the use of Web site
technology. Treasury and the IRS
believe that Web site technology
currently provides the most secure
method of furnishing statements
electronically but do not intend to limit
the technology to be used in furnishing
statements electronically. Accordingly,
under the final regulations, taxpayers
are permitted to furnish statements
through any electronic means to which
the recipient consents, including by email.
3. Standards To Ensure Confidentiality
of Taxpayer Information
One commentator recommended that
the IRS adopt security requirements that
require simply a sign-on and a
password. Two commentators
recommended against adoption of
specific standards. The final regulations
do not adopt specific security standards
to ensure the confidentiality of recipient
information. Rather, the final
regulations leave room for security
methodologies to evolve through
advances in technology.
4. Consent Consistent With the E–SIGN
Act’s Notice and Consent Provisions
The proposed regulations adopted
notice and consent requirements
consistent with the E–SIGN Act. Three
commentators stated that the notice and
consent requirements of the regulation
should not apply to the electronic
transmission of statements between
employers and employees. One
commentator observed that the notice

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and consent requirement will require
the employer to modify existing
databases and/or create a separate data
base to distinguish between employees
who have consented to receive
statements electronically and those who
will receive a paper statement. The
commentator asserted that the cost of
these database changes would offset any
savings from electronic furnishing. Two
commentators stated that credit unions
could not efficiently provide statements
to their employees electronically, if the
credit unions were subject to the
regulation’s (E–SIGN Act’s) notice and
consent requirements.
The final regulations retain the notice
and consent requirements. The notice
and consent requirements are justified
on tax administration grounds; it is
important that taxpayers be able to
demonstrate the ability to receive the
tax statements electronically and then
actually receive them. Moreover, the IRS
and Treasury continue to believe that
electronic furnishing should be
voluntary for recipients as well as
furnishers to accommodate recipients
who prefer to receive their statements
by traditional paper delivery for
perceived security and privacy reasons.
Section 401 of JCWAA, which adopted
the notice and consent requirements in
the temporary regulations, suggests that
Congress also believes that electronic
furnishing should be voluntary.
5. Verification of Receipt
Two commentators stated that, since
the recipient chooses whether to receive
information electronically, the recipient
should be responsible for having the
hardware and software necessary to
receive the information electronically.
The commentators pointed out that
electronic mail systems are not
standardized and some systems do not
provide verification of delivery.
The regulations were not changed to
reflect these comments. Both the
furnisher and the recipient must
voluntarily participate in the electronic
delivery system. Both parties are
responsible for ensuring that the system
complies with the requirements of the
regulations.
6. Consent Demonstrating Ability To
Obtain Statements
One commentator recommended
clarification of the example provided in
the regulations regarding consent from
the recipient. The commentator noted
that a recipient’s being able to receive
and send e-mail does not necessarily
prove that the recipient can access a
Web site and download the statement.
The commentator recommended an

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example describing alternatives to
consent by e-mail.
The rule for consent requires that the
recipient demonstrate the ability to
access statements, which is done in the
regulation’s example by opening the
attachment. However, the IRS agrees
with the commentator’s observation and
has added two examples of alternative
methods of providing consent in the
final regulation.
7. Posting Despite Lack of Consent to
Electronic Delivery
Two commentators recommended
that the regulations expressly permit
furnishers to post all their statements to
a Web site and to send each recipient
his/her statement as an e-mail
attachment, even if the recipient has not
consented to electronic furnishing. The
furnisher could then provide paper
copies of the statements to recipients
who did not consent to electronic
furnishing. The commentators cited the
ease and economy of total versus
piecemeal posting.
The final regulations do not expressly
adopt the recommendation. However,
the regulations do not prohibit a
furnisher from storing all statements on
the Web server. Whether the furnisher
stores all statements or only those
statements for which consents are
received is a business decision for the
furnisher.
8. Contact Information of Person To
Whom a Withdrawal of Consent Should
Be Furnished
Three commentators noted that
providing the contact information for a
specific individual to whom withdrawal
of consent should be furnished may
cause confusion, because in many large
companies no single individual can
accommodate communications from a
potentially large number of recipients.
The commentators suggest that the
regulations provide that the recipients
may be provided the name, address,
phone number and e-mail address of an
individual or department, such as a
Human Resources Department, or
Payroll Department on the disclosure
statement. The regulations have been
amended to provide that either the
name of an individual or of a
department may be included in the
disclosure statement.
9. Definition of High Importance
Two commentators requested
clarification of the term high importance
in proposed §§ 1.6050S–1(a)(6)(i),
1.6050S–2(a)(6)(i), and 31.6051–
1(j)(6)(i). The commentators noted that
if this term refers to assigning a high
priority to the e-mail, as some e-mail

