Tuition Payments Statement

Instructions for Certain
Information Returns
(Forms 1096, 1097, 1098, 1099, 3921, 3922,
5498, and W-2G)
Volume 2 of 2

Instruction 1099-General (Rev. 2019) Catalog Number 50251Z
Department of the Treasury Internal Revenue Service www.irs.gov

Visit the Accessibility
Page on IRS.gov

82

The account number may be a checking
account number, savings account number,
brokerage account number, serial number,
loan number, policy number, or any other
number you assign to the payee that is
unique and will distinguish the specific
account. This number must not appear
anywhere else on the form, and this box may
not be used for any other item unless the
separate instructions indicate otherwise.
Using unique account numbers ensures that
corrected information returns will be
processed accurately.
If you are using window envelopes to mail
statements to recipients and using reduced
rate mail, be sure the account number does
not appear in the window. The U.S. Postal
Service may not accept these for reduced rate
mail.

83

M. Statements to Recipients
(Beneficiaries, Borrowers,
Debtors, Donors, Employees,
Insureds, Participants,
Payers, Policyholders,
Shareholders, Students,
Transferors, or Winners on
Certain Forms)
If you are required to file Forms 1097, 1098,
1099, 3921, 3922, 5498, or W-2G, you also
must furnish statements to recipients
containing the information furnished to the
IRS and, in some cases, additional
information. Be sure that the statements you
provide to recipients are clear and legible.
Substitute statements. If you are not using
the official IRS form to furnish statements to
recipients, see Pub. 1179 for specific rules
about providing “substitute” statements to
recipients. Generally, a substitute is any
statement other than Copy B of the official
form. You may develop them yourself or buy
84

them from a private printer. However, the
substitutes must comply with the format and
content requirements specified in Pub. 1179
that is available on IRS.gov.
Telephone number. You are required to
include the telephone number of a person to
contact on the following statements to
recipients: W-2G, 1097-BTC, 1098, 1098-C,
1098-E, 1098-Q, 1098-T, 1099-A, 1099-B,
1099-C, 1099-CAP, 1099-DIV, 1099-G
(excluding state and local income tax
refunds), 1099-INT, 1099-K, 1099-LS, 1099LTC, 1099-MISC (excluding fishing boat
proceeds), 1099-OID, 1099-PATR, 1099-Q,
1099-S, and 1099-SB. You may include the
telephone number in any conspicuous place
on the statements. This number must provide
direct access to an individual who can answer
questions about the statement. Although not
required, if you report on other Forms 1099
and 5498, or on Forms 3921 and 3922, you
are encouraged to furnish telephone
numbers.
Rules for furnishing statements. Different
rules apply to furnishing statements to
85

recipients depending on the type of payment
(or other information) you are reporting and
the form you are filing.
If you are reporting a payment that
includes noncash property, show the
FMV of the property at the time of
payment.
Report the type of payment information as
described next for: (a) Dividend, interest, and
royalty payments; (b) Real estate
transactions; and (c) Other information.
Dividend, interest, and royalty payments.
For payments of dividends under section 6042
(reported on Form 1099-DIV), patronage
dividends under section 6044 (reported on
Form 1099-PATR), interest (including OID and
tax-exempt interest) under section 6049
(reported on Form 1099-INT or 1099-OID), or
royalties under section 6050N (reported on
Form 1099-MISC or 1099-S), you are
required to furnish an official IRS Form 1099
or an acceptable substitute Form 1099 to a
recipient either in person, by First-Class Mail
to the recipient's last known address, or
electronically (see Electronic recipient
86

statements, later). Statements may be sent
by intraoffice mail if you use intraoffice mail
to send account information and other
correspondence to the recipient.
Statement mailing requirements for
Forms 1099-DIV, 1099-INT, 1099-OID,
and 1099-PATR, and forms reporting
royalties only. The following statement
mailing requirements apply only to Forms
1099-DIV (except for section 404(k)
dividends), 1099-INT (except for interest
reportable in the course of your trade or
business under section 6041), 1099-OID,
1099-PATR, and timber royalties reported
under section 6050N (on Form 1099-MISC or
1099-S). The mailing must contain the official
IRS Form 1099 or an acceptable substitute
and also may contain the following
enclosures: (a) Form W-2, applicable Form
W-8, Form W-9, or other Forms W-2G, 1097,
1098, 1099, 3921, 3922, and 5498
statements; (b) a check from the account
being reported; (c) a letter explaining why no
check is enclosed; (d) a statement of the
person's account shown on Forms 1097,
1098, 1099, 3921, 3922, or 5498; and (e) a
87

letter explaining the tax consequences of the
information shown on the recipient
statement.
A statement of the person's account (yearend account summary) that you are permitted
to enclose in a statement mailing may include
information similar to the following: (a) the
part of a mutual fund distribution that is
interest on U.S. Treasury obligations; (b)
accrued interest expense on the purchase of a
debt obligation; and (c) the cost or other
basis of securities and the gain/loss on the
sale of securities.
No additional enclosures, such as advertising,
promotional material, or a quarterly or annual
report, are permitted. Even a sentence or two
on the year-end statement describing new
services offered by the payer is not
permitted. Logos are permitted on the
envelope and on any nontax enclosures. See
Pub. 1179, section 1.3.2.
A recipient statement may be perforated to a
check or to a statement of the recipient's
specific account. The check or account
statement to which the recipient statement is
88

perforated must contain, in bold and
conspicuous type, the legend “Important Tax
Return Document Attached.”
The legend “Important Tax Return Document
Enclosed” must appear in a bold and
conspicuous manner on the outside of the
envelope and on each letter explaining why no
check is enclosed, or on each check or
account statement that is not perforated to
the recipient statement. The legend is not
required on any tax form, tax statement, or
permitted letter of tax consequences included
in a statement mailing. Further, you need not
pluralize the word “document” in the legend
simply because more than one recipient
statement is enclosed.
If you provide Forms 1097, 1098,
1099, 3921, 3922, 5498, or W-2G
recipient statements in a “separate
mailing” that contains only these statements,
Forms W-8 and W-9, and a letter explaining
the tax consequences of the information
shown on a recipient statement included in
the envelope, you are not required to include
89

