[ Home ] [ Services ] [ FAQ ] [ Site Map ] [ Contact Us ]

IRS Audits

Chapter 6. Payer Compliance

Section 2. Information Returns and Information Reporting (Cont. 3)

4.6.2  Information Returns and Information Reporting (Cont. 3)

4.6.2.11 
Form 1099-INT, Interest Income/Form 1099-OID, Original Issue Discount

4.6.2.11.6  (08-01-2002)
Who Must File Form 1099–OID

  1. The following must file Form 1099-OID if the original issue discount (OID) includible in gross income is at least $10.

    • Issuers with any bond outstanding or other evidence of indebtedness in registered or bearer form issued with OID

    • Issuers of certificates of deposit (CD) made after 1970 if the CD has OID and a term of one year

    • Financial institutions having other deposit arrangements with OID and a term of more than one year

    • Brokers or other middlemen holding OID obligations as nominee for actual owners

    • Real Estate Mortgage Investment Conduits (REMICs), holders of ownership interests in financial asset securitization investment trusts, or issuers of collateralized debt obligations

    • Any of the above entities that have withheld and paid any foreign tax on OID or withheld any Federal income tax under IRC section 3406 even if the OID is less than $10

     

4.6.2.11.7  (08-01-2002)
Exceptions

  1. Payers are not required to file Forms 1099-OID for payments made to the following payees:

    • Corporations

    • Tax-exempt organizations

    • Individual retirement accounts

    • Medical savings accounts (MSAs) or Medicare + Choice MSAs

    • US agencies

    • States

    • The District of Columbia

    • US possessions

    • Registered securities or commodities dealers

     

4.6.2.11.8  (08-01-2002)
Reporting Requirements

  1. Payers required to file Form 1099-OID must include:

    1. The payer's name, address, TIN, and telephone number (on recipient's copy),

    2. The payee's name, address, and TIN, and

    3. The individual box information.

     

4.6.2.11.9  (08-01-2002)
References

  1. IRC sections 6041 and 6049(a).

  2. Regulations 1.6049-4,1.6049-5, and 1.6049-7.

  3. Rev. Ruls. 75-20 and 75-21.

  4. Instructions for Forms 1098, 1099, 5498, and W-2G.

  5. IRM 4.6 Exhibit 4.6.2–14 and 4.6.2–15.

4.6.2.12  (08-01-2002)
Form 1099-LTC, Long-Term Care and Accelerated Death Benefits

  1. This part of Section 2 explains the filing requirements for Form 1099-LTC, Long-Term Care and Accelerated Death Benefits.

4.6.2.12.1  (08-01-2002)
Law

  1. The Health Insurance Portability and Accountability Act of 1996 added IRC section 6050Q, which requires any person paying long-term care or accelerated death benefits after December 31, 1996, to report the aggregate benefits paid during the calendar year.

4.6.2.12.2  (08-01-2002)
Definitions

  1. Long-term care benefits mean--

    1. Any payments made under a product that is advertised, marketed, or offered as long-term care insurance (whether qualified or not) and

    2. Accelerated death benefits (excludable in whole or in part from gross income under IRC section 101(g)) paid under a life insurance contract or paid by a viatical settlement provider.

     

  2. An accelerated death benefit is any amount paid under a life insurance contract for an insured individual who is terminally or chronically ill.

  3. A viatical settlement provider is any person who is regularly engaged in the business of purchasing or taking assignment of insurance contracts on the lives of terminally or chronically ill individuals and is licensed in the state where the insured lives.

    1. If licensing is not required in the state, the provider must meet the requirements of sections 8 and 9 of the Viatical Settlements Model Act of the National Association of Insurance Commissioners (NAIC) and the provider must also meet the requirements of the Model Regulations of the NAIC for evaluating the reasonableness of amounts paid in viatical settlement transactions with terminally ill individuals.

     

  4. A chronically ill individual is someone who has been certified (at least annually) by a licensed health care practitioner as--

    1. Being unable to perform, without substantial assistance from another individual, at least two daily living activities for at least 90 days due to a loss of functional capacity; or

    2. Having a level of disability similar to the level of disability described in section 18.3(4) of this IRM; or

    3. Requiring substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment.

     

  5. A terminally ill individual is someone who has been certified by a physician as having an illness or physical condition that can reasonably be expected to result in death in 24 months or less.

  6. The policyholder is the individual who owns the contract, including the owner of a contract sold or assigned to a viatical settlement provider.

  7. The insured is the chronically or terminally ill individual on whose behalf long-term care benefits are paid.

4.6.2.12.3  (08-01-2002)
Who