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software allows, there must be
allowances made for e-mail software
that does not have that capability. The
commentators suggest that in a case
where the sending or receiving software
does not offer or recognize levels of
priority, the regulations should allow
the use of a subject line stating ‘‘HIGH
IMPORTANCE—IMPORTANT TAX
RETURN DOCUMENT AVAILABLE.’’
The final regulations do not require
furnishers to assign high priority to email because some software does not
have this capability and the IRS and
Treasury do not intend to favor any
particular technology. Accordingly,
furnishers will not be required to use email software with the capability of
assigning high priority.
10. Use of Other Subject Lines
One commentator expressed concern
that requiring use of the language
‘‘IMPORTANT TAX RETURN
DOCUMENT AVAILABLE’’ on the
subject line of e-mail notices could be
exploited to spread a computer virus
through e-mails with the same subject
line. The commentator suggests that
each organization be permitted to create
its own subject line containing the name
of the issuing organization.
The regulations have not been
amended to include this modification of
the subject line. It is important to use
standard language to identify the
statement. Moreover, to prevent the
spread of computer viruses, the
recipient need only monitor who sent
the e-mail.
11. Undeliverable Notice
One commentator suggested that
when an electronic notice is returned
and the furnisher notifies the recipient,
the recipient may give the furnisher a
corrected electronic address to receive
the statement electronically. The
consent rule in the final regulations
allows the furnisher to obtain a new
address from the recipient and resend
the notice.
12. Allowable Period to Deliver Paper
Statement
Two commentators recommended
that if the recipient states that he or she
no longer has an e-mail address or
Internet access, and desires a paper
statement, the furnisher should construe
the recipient’s statement as a
withdrawal of consent. Furnishers will
then be allowed a certain number of
days to furnish the paper statement to
the recipient. In addition, several
members of the information reporting
industry requested that a cut-off date be
provided for withdrawing consent.

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7569

The final regulations retain the rules
regarding withdrawal of consent, but
allow the furnisher to treat a request for
a paper statement as a withdrawal of
consent. Treasury and the IRS do not
think the regulations should impose a
cut-off date for withdrawing consent.
Furnishers may, however, provide that
a withdrawal of consent takes effect
either on the date it is received by the
furnisher or on a subsequent date,
thereby imposing their own cut-off date
for withdrawing consents.
The final regulations retain the rule
that a withdrawal of consent will not
affect a statement that has been
furnished electronically. Thus, if the
withdrawal takes effect after the
statement is furnished electronically,
the statement will be considered timely
if it was furnished electronically by the
applicable due date. The final
regulations also provide that if the
withdrawal of consent takes effect
before the statement is furnished
electronically a paper statement must be
furnished. In this case, a paper
statement furnished after the statement
due date will be considered timely if
furnished within 30 days after the date
the withdrawal of consent is received by
the furnisher. This extension of time
eliminates the need to address
reasonable cause for late filing under
section 6724. Therefore, the proposed
amendment to the regulations under
section 6724 is not adopted and
temporary regulation § 301.6724–1T is
removed.

computer hackers will have to access
the confidential information on the Web
site. One commentator noted that even
if a recipient intends to apply for two
extensions, it is highly likely that the
recipient will have accessed the Form
W–2 on the Web site by April 15 to
determine whether a payment was
necessary by that date. One
commentator suggested that furnishers
have the option to maintain statements
on the Web site until April 30, as long
as they provide replacements through
October 15 by paper or as attachments
to an e-mail.
The final regulations do not change
the access period. It is the responsibility
of the furnisher to maintain a secure
Web site. It is important to allow access
to the Web site during the entire filing
season (including the period of
extensions) to enable taxpayers to
import the information directly to their
returns if they choose to file
electronically.