the legend “Important Tax Return Document
Enclosed” on the envelope.
Substitute forms. You may furnish to the
recipient Copy B of the official IRS form, or
you may use substitute Forms 1099-DIV,
1099-INT, 1099-OID, or 1099-PATR if they
contain the same language as the official IRS
forms and they comply with the rules in Pub.
1179 relating to substitute Forms 1099.
Applicable box titles and numbers must be
clearly identified, using the same wording and
numbering as the official IRS form. For
information on substitute Forms 1099-MISC,
see Other information, later. For Forms 1099S, see Real estate transactions, later.
All substitute statements to recipients
must contain the tax year, form
number, and form name prominently
displayed together in one area of the
statement. For example, they could be shown
in the upper right part of the statement.
If you are using substitutes, the IRS
encourages you to use boxes so that the
substitute has the appearance of a form. The
substitute form must contain the applicable
90

instructions as on the front and back of Copy
B (in the case of Form 1099-R, Copies B, C,
and 2) of the official IRS form. See Pub. 1179
for additional requirements and certain
“composite” statements that are permitted.
Real estate transactions. You must furnish
a statement to the transferor containing the
same information reported to the IRS on
Form 1099-S. You may use Copy B of the
official IRS Form 1099-S or a substitute form
that complies with Pub. 1179 and Regulations
section 1.6045-4(m). You may use a
Settlement Statement (under the Real Estate
Settlement Procedures Act (RESPA)) as the
written statement if it is conformed by
including on the statement the legend shown
on Form 1099-S and by designating which
information is reported to the IRS on Form
1099-S. You may furnish the statement to the
transferor in person, by mail, or electronically.
Furnish the statement at or after closing but
by February 15 of the following year.
The statement mailing requirements
explained earlier do not apply to statements
to transferors for proceeds from real estate
91

transactions reported on Form 1099-S.
However, the statement mailing requirements
do apply to statements to transferors for
timber royalties reportable under section
6050N on Form 1099-S.
Other information. Statements to recipients
for Forms 1097-BTC, 1098, 1098-C, 1098-E,
1098-F, 1098-Q, 1098-T, 1099-A, 1099-B,
1099-C, 1099-CAP, 1099-G, 1099-H, 1099-K,
1099-LS, 1099-LTC, 1099-MISC, 1099-Q,
1099-QA, 1099-R, 1099-SA, 1099-SB, 3921,
3922, 5498, 5498-ESA, 5498-QA, 5498-SA,
W-2G, 1099-DIV (only for section 404(k)
dividends reportable under section 6047),
1099-INT (only for interest reportable in the
course of your trade or business under
section 6041), or 1099-S (only for royalties)
need not be, but can be, a copy of the official
paper form filed with the IRS. If you do not
use a copy of the paper form, the form
number and title of your substitute must be
the same as the official IRS form. All
information required to be reported must be
numbered and titled on your substitute in
substantially the same manner as on the
official IRS form. However, if you are
92

reporting a payment as “Other income” in box
3 of Form 1099-MISC, you may substitute
appropriate explanatory language for the box
title. For example, for payments of accrued
wages to a beneficiary of a deceased
employee required to be reported on Form
1099-MISC, you might change the title of box
3 to “Beneficiary payments” or something
similar.
Appropriate instructions to the recipient,
similar to those on the official IRS form, must
be provided to aid in the proper reporting of
the items on the recipient's income tax return.
For payments reported on Form 1099-B,
rather than furnish appropriate instructions
with each Form 1099-B statement, you may
furnish to the recipient one set of instructions
for all statements required to be furnished to
a recipient in a calendar year.
Except for royalties reported on Form 1099MISC or 1099-S, the statement mailing
requirements explained earlier do not apply to
statements to recipients for information
reported on the forms listed under Other
information, earlier. You may combine the
93

statements with other reports or financial or
commercial notices or expand them to include
other information of interest to the recipient.
Be sure that all copies of the forms are
legible. See Pub. 1179 for certain “composite”
statements that are permitted.
When to furnish forms or statements.
Generally, you must furnish Forms 1098,
1099, 3921, 3922, and W-2G information by
January 31, 2020. Forms 1099-B, 1099-S,
and 1099-MISC (only if you are reporting
payments in box 8 or 14) must be furnished
by February 18, 2020.
Also, this applies to statements furnished as
part of a consolidated reporting statement.
See TD 9504, 2010-47 I.R.B. 670, available
at IRS.gov/irb/2010-47_IRB/ ar08.html.
However, you may issue them earlier in some
situations, as provided by the regulations. For
example, you may furnish Form 1099-INT to
the recipient redeeming U.S. Savings Bonds
at the time of redemption. Brokers and barter
exchanges may furnish Form 1099-B anytime
but not later than February 18, 2020.
94

Furnish Form 1097-BTC to the recipient for
each month in which a tax credit amount is
allowable to the recipient on or before the
15th day of the 2nd calendar month after the
close of the calendar month in which the
credit is allowed. For more information, see
the Instructions for Form 1097-BTC.
Donee organizations required to issue Form
1098-C must furnish the acknowledgment to
a donor within 30 days of the sale of the
vehicle (if it is sold without material
improvements or significant intervening use)
or within 30 days of the contribution.
Trustees or issuers of traditional IRAs must
furnish Form 5498 to participants with a
statement of the value of the participant's
account, and RMD, if applicable, by January
31, 2020. The FMV of SEP IRAs also must be
furnished to the participant by January 31,
2020.
Traditional IRA, Roth IRA, SEP IRA, or SIMPLE
IRA contribution information must be
furnished to the participant by June 1, 2020.

