Understanding IRS Notice 1027: Form W-4 Media Label Instructions Guide

1. Introduction – What is Notice 1027?

IRS Notice 1027, officially titled “How to Prepare Media Label for Form W-4,” is an official administrative guidance document issued by the Internal Revenue Service (IRS), an agency of the U.S. Department of the Treasury.

It provides detailed instructions for employers, payroll service bureaus, and third-party transmitters on how to create and affix standardized external identification labels when submitting employee Form W-4 (Employee’s Withholding Certificate) data to the IRS on electronic or magnetic media.

2. Purpose of the Notice – Why Does Notice 1027 Exist?

Under Internal Revenue Code (IRC) Section 3402 and Treasury Regulation Section 31.3402(f)(2)-1(g), employers are required to withhold federal income tax from employee paychecks and submit certain employee Form W-4 certificates to the IRS for review under statutory compliance rules.

When employers or payroll service providers submit large volumes of employee Form W-4 records electronically or on physical storage media (such as tape cartridges or diskettes), the IRS needs an immediate, foolproof way to identify the contents of the shipment before processing.

Notice 1027 solves this logistical problem by establishing standardized external media labeling rules. Replacing older pre-printed IRS form labels (such as obsolete Form 6469), Notice 1027 allows employers to use self-printed pressure-sensitive adhesive labels, ensuring that IRS enterprise computing centers can quickly identify the transmitter, Tax Year, Tax Quarter, and employee record counts without data mixing or processing delays.

3. Who Needs to Follow / File This Notice

Notice 1027 is designed for payroll administrators, employers, and technical software transmitters. You must follow Notice 1027 guidelines if your organization meets any of these criteria:

• Magnetic Media W-4 Filers: Employers or payroll transmitters submitting employee Form W-4 withholding allowance certificates to the IRS on magnetic tape, diskette, or electronic media cartridges.
• Payroll Service Bureaus: Third-party payroll agencies or disbursing agents that transmit consolidated Form W-4 data on behalf of multiple client businesses.
• Form 6466 Transmitters: Transmitters filing Form 6466 (“Transmittal of Forms W-4 Reported Magnetically/Electronically”) alongside physical storage media shipped to the IRS.

4. Who Is Exempt / Not Required to File

Most routine small business employers do not need to prepare media labels under Notice 1027. You are exempt or not required to use Notice 1027 if any of the following apply:

• Paper Form W-4 Filers: Employers who submit physical paper copies of employee Form W-4 forms directly to the IRS.
• Routine Internal Payroll Processing: Employers who collect Form W-4 forms from workers for internal payroll setup without triggering IRS mandatory reporting submissions.
• Annual Form W-2 / W-3 Filers: Businesses submitting annual year-end Form W-2 wage statements to the Social Security Administration (SSA) rather than Form W-4 withholding certificates to the IRS.
• Individual Employees: Workers filling out their personal Form W-4 for their employer.

5. When to File

Notice 1027 is an event-triggered instruction guide used whenever an employer or transmitter prepares physical storage media containing Form W-4 records for shipment to the IRS.

The media label prepared according to Notice 1027 must be affixed to the physical storage media container before shipping. The media package must be shipped on the exact same day that transmittal Form 6466 (and continuation Form 6467, if applicable) is mailed or faxed to the designated IRS enterprise computing center.

6. Where and How to File

Notice 1027 provides instructions for preparing a pressure-sensitive, self-adhesive label that is affixed directly to the external surface of the physical storage media drive, cassette, or tape container.

The labeled media package must be shipped in a protective container directly to the specific IRS Enterprise Computing Center address as per instructions for Form W-4 magnetic reporting. Furthermore, Notice 1027 requires that the outside shipping box must be prominently labeled: “IRB Special Projects” to ensure rapid routing upon arrival at the IRS receiving facility.

7. Step-by-Step Instructions to Fill/Prepare the Media Label

Notice 1027 outlines specific required text fields that must be clearly printed or typed onto the pressure-sensitive adhesive label. The table below details the mandatory fields required on the label format.

Label Field	Field Title	Instruction / Description
Field 1	Transmitter / Employer Name	Enter the full official legal business name of the employer or service bureau transmitting the media.
Field 2	Transmitter Control Code (TCC)	Enter the unique 5-character alphanumeric TCC assigned to the transmitter by the IRS.
Field 3	Type of Media	Specify the exact storage format (e.g., electronic file, tape cartridge, diskette).
Field 4	Tax Year	Indicate the current four-digit tax year for which Form W-4 data is being reported.
Field 5	Tax Quarter	Indicate the specific calendar quarter (e.g., Q1, Q2, Q3, Q4) covered by the transmittal.
Field 6	Number of Employees	Report the exact total headcount of employee Form W-4 records stored on the media.
Field 7	Media Sequence	State the sequence number and total volume count (e.g., Media 1 of 3, 2 of 3, 3 of 3).