13. Corrected Statements
Two commentators requested that the
furnisher be able to post both Forms W–
2c and replacement Forms W–2 on the
Web site. The commentators noted that
an employer may prefer to completely
replace an employee’s W–2, if it can be
done before W–2s are filed with the
Social Security Administration, thereby
avoiding the W–2c process. The
regulations have not been amended to
allow a replacement Form W–2 if a
Form W–2c is otherwise required. The
purpose of the regulations is to describe
the manner in which statements may be
furnished electronically. The
regulations are not intended to change
the established procedures for
correcting statements. Employers should
consult IRS forms and instructions for
the appropriate correction procedures.

The collection of information
contained in §§ 1.6041–2, 1.6050S–2,
1.6050S–4, and 31.6051–1 is required if
a person required to furnish a taxpayer
with a statement wishes to furnish the
statement electronically. This
information will be used to determine
that the recipient has consented to
receive the statement electronically. The
objectives of these final regulations are
to provide uniform, practicable, and
administrable rules for providing
information statements electronically.
The types of small entities to which the
regulations may apply are small eligible
educational institutions (such as
colleges and universities), small
corporations and partnerships, and
small employers.
There are no known Federal rules that
duplicate, overlap, or conflict with these
regulations. The regulations impose the
least economic burden on small entities
of all of the alternatives considered. The
collection of information is required
only from persons receiving the
statements electronically using a
method authorized by the final
regulations.

14. Access Period
Two commentators recommended
shortening the period of time during
which statements can be accessed by
changing the period’s end date from
October 15th to April 30th (or August
15) to reduce the amount of time

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Special Analyses
It has been determined that these final
regulations are 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.
Final Regulatory Flexibility Analysis

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Drafting Information
The principal author of these final
regulations is Michael E. Hara, of the
Office of Associate Chief Counsel
(Procedure and Administration),
Administrative Provisions and Judicial
Practice Division. 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
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.
Adoption of 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 removing the
entries for ‘‘Section 1.6041–2T, ‘‘Section
6050S–4T,’’ and ‘‘Section 6050S–2T’’
and adding entries in numerical order to
read in part as follows:

■

Authority: 26 U.S.C. 7805 * * *
Section 1.6041–2 also issued under 26
U.S.C. 6041(d). * * *
Section 1.6050S–2 also issued under 26
U.S.C. 6050S(g).
Section 1.6050S–4 also issued under 26
U.S.C. 6050S(g). * * *

Par. 2. Section 1.6041–2(a)(5) is added
to read as follows:

■

§ 1.6041–2 Return of information as to
payments to employees.

(a) * * *
(5) Statement for employees. An
employer required under this paragraph
(a) to file Form W–2 with respect to an
employee is also required under
sections 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.
*
*
*
*
*

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§ 1.6041–2T

[Removed]

Par. 3. Section 1.6041–2T is removed.
Par. 4. Section 1.6050S–2 is added to
read as follows:

■
■

§ 1.6050S–2 Information reporting for
payments and reimbursements or refunds
of qualified tuition and related expenses.

(a) Electronic furnishing of
statements—(1) In general. A person
required by section 6050S(d) to furnish
a written statement regarding payments
and reimbursements or refunds of
qualified tuition and related expenses
(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 (6) of this section is treated as
furnishing the required statement.
(2) Consent—(i) In general. The
recipient must have affirmatively
consented to receive the statement in an
electronic format. The consent may be
made electronically in any 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 paper
document if it is confirmed
electronically.
(ii) Withdrawal of consent. The
consent requirement of this paragraph
(a)(2) is not satisfied if the recipient
withdraws the consent and the
withdrawal takes effect before the
statement is furnished. The furnisher
may provide that a withdrawal of
consent takes effect either on the date it
is received by the furnisher or on a
subsequent date. The furnisher may also
provide that a request for a paper
statement will be treated as a
withdrawal of consent.
(iii) 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.