95

Trustees of a SIMPLE IRA must furnish a
statement of the account balance and the
account activity by January 31, 2020.
Trustees and middlemen of a WHFIT must
furnish the required statement by March 16,
2020.
For real estate transactions, you may furnish
Form 1099-S to the transferor at closing or by
mail on or before February 18, 2020.
Filers of Forms 5498 or 5498-SA who furnish
a statement of FMV of the account to the
participant by January 31, 2020, with no
reportable contributions, including rollovers,
made in 2019, need not furnish another
statement by June 1, 2020, to the participant
to report zero contributions. If another
statement is not furnished to the participant,
the statement of the FMV of the account must
contain a legend designating which
information is being filed with the IRS.
Form 5498-ESA must be furnished to the
beneficiary by March 31, 2020.
Form 5498-QA must be furnished to the
beneficiary by March 16, 2020.
96

See the Guide to Information Returns, later,
for the date other information returns are due
to the recipient.
You will meet the requirement to furnish the
statement if it is properly addressed and
mailed, or, with respect to electronic recipient
statements, posted to a website, on or before
the due date. If the regular due date falls on
a Saturday, Sunday, or legal holiday, the due
date is the next business day. A business day
is any day that is not a Saturday, Sunday, or
legal holiday.
Electronic recipient statements. If you are
required to furnish a written statement (Copy
B or an acceptable substitute) to a recipient,
then you may furnish the statement
electronically instead of on paper. This
includes furnishing the statement to recipients
of Forms 1097-BTC, 1098, 1098-E, 1098-F,
1098-Q, 1098-T, 1099-A, 1099-B, 1099-C,
1099-CAP, 1099-DIV, 1099-G, 1099-H, 1099INT, 1099-K, 1099-LS, 1099-LTC, 1099MISC, 1099-OID, 1099-PATR, 1099-Q, 1099QA, 1099-R, 1099-S, 1099-SA, 1099-SB,
3921, 3922, 5498, 5498-ESA, 5498-QA, and
97

5498-SA. Also, it includes Form W-2G (except
for horse and dog racing, jai alai,
sweepstakes, wagering pools, and lotteries).
Until further guidance is issued to the
contrary, Form 1098-C may not be
furnished electronically.
If you meet the requirements that follow, you
are treated as furnishing the statement
timely.
Consent. The recipient must consent in the
affirmative and not have withdrawn the
consent before the statement is furnished.
The consent by the recipient must be made
electronically in a way that shows that he or
she can access the statement in the electronic
format in which it will be furnished.
You must notify the recipient of any hardware
or software changes prior to furnishing the
statement. A new consent to receive the
statement electronically is required after the
new hardware or software is put into service.
Prior to furnishing the statements
electronically, you must provide the recipient
98

a statement with the following statements
prominently displayed.
• If the recipient does not consent to
receive the statement electronically, a
paper copy will be provided.
• The scope and duration of the consent.
For example, whether the consent applies
to every year the statement is furnished or
only for the statement for a particular
year, as applicable, immediately following
the date of the consent.
• How to obtain a paper copy after giving
consent.
• How to withdraw the consent. The consent
may be withdrawn at any time by
furnishing the withdrawal in writing
(electronically or on paper) to the person
whose name appears on the statement.
Also confirmation of the withdrawal will be
in writing (electronically or on paper).
• Notice of termination. The notice must
state under what conditions the
statements will no longer be furnished to
the recipient.
99

• Procedures to update the recipient's
information.
• A description of the hardware and
software required to access, print, and
retain a statement, and a date the
statement will no longer be available on
the website.
Format, posting, and notification.
Additionally, you must do the following.
• Ensure the electronic format contains all
the required information and complies
with the applicable revenue procedure for
substitute statements to recipients in Pub.
1179.
• Post, on or before the due date, the
applicable statement on a website
accessible to the recipient through October
15 of that year.
• Inform the recipient, electronically or by
mail, of the posting and how to access and
print the statement.
For more information, see Regulations section
31.6051-1.
100

For electronic furnishing of:
• Forms 1098-E and 1098-T, see
Regulations section 1.6050S-2;
• Forms 1099-R, 1099-SA, 1099-Q, 5498,
5498-ESA, and 5498-SA, see Notice 200410, 2004-6 I.R.B. 433, available at
IRS.gov/irb/2004-06_IRB/ar12.html;
• Forms 3921 and 3922, see the form
instructions;
• Form 1099-K, see Regulations section
1.6050W-2(a)(2) (i); and
• Forms 1099-QA and 5498-QA, see
Proposed Regulations section 1.529A-7,
available at IRS.gov/irb/201527_IRB/ar09.html.
Extension of time to furnish statements
to recipients. You may request an extension
of time to furnish the statements to recipients
by sending a letter to:
Internal Revenue Service
Attn: Extension of Time Coordinator
240 Murall Drive, Mail Stop 4360
Kearneysville, WV 25430
101

The letter must include (a) payer name, (b)
payer TIN, (c) payer address, (d) type of
return, (e) a statement that extension
request is for providing statements to
recipients, (f) reason for delay, and (g) the
signature of the payer or authorized agent.
Your request must be postmarked by the date
on which the statements are due to the
recipients. If your request for an extension is
approved, generally you will be granted a
maximum of 30 extra days to furnish the
recipient statements.

N. Backup Withholding
Interest (including tax-exempt interest and
exempt-interest dividends), dividends, rents,
royalties, commissions, NEC, and certain
other payments (including broker and barter
exchange transactions, compensation paid to
an H-2A visa holder who did not furnish a
TIN, reportable gross proceeds paid to
attorneys, payment card and third-party
network transactions, and certain payments
made by fishing boat operators) may be
subject to backup withholding at a 24% rate.
102

To be subject to backup withholding, a
payment must be a reportable interest
(including tax-exempt interest and exemptinterest dividends) or dividend payment under
section 6049(a), 6042(a), or 6044 (if the
patronage dividend is paid in money or
qualified check), or an “other” reportable
payment under section 6041, 6041A(a),
6045, 6050A, 6050N, or 6050W. If the
payment is one of these reportable payments,
backup withholding will apply if:
1.

The payee fails to furnish his or her
TIN to you;

2.

For interest, dividend, and broker and
barter exchange accounts opened or
instruments acquired after 1983, the
payee fails to certify, under penalties
of perjury, that the TIN provided is
correct;

3.

The IRS notifies you to impose backup
withholding because the payee
furnished an incorrect TIN;

4.

For interest and dividend accounts or
instruments, you are notified that the
103

payee is subject to backup withholding
(under section 3406(a)(1)(C)); or
5.

For interest and dividend accounts
opened or instruments acquired after
1983, the payee fails to certify to you,
under penalties of perjury, that he or
she is not subject to backup
withholding. See 4. Payee failure to
certify that he or she is not subject to
backup withholding under When to apply
backup withholding, later.

6.