Detailed Preparation Steps

1. Obtain Pressure-Sensitive Label Stock: Select a standard self-adhesive paper label that fits securely onto the physical media casing or tape protective box without covering drive mechanisms.
2. Print Transmitter Identifying Data: Clearly type or print the transmitter’s legal business name and the 5-character IRS-assigned Transmitter Control Code (TCC).
3. Record Tax Period & Media Type: Specify the media format, four-digit Tax Year, and specific Tax Quarter corresponding to the Form W-4 records on the drive.
4. Verify Employee Headcount: Calculate the exact number of employee Form W-4 records contained in the file and record this number on the label. Verify that this total matches Form 6466 Line totals exactly.
5. Affix Label & Mark Shipping Box: Firmly affix the label to the external media casing. Place the media in a protective shipping box and write “IRB Special Projects” on the outside mailing container before sending to the designated IRS address.

8. Required Documents/Information Needed Before Preparing

Before preparing a Notice 1027 media label, gather the following administrative and technical files:

• Transmitter Control Code (TCC): Official 5-character alphanumeric TCC issued by the IRS under Form 4419 approval.
• Transmitter EIN & Legal Name: Employer Identification Number and legal business registration name.
• Form 6466 Transmittal: Signed copy of Form 6466 (Transmittal of Forms W-4 Reported Magnetically/Electronically).
• Employee Data Log: File summary verifying the total number of employee Form W-4 records generated in the electronic data file.
• Adhesive Label Stock & Outer Mailing Container: Pressure-sensitive blank labels and shipping boxes.

9. Common Mistakes to Avoid

Errors on external media labels can lead to immediate shipment rejections and lost data files. Watch out for these frequent mistakes:

• Omitting the Transmitter Control Code (TCC): Failing to print the assigned 5-character TCC on the label, which prevents IRS systems from assigning the media to your account.
• Mismatched Employee Headcounts: Printing a different employee count on the media label than the total reported on transmittal Form 6466.
• Submitting Duplicate Paper and Media Records: Submitting employee Form W-4 data on magnetic media while mailing paper copies of the same forms, causing double processing errors.
• Forgetting Outer Container Markings: Omitting the label “IRB Special Projects” on the outside shipping box, causing mailroom processing delays at the IRS facility.
• Covering Media Drive Spindles or Optical Sensors: Placing large adhesive labels over mechanical drive spindles or tape alignment holes, which damages reading equipment.

10. Penalties for Non-Filing or Errors

Failing to prepare proper media labels or submitting damaged, unreadable Form W-4 media carries legal and financial consequences:

• Immediate Unprocessed Return of Media: Unlabeled or improperly labeled media will be rejected by the IRS and returned unprocessed to the transmitter at their expense.
• Information Reporting Penalties: If media rejections cause an employer to miss statutory Form W-4 filing deadlines under IRC Section 3402, the IRS can assess information return penalties under IRC Section 6721 (ranging from $50 to over $290 per unfiled record).
• Mandatory Lock-In Letter Adjustments: Unverified employee W-4 withholding claims can lead the IRS to issue formal “lock-in letters,” forcing employers to disregard employee W-4 claims and withhold tax at maximum statutory rates.

11. Related Forms or Schedules

Payroll administrators managing Notice 1027 media labels frequently interact with these related federal tax forms:

• Form W-4: Employee’s Withholding Certificate.
• Form 6466: Transmittal of Forms W-4 Reported Magnetically/Electronically.
• Form 6467: Transmittal of Forms W-4 Reported Magnetically/Electronically (Continuation).
• Form 4419: Application for Filing Information Returns Electronically (FIRE).
• Notice 1036: Early Release Copies of Percentage Method Tables for Income Tax Withholding.

12. Frequently Asked Questions

1. What is the primary purpose of IRS Notice 1027?

Notice 1027 provides standardized formatting rules for employers and payroll transmitters to prepare external identification labels for electronic or magnetic media containing Form W-4 data shipped to the IRS.

2. Do I need a pre-printed official form from the IRS for the media label?

No. Notice 1027 allows transmitters to use any standard self-prepared pressure-sensitive adhesive label, provided it contains all seven required text fields.

3. What is a Transmitter Control Code (TCC)?

A TCC is a unique 5-character alphanumeric code assigned by the IRS to authorized transmitters to identify who is submitting electronic or magnetic information returns.

4. Does Notice 1027 apply to standard paper Form W-4 filings?

No. Notice 1027 applies strictly to electronic or magnetic storage media submissions (tape cartridges or diskettes) accompanied by Form 6466.

5. What must be written on the outside shipping box?

The outside of the shipping container must be clearly labeled “IRB Special Projects” to ensure rapid internal routing at the IRS Enterprise Computing Center.

6. Are IRS media files returned to the transmitter after processing?

No. The IRS does not return magnetic tape cartridges or electronic media to transmitters after processing is complete.

13. Conclusion – Key Takeaways

IRS Notice 1027 is an essential technical guidance document for high-volume employers, payroll service bureaus, and software transmitters submitting employee Form W-4 data to the IRS on magnetic or electronic media. By defining clear requirements for external self-adhesive labels—including legal business names, Transmitter Control Codes, tax quarter dates, and employee record counts—Notice 1027 guarantees efficient IRS data intake. To avoid media rejection and late-filing information penalties, verify that all seven required label fields are printed clearly, ensure employee totals match Form 6466 transmittal lines, mark shipping boxes “IRB Special Projects,” and mail media packages promptly to the designated IRS address.