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(iv) Examples. The following
examples illustrate the rules of this
paragraph (a)(2):
Example 1. Furnisher F sends Recipient R
a letter stating that R may consent to receive
statements required by section 6050S(d)
electronically on a Web site instead of in a
paper format. The letter contains instructions
explaining how to consent to receive the
statements electronically by accessing the
Web site, downloading the consent
document, completing the consent document
and e-mailing the completed consent back to
F. The consent document posted on the Web
site uses the same electronic format that F
will use for the electronically furnished
statements. R 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.
Example 2. Furnisher F sends Recipient R
an e-mail stating that R may consent to
receive statements required by section
6050S(d) electronically 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.
Example 3. Furnisher F posts a notice on
its Web site stating that Recipient R may
receive statements required by section
6050S(d) electronically instead of in a paper
format. The Web site contains instructions on
how R may access a secure Web page and
consent to receive the statements
electronically. By accessing the secure Web
page and giving consent, 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

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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 and
whether a request for a paper statement
will be treated as a withdrawal of
consent.
(v) Withdrawal of consent. The
recipient must be informed that—
(A) The recipient may withdraw a
consent by writing (electronically or on
paper) to the person or department
whose name, mailing address, telephone
number, and e-mail address is provided
in the disclosure statement;
(B) The furnisher will confirm the
withdrawal and the date on which it
takes effect 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 date on
which the withdrawal of consent takes
effect.
(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. The furnisher must inform the
recipient of any change in the
furnisher’s contact information.
(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 Web site.
(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) Notice—(i) In general. If the
statement is furnished on a Web site, the
furnisher must notify the recipient that
the statement is posted on a Web site.
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 must be on the
subject line of the electronic mail.

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15:08 Feb 17, 2004

Jkt 203001

(ii) Undeliverable electronic address.
If an electronic notice described in
paragraph (a)(5)(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. If the
furnisher has corrected a recipient’s
statement that was furnished
electronically, the furnisher must
furnish the corrected statement to the
recipient electronically. If the
recipient’s statement was furnished
through a Web site posting and the
furnisher has corrected the statement,
the furnisher must notify the recipient
that it has posted the corrected
statement on the Web site within 30
days of such posting in the manner
described in paragraph (a)(5)(i) of this
section. The corrected statement or the
notice must be furnished by mail or in
person if—
(A) An electronic notice of the Web
site posting of an original statement was
returned as undeliverable; and
(B) The recipient has not provided a
new e-mail address.
(6) Access period. Statements
furnished on a Web site must be
retained on the Web site 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 Web site 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) Paper statements after withdrawal
of consent. If a recipient withdraws
consent to receive a statement
electronically and the withdrawal takes
effect before the statement is furnished
electronically, a paper statement must
be furnished. A paper statement
furnished after the statement due date
under this paragraph (b) will be
considered timely if furnished within 30
days after the date the withdrawal of
consent is received by the furnisher.
(c) Effective date. This section applies
to statements required to be furnished
after February 13, 2004. Paragraph (a)(6)
of this section also applies to statements
required to be furnished after December
31, 2004.

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1.6050S–4T
■

7571

[Removed]

Par. 5 Section 1.6050S–4T is removed.

Par. 6 Section 1.6050S–4 is added to
read as follows:

■

§ 1.6050S–4 Information reporting for
payments of interest on qualified education
loans.

(a) Electronic furnishing of
statements—(1) In general. A person
required by section 6050S(d) to furnish
a written statement regarding payments
of interest on qualified education loans
(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 (6) of this section is treated as
furnishing the required statement.
(2) Consent—(i) In general. The
recipient must have affirmatively
consented to receive the statement in an
electronic format. The consent may be
made electronically in any 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 paper
document if it is confirmed
electronically.
(ii) Withdrawal of consent. The
consent requirement of this paragraph
(a)(2) is not satisfied if the recipient
withdraws the consent and the
withdrawal takes effect before the
statement is furnished. The furnisher
may provide that a withdrawal of
consent takes effect either on the date it
is received by the furnisher or on a
subsequent date. The furnisher may also
provide that a request for a paper
statement will be treated as a
withdrawal of consent.
(iii) 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.