The payment is also a withholdable
payment under Chapter 4 (sections
1471-1474) that is made to a
recalcitrant account holder that is a
U.S. nonexempt recipient, and you are
a PFFI (including a Reporting Model 2
FFI) that elects to withhold under
section 3406 to satisfy your
withholding obligation under
Regulations section 1.1471-4(b)(1).
See Regulations section 1.14714(b)(3)(iii).
If you do not collect and pay over
backup withholding from affected
104

payees as required, you may become liable
for any uncollected amount.
Some payees are exempt from backup
withholding. For a list of exempt payees and
other information, see Form W-9 and the
separate Instructions for the Requester of
Form W-9.
Examples of payments to which backup
withholding does not apply include but are
not limited to the following.
• Wages.
• Distributions from a pension, annuity,
profit-sharing or stock bonus plan, any
IRA, an owner-employee plan, or other
deferred compensation plan.
• Distributions from a medical or health
savings account (HSA) and long-term care
benefits.
• Certain surrenders of life insurance
contracts.
• Distribution from qualified tuition
programs (QTPs) or Coverdell ESAs.
105

• Gambling winnings if regular gambling
winnings withholding is required under
section 3402(q). However, if regular
gambling winnings withholding is not
required under section 3402(q), backup
withholding applies if the payee fails to
furnish a TIN.
• Real estate transactions reportable under
section 6045(e).
• Canceled debts reportable under section
6050P.
• Fish purchases for cash reportable under
section 6050R.
• Reportable payments that are
withholdable payments made to a
recalcitrant account holder that is a U.S.
nonexempt recipient from which you have
withheld under Chapter 4. See
Regulations section 1.1474-6(f).
When to apply backup withholding.
Generally, the period for which the 24%
should be withheld is as follows.

106

1. Failure to furnish TIN in the manner
required. Withhold on payments made
until the TIN is furnished in the manner
required. Special backup withholding
rules may apply if the payee has applied
for a TIN. The payee may certify to this
on Form W-9 by noting “Applied For” in
the TIN block and by signing the form.
This form then becomes an “awaitingTIN” certificate, and the payee has 60
days to obtain a TIN and furnish it to
you. If you do not receive a TIN from the
payee within 60 days and you have not
already begun backup withholding,
begin backup withholding and continue
until the TIN is provided.
The 60-day exemption from backup
withholding applies only to interest and
dividend payments and certain
payments made with respect to readily
tradable instruments. Therefore, any other
payment, such as NEC, is subject to backup
withholding even if the payee has applied for
and is awaiting a TIN. For information about
whether backup withholding applies during
107

the 60-day period, see Regulations section
31.3406(g)-3.
2. Notice from the IRS that payee's
TIN is incorrect. You may choose to
withhold on any reportable payment
made to the account(s) subject to
backup withholding after receipt of an
incorrect TIN notice from the IRS, but
you must withhold on any reportable
payment made to the account more than
30 business days after you received the
notice. Stop withholding within 30 days
after you receive a certified Form W-9
(or other form that requires the payee to
certify the payee’s TIN).
The IRS will furnish a notice to you,
and you are required to promptly
furnish a “B” notice, or an acceptable
substitute, to the payee. For further
information, see Regulations section
31.3406(d)-5 and Pub. 1281, Backup
Withholding for Missing and Incorrect
Name/TIN(s).
If you receive two incorrect TIN notices within
3 years for the same account, follow the
108

procedures in Regulations section
31.3406(d)-5(g) and Pub. 1281.
3. Notice from the IRS that payee is
subject to backup withholding due
to notified payee underreporting.
You may choose to withhold on any
reportable payment made to the
account(s) subject to backup
withholding after receipt of the notice,
but you must withhold on any reportable
payment made to the account more than
30 business days after you receive the
notice. The IRS will notify you in writing
when to stop withholding, or the payee
may furnish you a written certification
from the IRS stating when the
withholding should stop. In most cases,
the stop date will be January 1 of the
year following the year of the stop
notice.
You must notify the payee when
withholding under this procedure
starts. For further information, see
Regulations section31.3406(c)-1(d).
109

4. Payee failure to certify that he or
she is not subject to backup
withholding. Withhold on reportable
interest and dividends until the
certification has been received.
For exceptions to these general timing rules,
see section 3406(e).
For special rules on backup withholding
on gambling winnings, see the
separate Instructions for Forms W-2G
and 5754.
Reporting backup withholding. Report
backup withholding on Form 945, Annual
Return of Withheld Federal Income Tax. Also,
report backup withholding and the amount of
the payment on Forms W-2G, 1099-B, 1099DIV, 1099-G, 1099-INT, 1099-K, 1099-MISC,
1099-OID, or 1099-PATR even if the amount
of the payment is less than the amount for
which an information return is normally
required.
Form 945. Report backup withholding,
voluntary withholding on certain government
payments, and withholding from gambling
110

winnings, pensions, annuities, IRAs, military
retirement, and Indian gaming profits on
Form 945. Generally, file Form 945 for 2019
by January 31, 2020. For more information,
including the deposit requirements for Form
945, see the separate Instructions for Form
945, and Pub. 15.
Do not report on Form 945 any income tax
withholding reported on the following forms.
• Form W-2, including withholding on
distributions to plan participants from
nonqualified plans that must be reported
on Form 941, and may be reported on
Form 943, Form 944, or Schedule H (Form
1040).
• Form 1042-S must be reported on Form
1042.
Pub. 515 has more information on
Form 1042 reporting, partnership
withholding on effectively connected
income, and dispositions of U.S. real property
interests by a foreign person.

111

Additional information. For more
information about backup withholding, see
Pub. 1281.