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Federal Register / Vol. 69, No. 32 / Wednesday, February 18, 2004 / Rules and Regulations

(iv) Examples. The following
examples illustrate the rules of this
paragraph (a)(2):
Example 1. Furnisher F sends Recipient R
a letter stating that R may consent to receive
statements required by section 6050S(d)
electronically on a Web site instead of in a
paper format. The letter contains instructions
explaining how to consent to receive the
statements electronically by accessing the
Web site, downloading the consent
document, completing the consent document
and e-mailing the completed consent back to
F. The consent document posted on the Web
site uses the same electronic format that F
will use for the electronically furnished
statements. R 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.
Example 2. Furnisher F sends Recipient R
an e-mail stating that R may consent to
receive statements required by section
6050S(d) electronically 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.
Example 3. Furnisher F posts a notice on
its Web site stating that Recipient R may
receive statements required by section
6050S(d) electronically instead of in a paper
format. The Web site contains instructions on
how R may access a secure Web page and
consent to receive the statements
electronically. By accessing the secure Web
page and giving consent, 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

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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 and
whether a request for a paper statement
will be treated as a withdrawal of
consent.
(v) Withdrawal of consent. The
recipient must be informed that—
(A) The recipient may withdraw a
consent by writing (electronically or on
paper) to the person or department
whose name, mailing address, telephone
number, and e-mail address is provided
in the disclosure statement;
(B) The furnisher will confirm the
withdrawal and the date on which it
takes effect 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 date on
which the withdrawal of consent takes
effect.
(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. The furnisher must inform the
recipient of any change in the
furnisher’s contact information.
(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 Web site.
(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) Notice—(i) In general. If the
statement is furnished on a Web site, the
furnisher must notify the recipient that
the statement is posted on a Web site.
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 must be on the
subject line of the electronic mail.

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(ii) Undeliverable electronic address.
If an electronic notice described in
paragraph (a)(5)(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. If the
furnisher has corrected a recipient’s
statement that was furnished
electronically, the furnisher must
furnish the corrected statement to the
recipient electronically. If the
recipient’s statement was furnished
though a Web site posting and the
furnisher has corrected the statement,
the furnisher must notify the recipient
that it has posted the corrected
statement on the Web site within 30
days of such posting in the manner
described in paragraph (a)(5)(i) of this
section. The corrected statement or the
notice must be furnished by mail or in
person if—
(A) An electronic notice of the Web
site posting of an original statement or
the corrected statement was returned as
undeliverable; and
(B) The recipient has not provided a
new e-mail address.
(6) Access period. Statements
furnished on a Web site must be
retained on the Web site 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 Web site 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
after February 13, 2004. Paragraph (a)(6)
of this section also applies to statements
required to be furnished after December
31, 2003.
§ 1.6050S–2T
■

[Removed]

Par. 7 Section 1.6050S–2T is removed.

PART 31—EMPLOYMENT TAXES AND
COLLECTION OF INCOME TAX AT
SOURCE
Par. 8. The authority citation for part
31 is amended by revising the entry for
‘‘31.6051–1(d’’) and removing the entry

■

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Federal Register / Vol. 69, No. 32 / Wednesday, February 18, 2004 / Rules and Regulations
for ‘‘Section 31.6051–1T’’ to read, in
part, as follows:
Authority: 26 U.S.C. 7805 * * *
Section 31.6051–1 also issued under 26
U.S.C. 6051. * * *

Par. 9. In § 31.6051–1, paragraph (j) is
added to read as follows:

■

§ 31.6051–1

Statements for employees.

*

*
*
*
*
(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 (6) 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. The consent may
be made electronically in any 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 paper
document if it is confirmed
electronically.
(ii) Withdrawal of consent. The
consent requirement of this paragraph
(j)(2) is not satisfied if the recipient
withdraws the consent and the
withdrawal takes effect before the
statement is furnished. The furnisher
may provide that a withdrawal of
consent takes effect either on the date it
is received by the furnisher or on a
subsequent date. The furnisher may also
provide that a request for a paper
statement will be treated as a
withdrawal of consent.
(iii) 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

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15:08 Feb 17, 2004

Jkt 203001

consent or confirmation of consent to
receive the Form W–2 electronically.
(iv) Examples. The following
examples illustrate the rules of this
paragraph (j)(2):
Example 1. Furnisher F sends Recipient R
a letter stating that R may consent to receive
Form W–2 electronically on a Web site
instead of in a paper format. The letter
contains instructions explaining how to
consent to receive Form W–2 electronically
by accessing the Web site, downloading the
consent document, completing the consent
document and e-mailing the completed
consent back to F. The consent document
posted on the Web site uses the same
electronic format that F will use for the
electronically furnished Form W–2. R 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 (j)(2)(i) of this section.
Example 2. Furnisher F sends Recipient R
an e-mail stating that R may consent to
receive Form W–2 electronically instead of in
a paper format. The e-mail contains an
attachment instructing R how to consent to
receive Form W–2 electronically. The e-mail
attachment uses the same electronic format
that F will use for the electronically
furnished Form 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 Form W–2 electronically in the
manner described in paragraph (j)(2)(i) of this
section.
Example 3. Furnisher F posts a notice on
its Web site stating that Recipient R may
receive Form W–2 electronically instead of in
a paper format. The Web site contains
instructions on how R may access a secure
Web page and consent to receive the
statements electronically. By accessing the
secure Web page and giving consent, R has
consented to receive Form 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 each
Form W–2 required to be furnished 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 first Form W–2 required to

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7573

be furnished 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 (j)(2)(i) of this section and
whether a request for a paper statement
will be treated as a withdrawal of
consent.
(v) Withdrawal of consent. The
recipient must be informed that—
(A) The recipient may withdraw a
consent by writing (electronically or on
paper) to the person or department
whose name, mailing address, telephone
number, and e-mail address is provided
in the disclosure statement;
(B) The furnisher will confirm the
withdrawal and the date on which it
takes effect 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 (j) before the date on
which the withdrawal of consent takes
effect.
(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. The furnisher must inform the
recipient of any change in the
furnisher’s contact information.
(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 Web site.
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) Notice—(i) In general. If the
statement is furnished on a Web site, the
furnisher must notify the recipient that
the statement is posted on a Web site.
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,

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Federal Register / Vol. 69, No. 32 / Wednesday, February 18, 2004 / Rules and Regulations

‘‘IMPORTANT TAX RETURN
DOCUMENT AVAILABLE.’’ If the
notice is provided by electronic mail,
the foregoing statement must be on the
subject line of the electronic mail.
(ii) Undeliverable electronic address.
If an electronic notice described in
paragraph (j)(5)(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 Form W–2. If the
furnisher has corrected a recipient’s
Form W–2 that was furnished
electronically, the furnisher must
furnish the corrected Form W–2 to the
recipient electronically. If the
recipient’s Form W–2 was furnished
through a Web site posting and the
furnisher has corrected the Form W–2,
the furnisher must notify the recipient
that it has posted the corrected Form
W–2 on the Web site within 30 days of
such posting in the manner described in
paragraph (j)(5)(i) of this section. The
corrected Form W–2 or the notice must
be furnished by mail or in person if—
(A) An electronic notice of the Web
site posting of an original Form W–2 or
the corrected Form W–2 was returned as
undeliverable; and
(B) The recipient has not provided a
new e-mail address.
(6) Access period. Forms W–2
furnished on a Web site must be
retained on the Web site 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 Web site 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.
(7) Paper statements after withdrawal
of consent. If a recipient withdraws
consent to receive a statement
electronically and the withdrawal takes
effect before the statement is furnished
electronically, a paper statement must
be furnished. A paper statement
furnished after the statement due date
under this paragraph (j)(7) will be
considered timely if furnished within 30
days after the date the withdrawal of
consent is received by the furnisher.
(8) Effective date. This paragraph (j)
applies to Forms W–2 required to be

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furnished after February 13, 2004.
Paragraph (j)(6) of this section also
applies to Forms W–2 required to be
furnished after December 31, 2003.
§ 31.6051–1T

[Removed]

Par. 10. Section 31.6051–1T is
removed.