O. Penalties
The following penalties generally apply to the
person required to file information returns.
The penalties apply to paper filers as well as
to electronic filers.
For information on the penalty for
failure to file electronically, see
Penalty, earlier, in part F.
Failure To File Correct Information Returns by
the Due Date (Section 6721)
If you fail to file a correct information return
by the due date and you cannot show
reasonable cause, you may be subject to a
penalty. The penalty applies:
• If you fail to file timely,
• If you fail to include all information
required to be shown on a return, or
• If you include incorrect information on a
return.
112

The penalty also applies:
• If you file on paper when you were
required to file electronically,
• If you report an incorrect TIN,
• If you fail to report a TIN, or
• If you fail to file paper forms that are
machine readable.
The amount of the penalty is based on when
you file the correct information return. The
penalty is as follows.
• $50 per information return if you correctly
file within 30 days (by March 30 if the due
date is February 28); maximum penalty
$556,500 per year ($194,500 for small
businesses, defined below).
• $110 per information return if you
correctly file more than 30 days after the
due date but by August 1; maximum
penalty $1,669,500 per year ($556,500
for small businesses).
• $270 per information return if you file
after August 1 or you do not file required
113

information returns; maximum penalty
$3,339,000 per year ($1,113,000 for
small businesses).
If you do not file corrections and you
do not meet any of the exceptions to
the penalty described later, the
penalty is $270 per information return.
Small businesses—lower maximum
penalties. You are a small business if your
average annual gross receipts for the 3 most
recent tax years (or for the period you were in
existence, if shorter) ending before the
calendar year in which the information returns
were due are $5 million or less.
Exceptions to the penalty. The following
are exceptions to the failure-to-file penalty.
1. The penalty will not apply to any failure
that you can show was due to
reasonable cause and not to willful
neglect. In general, you must be able to
show that your failure was due to an
event beyond your control or due to
significant mitigating factors. You also
must be able to show that you acted in a
114

responsible manner and took steps to
avoid the failure.
2. An inconsequential error or omission is
not considered a failure to include
correct information. An inconsequential
error or omission does not prevent or
hinder the IRS from processing the
return, from correlating the information
required to be shown on the return with
the information shown on the payee's
tax return, or from otherwise putting the
return to its intended use. Errors and
omissions that are never inconsequential
are those related to (a) a TIN, (b) a
payee's surname, and (c) any money
amount except as provided, later, with
respect to the safe harbor for de minimis
dollar amount errors.
3. De minimis rule for corrections. Even
though you cannot show reasonable
cause, the penalty for failure to file
correct information returns will not apply
to a certain number of returns if you:
a.

Filed those information returns
timely,
115

b.

Either failed to include all the
information required on a return or
included incorrect information, and

c.

Filed corrections by August 1.

If you meet all the conditions in (a), (b), and
(c) above, the penalty for filing incorrect
returns will not apply to the greater of 10
information returns or / of 1% (0.005) of the
total number of information returns you are
required to file for the calendar year.
1

2

4. Safe harbor for de minimis dollar
amount errors. See Safe Harbor for De
Minimis Dollar Amount Errors on
Information Returns and Payee
Statements Under Sections 6721 and
6722, later.
Intentional disregard of filing
requirements. If any failure to file a correct
information return is due to intentional
disregard of the filing or correct information
requirements, the penalty is at least $550 per
information return with no maximum penalty.

116

Failure To Furnish Correct Payee
Statements (Section 6722)
If you fail to provide correct payee
statements and you cannot show reasonable
cause, you may be subject to a penalty. The
penalty applies if you fail to provide the
statement by the due date (January 31 for
most returns; see the Guide to Information
Returns, later), you fail to include all
information required to be shown on the
statement, or you include incorrect
information on the statement. “Payee
statement” has the same meaning as
“statement to recipient” as used in part M.
The amount of the penalty is based on when
you furnish the correct payee statement. It is
a separate penalty and is applied in the same
manner as the penalty for failure to file
correct information returns by the due date
(section 6721), described earlier.
Exception. An inconsequential error or
omission is not considered a failure to include
correct information. An inconsequential error
or omission cannot reasonably be expected to
117

prevent or hinder the payee from timely
receiving correct information and reporting it
on his or her income tax return or from
otherwise putting the statement to its
intended use. Errors and omissions that are
never inconsequential are those relating to
(a) a dollar amount, except as provided,
later, with respect to the safe harbor for de
minimis dollar amount errors, (b) a significant
item in a payee's address, (c) the appropriate
form for the information provided (that is,
whether the form is an acceptable substitute
for the official IRS form), and (d) whether the
statement was furnished in person or by
“statement mailing,” when required.
Intentional disregard of payee statement
requirements. If any failure to provide a
correct payee statement is due to intentional
disregard of the requirements to furnish a
correct payee statement, the penalty is at
least $550 per payee statement with no
maximum penalty.
No penalty will be imposed on an
educational institution that fails to
provide the TIN of a student on Form
118

1098-T, if the institution certifies under
penalty of perjury that it complied with the
rules for obtaining the student’s TIN. See the
2019 Instructions for Forms 1098-E and
1098-T for additional information.

Safe Harbor for De Minimis Dollar
Amount Errors on Information
Returns and Payee Statements
Under Sections 6721 and 6722
If one or more dollar amounts are incorrect
on an information return filed with the IRS or
on a payee statement furnished to a
recipient, no correction of the dollar amount
shall be required, and the return shall be
treated as having been filed or the payee
statement furnished, as correct, if:
• The difference between the dollar amount
reported on the filed return or furnished
payee statement, and the correct amount
is no more than $100; and
• The difference between the dollar amount
reported for tax withheld, on the filed
119

return or furnished payee statement, and
the correct amount is no more than $25.
This safe harbor provision shall not apply if a
recipient to whom a statement is required to
be furnished elects to receive a corrected
statement. In that case, a corrected return
must be filed with the IRS and a corrected
payee statement furnished to the recipient.

Forms 1099-B (QOF reporting
only), 1099-Q, 1099-QA, 1099-SA,
5498, 5498-ESA, 5498-QA, and
5498-SA (Section 6693)
The penalties under sections 6721 and 6722
do not apply to:

120

The penalty for failure to timely file Forms
1099-SA, 5498-SA, 5498, 1099-Q, 1099-QA,
5498-QA, or 5498-ESA is $50 per return with
no maximum, unless the failure is due to
reasonable cause. See section 6693.

Fraudulent Acknowledgments
With Respect to Donations of
Motor Vehicles, Boats, and
Airplanes (Section 6720)
If you are required under section
170(f)(12)(A) to furnish a contemporaneous
written acknowledgment to a donor and you
knowingly furnish a false or fraudulent Form
1098-C, or knowingly fail to furnish a Form
1098-C within the applicable 30-day period,
you may be subject to a penalty. See the
2019 Instructions for Form 1098-C for more
detailed information.

Civil Damages for Fraudulent
Filing of Information Returns
(Section 7434)
If you willfully file a fraudulent information
return for payments you claim you made to
121

another person, that person may be able to
sue you for damages. You may have to pay
$5,000 or more.