■

Current
OMB control
No.

CFR part or section where
identified and described

*
*
*
*
*
1.6050S–4 ................................
1545–1729
*

*

*

*

*

PART 301—REGULATIONS ON
PROCEDURE AND ADMINISTRATION

Mark E. Matthews,
Deputy Commissioner for Services and
Enforcement.
■ Par. 11. The authority citation for part
301 continues to read, in part, as follows:
Approved: February 12, 2004.
Pamela F. Olson,
Authority: 26 U.S.C. 7805 * * *
Assistant Secretary of the Treasury.
§ 301.6724–1T [Removed]
[FR Doc. 04–3544 Filed 2–13–04; 10:16 am]

Par. 12. Section 301.6724–1T is
removed.

■

BILLING CODE 4830–01–P

PART 602—OMB CONTROL NUMBERS
UNDER THE PAPERWORK
REDUCTION ACT

POSTAL RATE COMMISSION

Par. 13. The authority citation for part
602 continues to read as follows:

[Docket No. RM2003–5; Order No. 1391]

■

39 CFR Part 3001

Negotiated Service Agreements

Authority: 26 U.S.C. 7805.

Par. 14. In § 602.101, paragraph (b) is
amended by:
■ 1. Removing the following entries from
the table:
■

Postal Rate Commission.
Final rule.

AGENCY:
ACTION:

SUMMARY: This document promulgates a
final rule on procedural requirements
for baseline and functionally equivalent
Negotiated Service Agreements. The
final rule incorporates relatively minor
■ 2. Revising the entry for ‘‘31.6051–1’’
changes to the text of the rule as
in the table to read as follows:
proposed, except in the area of the
requisite Postal Service financial
§ 602.101 OMB Control numbers.
analysis. Adoption of this rule will
*
*
*
*
*
provide the Postal Service and others
(b) * * *
with guidance on the procedures that
will govern future cases involving
Current
CFR part or section where
Negotiated Service Agreements.
OMB
control
identified and described
No.
DATES: Effective March 19, 2004.
FOR FURTHER INFORMATION CONTACT:
Stephen
L. Sharfman, General Counsel,
*
*
*
*
*
31.6051–1 .................................
1545–0008 (202) 789–6818.
1545–0182 SUPPLEMENTARY INFORMATION:

1.6041–2T .................................
1.6050S–2T ..............................
1.6050S–4T ..............................
31.6051–1T ...............................

1545–1729
1545–1729
1545–1729
1545–1729

1545–0458
1545–1729

*

*
*
*
*
■ 3. Adding the following entries in
numerical order to the table to read as
follows:
§ 602.101

*

OMB Control numbers.

*
*
(b) * * *

*

*

CFR part or section where
identified and described

Current
OMB control
No.

*
*
*
*
*
1.6041–2 ...................................
1545–1729
*
*
*
*
*
1.6050S–2 ................................
1545–1729

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Regulatory History
68 FR 52552 (September 4, 2003)
Background
On August 27, 2003, the Commission
issued PRC Order No. 1383 to establish
a rulemaking docket for the purpose of
considering new procedural rules
applicable to Postal Service requests for
baseline and functionally equivalent
Negotiated Service Agreements.1 The
order included a proposal for the text of
the procedural rules, and established a
period, which concluded on September
1 Notice and Order Establishing Rulemaking
Docket for Consideration of Proposed Rules
Applicable to Baseline and Functionally Equivalent
Negotiated Service Agreements, PRC Order No.
1383, August 27, 2003 (Order).

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