P. Payments to Corporations
and Partnerships
Generally, payments to corporations are not
reportable. See, for example, Regulations
section 1.6049-4(c)(1)(ii). However, you
must report payments to corporations for the
following.
• Medical and health care payments (Form
1099-MISC).
• Withheld federal income tax or foreign tax.
• Barter exchange transactions (Form 1099B).
• Broker and barter transactions for an S
corporation (Form 1099-B).
• Substitute payments in lieu of dividends
and tax-exempt interest (Form 1099MISC).

122

• Acquisitions or abandonments of secured
property (Form 1099-A).
• Cancellation of debt (Form 1099-C).
• Payments of attorneys' fees and gross
proceeds paid to attorneys (Form 1099MISC).
• Fish purchases for cash (Form 1099MISC).
• Credits and interest for qualified tax credit
bonds reported on Forms 1097-BTC and
1099-INT.
• Merchant card and third-party network
payments (Form 1099-K).
• Federal executive agency payments for
services (Form 1099-MISC). For additional
reporting requirements, see Rev. Rul.
2003-66 on page 1115 of Internal
Revenue Bulletin 2003-26 at
IRS.gov/pub/irs-irbs/irb03-26.pdf.
• Payments made in a reportable life
insurance sale (Form 1099-LS). In
addition, the following information returns
are furnished to corporations, although
123

they do not report payments: Form 1099SB, Seller’s Basis in Life Insurance
Contract; and Form 1098-F, Fines,
Penalties, and Other Amounts.
Reporting generally is required for all
payments to partnerships. For example,
payments of $600 or more made in the
course of your trade or business to an
architectural firm that is a partnership are
reportable on Form 1099-MISC.

Q. Earnings on Any IRA,
Coverdell ESA, ABLE Account,
Archer MSA, or HSA
Generally, income earned in any IRA,
Coverdell ESA, ABLE account, Archer MSA, or
HSA, such as interest or dividends, is not
reported on Forms 1099. However,
distributions from such arrangements or
accounts must be reported on Form 1099-R,
1099-Q, 1099-QA, or 1099-SA.

124

R. Certain Grantor Trusts
Certain grantor trusts (other than WHFITs)
may choose to file Forms 1099 rather than a
separate statement attached to Form 1041,
U.S. Income Tax Return for Estates and
Trusts. If you have filed Form 1041 for a
grantor trust in the past and you want to
choose the Form 1099 filing method for 2019,
you must have filed a final Form 1041 for
2018. To change reporting method, see
Regulations section 1.671-4(g) and the
Instructions for Form 1041 and Schedules A,
B, D, G, I, J, and K-1.
For more information on WHFITs, see Widely
held fixed investment trusts (WHFITs),
earlier.

125

S. Special Rules for Reporting
Payments Made Through
Foreign Intermediaries and
Foreign Flow-Through
Entities on Form 1099
If you are the payer and have received a
Form W-8IMY from a foreign intermediary or
flow-through entity, follow the instructions for
completing Form 1099, later.

Definitions
Foreign intermediary (FI). An FI is any
person who is not a U.S. person and acts as a
custodian, broker, nominee, or otherwise as
an agent for another person, regardless of
whether that other person is the beneficial
owner of the amount paid, a flow-through
entity, or another intermediary. The
intermediary can be a qualified intermediary
or a nonqualified intermediary.
Qualified intermediary (QI). A QI is a
person that is a party to a withholding
agreement with the IRS (described in
126

Regulations section 1.1441-1(e)(5)(iii)) and
is:
• An FFI (other than a U.S. branch of an FFI)
that is a participating FFI (including a
reporting Model 2 FFI), a registered
deemed-compliant FFI (including an FFI
treated as a deemed-compliant FFI under
an applicable IGA subject to due diligence
and reporting requirements similar to
those applicable to a registered deemedcompliant FFI under Regulations section
1.1471-5(f)(1), including the requirement
to register with the IRS), or any other
category of FFI identified in the QI
agreement;
• A foreign person that is a home office or
has a branch that is an eligible entity (as
described in Regulations section 1.14411(e)(6)(ii), without regard to the
requirement that the person be a QI);
• A foreign branch or office of a U.S.
financial institution or a foreign branch or
office of a U.S. clearing organization; or

127

• A foreign entity not described above that
the IRS accepts as a QI.
For details on QI agreements, see Rev. Proc.
2017-15, 2017-03 I.R.B. 437, available at
IRS.gov/irb/2017-03_IRB#RP-2017-15.
Nonqualified intermediary (NQI). An NQI
is any intermediary that is not a U.S. person
and that is not a QI.
Foreign flow-through entity (FTE). An FTE
is a foreign partnership (other than a
withholding foreign partnership), a foreign
simple trust or foreign grantor trust (other
than a withholding foreign trust), or, for
payments for which a reduced rate of
withholding is claimed under an income tax
treaty, any entity to the extent the entity is
considered to be fiscally transparent under
section 894 with respect to the payment by
an interest holder's jurisdiction.
Withholding foreign partnership or
withholding foreign trust. A withholding
foreign partnership or withholding foreign
trust is a foreign partnership or a foreign
simple or grantor trust that has entered into a
128

withholding agreement with the IRS in which
it agrees to assume primary withholding
responsibility for all payments that are made
to it for its partners, beneficiaries, or owners.
See Rev. Proc. 2017-21, 2017-6 I.R.B. 791,
available at IRS.gov/irb/2017-06_IRB#RP2017-21, for procedures for entering into a
withholding foreign partnership or trust
agreement.
Nonwithholding foreign partnership,
simple trust, or grantor trust. A
nonwithholding foreign partnership is any
foreign partnership other than a withholding
foreign partnership. A nonwithholding foreign
simple trust is any foreign simple trust that is
not a withholding foreign trust. A
nonwithholding foreign grantor trust is any
foreign grantor trust that is not a withholding
foreign trust.
Fiscally transparent entity. An entity is
treated as fiscally transparent with respect to
an item of income to the extent that the
interest holders in the entity must, on a
current basis, take into account separately
their shares of an item of income paid to the
129

entity, whether or not distributed, and must
determine the character of the items of
income as if they were realized directly from
the sources from which they were realized by
the entity. For example, partnerships,
common trust funds, and simple trusts or
grantor trusts are generally considered to be
fiscally transparent with respect to items of
income received by them.

Presumption Rules
For additional information including
details on the presumption rules, see
the Instructions for the Requester of
Forms W-8BEN, W-8BEN-E, W-8ECI, W-8EXP,
and W-8IMY; and Pub. 515. To order, see
How To Get Forms, Publications, and Other
Assistance under part T.
If you are the payer and do not have a Form
W-9, appropriate Form W-8, or other valid
documentation, or you cannot allocate a
payment to a specific payee, prior to
payment, you are required to use certain
presumption rules to determine the following.
130

• The status of the payee as a U.S. or
foreign person.
• The classification of the payee as an
individual, trust, estate, corporation, or
partnership.
See Regulations sections 1.1441-1(b)(3),
1.1441-5(d) and (e), 1.6045-1(g)(3)(ii), and
1.6049-5(d).
Under these presumption rules, if you must
presume that the payee is a U.S. nonexempt
recipient subject to backup withholding, you
must report the payment on a Form 1099.
However, if before filing Form 1099 with the
IRS the recipient is documented as foreign,
then report the payment on a Form 1042-S.
Conversely, if you must presume that the
payee is a foreign recipient and prior to filing
Form 1042-S with the IRS you discover that
the payee is a U.S. nonexempt recipient
based on documentation, then report all
payments made to that payee during the
calendar year on a Form 1099.
If you use the 90-day grace period rule to
presume a payee is foreign, you must file a
131

Form 1042-S to report all payments subject to
withholding during the grace period. If, after
the grace period expires, you discover that
the payee is a U.S. nonexempt recipient
subject to backup withholding, you must file a
Form 1099 for all payments made to that
payee after the expiration of the grace period.

Rules for Payments Made to U.S.
Nonexempt Recipients Through a
QI, NQI, or FTE
If you are the payer making a payment
through a QI, NQI, or FTE for a U.S.
nonexempt recipient on whose behalf the QI,
NQI, or FTE is acting, use the following rules
to complete Form 1099.
Known recipient. If you know that a payee
is a U.S. nonexempt recipient and have the
payee's name, address, and TIN (if a TIN has
been provided), you must complete the Form
1099 with that information unless you are not
required to report the payment under
Regulations section 1.6049-4(c)(4)
(applicable only to certain payments to
specified FFIs). Also, on the second name line
132

below the recipient's name, enter “IMY”
followed by the name of the QI, NQI, or FTE.
For payments made to multiple recipients: (a)
enter the name of the recipient whose status
you relied on to determine the applicable rate
of withholding, and (b) on the second name
line, enter “IMY” followed by the name of the
QI, NQI, or FTE. However, if the QI has
assumed primary Form 1099 reporting or
backup withholding responsibility, you are not
required to issue the Form 1099 or to backup
withhold. See Qualified intermediary (QI),
earlier.
Unknown recipient. If you cannot reliably
associate a payment with valid documentation
and are required to presume a payee is a U.S.
nonexempt recipient, do the following.
1. File a Form 1099 and enter “unknown
recipient” on the first name line.
2. On the second name line, enter “IMY”
followed by the name of the NQI or FTE.
3. Enter the EIN of the NQI or FTE, if
applicable, in the recipient's TIN box.
133

4. Furnish a copy of the Form 1099 with
“unknown recipient” to the NQI or FTE
who is acting on the recipient's behalf.
A payer that is required to report
payments made to a U.S. nonexempt
recipient account holder but does not
receive the necessary allocation information
cannot report those payments on a pro rata
basis. Report unallocated payments using the
presumption rules described above.

Rules for Non-U.S. Payers
Non-U.S. payers (foreign persons that are not
U.S. payers) generally have the same
reporting obligations as U.S. payers. A U.S.
payer is anyone who is:
• A U.S. person;
• Any U.S. governmental agency;
• A controlled foreign corporation (CFC);
• A foreign partnership that has one or
more U.S. partners who, in the aggregate,
hold more than 50% of the gross income
derived from the conduct of a U.S. trade
or business;
134

• A foreign person who owns 50% or more
of the gross income that is effectively
connected with a U.S. trade or business;
or
• A U.S. branch or territory financial
institution described in Regulations section
1.1441-1(b)(2)(iv) that is treated as a
U.S. person.
For more information, see Regulations section
1.6049-5(c)(5).
Exceptions. The following payments are not
subject to reporting by a non-U.S. payer.
1. A foreign source payment paid and
received outside the United States. For
example, see Regulations section
1.6049-4(f)(16).
2. Gross proceeds from a sale effected
outside the United States. See
Regulations section 1.6045-1(a).
3. An NQI or QI that provides another
payer all the information sufficient for
that payer to complete Form 1099
reporting. For example, see Regulations
135

section 1.6049-5(b)(14). However, if an
NQI or QI does not provide sufficient
information for another payer to report a
payment on Form 1099, the
intermediary must report the payment.
4. A payment made by certain FFIs for
which an exception to reporting applies
under Regulations section 1.60494(c)(4).

Rules for Reporting Payments
Initially Reported on Form 1042-S
If an NQI or QI receives a Form 1042-S made
out to an “unknown recipient” and the NQI or
QI has actual knowledge that the payee of the
income is a U.S. nonexempt recipient, it must
file a Form 1099 even if the payment has
been subject to withholding by another payer.
The NQI or QI reports the amount withheld by
the other payer on Form 1099 as federal
income tax withheld.

136

T. How To Get Tax Help
Information Reporting Program
Customer Service Section
For answers to your questions about reporting
on Forms 1096, 1097, 1098, 1099, 3921,
3922, 5498, W-2, W-2G, and W-3, you may
call a toll-free number, 866-455-7438. You
may still use the original telephone number,
304-263-8700 (not toll free). Persons with a
hearing or speech disability with access to
TTY/TDD equipment can call 304-579-4827
(not toll free).
Other tax-related matters. For other tax
information related to business returns or
accounts, call 800-829-4933.
If you have a hearing or speech disability and
have access to TTY/TDD equipment, call 800829-4059 to ask tax account questions.

Internal Revenue Bulletin (IRB)
The IRB, published weekly, contains newly
issued regulations, notices, announcements,
legislation, court decisions, and other items of
137

general interest. You may find this publication
useful to keep you up to date with current
developments. See How To Get Forms,
Publications, and Other Assistance, later.

Contacting Your Taxpayer
Advocate
The Taxpayer Advocate Service (TAS) is there
to help you. The TAS is your voice at the IRS.
Their job is to ensure that every taxpayer is
treated fairly and that you know and
understand your rights.
What can the TAS do for you? They can
offer you free help with IRS problems that you
can't resolve on your own. They know this
process can be confusing, but the worst thing
you can do is nothing at all! The TAS can help
if you can't resolve your tax problem and:
• Your problem is causing financial
difficulties for you, your family, or your
business;
• You face (or your business is facing) an
immediate threat of adverse action; or
138

• You've tried repeatedly to contact the IRS
but no one has responded, or the IRS
hasn't responded by the date promised.
If you qualify for their help, you'll be assigned
to one advocate who'll be with you at every
turn and will do everything possible to resolve
your problem. Here's why they can help.
• The TAS is an independent organization
within the IRS.
• Their advocates know how to work with
the IRS.
• Their services are free and tailored to
meet your needs.
• They have offices in every state, the
District of Columbia, and Puerto Rico.
How can you reach them? If you think the
TAS can help you, call your local advocate,
whose number is in your local directory and
at IRS.gov/Advocate, or call them toll free at
877-777-4778.
How else does the TAS help taxpayers?
The TAS also works to resolve large-scale,
systemic problems that affect many
139

taxpayers. If you know of one of these broad
issues, please report it to them by going to
IRS.gov/SAMS.
Taxpayer Advocacy Panel (TAP). The TAP
listens to taxpayers, identifies taxpayer
issues, and makes suggestions for improving
IRS services and customer satisfaction. If you
have suggestions for improvements, contact
the TAP toll free at 888-912-1227 or go to
ImproveIRS.org.

How To Get Forms, Publications,
and Other Assistance
Forms, instructions, and publications.
Visit IRS.gov/FormsPubs to download forms
and publications.
Otherwise, you can go to IRS.gov/OrderForms
to order current and prior-year forms and
instructions. Your order should arrive within
10 business days. You can also mail an order
to the address at the mail icon below.
Because the IRS processes paper
forms by machine (optical character
recognition equipment), you cannot file
140

Form 1096 or Copy A of Forms 1097, 1098,
1099, 3921, 3922, or 5498 that you print
from the IRS website. However, you can use
Copy B from those sources to provide
recipient statements.
Exception. Forms 1097-BTC, 1098-C, 1098MA, 1098-Q, 1099-CAP, 1099-H, 1099-LTC,
1099-Q, 1099-QA, 1099-SA, 3921, 5498-ESA,
5498-QA, and 5498-SA can be filled out
online and Copy A can be printed and filed
with the IRS using Form 1096.
Mail. You can send your order for
forms, instructions, and publications to
the address below. You should receive
a response within 10 business days after your
request is received.
Internal Revenue Service
1201 N. Mitsubishi Motorway
Bloomington, IL 61705-6613
Online. Go to IRS.gov 24 hours a day,
7 days a week to do the following.
• Access commercial tax preparation and efile services.
141

• Research your tax questions online.
• Search publications online by topic or
keyword.
• Use the online Internal Revenue Code,
regulations, or other official guidance.
• View IRBs published in the last few years.
• Sign up to receive local and national tax
news by email.

Comments and Suggestions
We welcome your comments about this
publication and your suggestions for future
editions.
You can send your comments from
IRS.gov/FormComments.
Or you can write to us at the following
address.
Internal Revenue Service
Tax Forms and Publications Division
1111 Constitution Ave. NW, IR-6526
Washington, DC 20224

142

Although we cannot respond individually to
each comment received, we do appreciate
your feedback and will consider your
comments as we revise our tax products.
Privacy Act and Paperwork Reduction Act
Notice. We ask for the information on these
forms to carry out the Internal Revenue laws
of the United States. You are required to give
us the information. We need it to figure and
collect the right amount of tax.
Sections 170(f)(12), 199, 220(h), 223, 408,
408A, 529, 529A, 530, 853A, 6039, 6041,
6041A, 6042, 6043, 6044, 6045, 6047, 6049,
6050A, 6050B, 6050D, 6050E, 6050H, 6050J,
6050N, 6050P, 6050Q, 6050R, 6050S, 6050T,
6050U, 6050W, 6050X, 6050Y, and their
regulations require you to file an information
return with the IRS and furnish a statement to
recipients. Section 6109 and its regulations
require you to provide your TIN on what you
file.
Routine uses of this information include giving
it to the Department of Justice for civil and
criminal litigation, and to cities, states, the
District of Columbia, and U.S.
143

commonwealths and possessions for use in
administering their tax laws. We may also
disclose this information to other countries
under a tax treaty, to federal and state
agencies to enforce federal nontax criminal
laws, or to federal law enforcement and
intelligence agencies to combat terrorism. If
you fail to provide this information in a timely
manner, you may be subject to penalties.
You are not required to provide the
information requested on a form that is
subject to the Paperwork Reduction Act
unless the form displays a valid OMB control
number. Books or records relating to a form
or its instructions must be retained as long as
their contents may become material in the
administration of any Internal Revenue law.
Generally, tax returns and return information
are confidential, as required by section 6103.
The time needed to complete and file the
following forms will vary depending on
individual circumstances. The estimated
average times are:

144

145

This page is intentionally left blank

146

Burden estimates are based upon current
statutory requirements as of October 2018.
Estimates of burden do not reflect any future
legislative changes that may affect the 2019
tax year. Any changes to burden estimates
will be included in IRS’ annual Paperwork
Reduction Act submission to the Office of
Management and Budget (OMB) and will be
made publicly available on RegInfo.gov.
If you have comments concerning the
accuracy of these time estimates, we would
be happy to hear from you. You can send
your comments from
IRS.gov/FormComments. Send your
comments to the Internal Revenue Service,
Tax Forms and Publications, 1111
Constitution Ave. NW, IR-6526, Washington,
DC 20224. Do not send these forms to this
address. Instead, see part D.

147

This page is intentionally left blank

148

149

150

151

152

153

154