Tax & Accounting Blog

Form 1099 Changes to Note as You Prepare for Year-End Statements and Filing

1099, Information Reporting for Wealth Management, ONESOURCE, Tax Information Reporting, TIN Compliance, Trust Tax, Withholding Management November 1, 2011

Notes that may help you plan your Form 1099 reporting season:

  • Your company’s logo, slogans or advertising are not permitted on the Form 1099 statements you send out to report amounts paid in 2011 and later years. This is the new rule, though we’re still waiting for the IRS to issue specific clarifications or explanations of the rule in a new version of Publication 1179, which will contain an updated Revenue Procedure for substitute and composite 1099 statements.
  • You can mask the social security numbers of your payees using either of two methods on Form 1099 paper statements you send out for 2011. This is an extension of the same temporary rule used for 2010 Forms 1099.  The first method allowed is to substitute a X for the first five numbers, for example, XXX-XX-1234.  The second method allowed is to replace each of the first five numbers with an asterisk, for example, ***-**-1234. This masking, or truncation as the IRS calls it, is not required but is an option for the payer.  Payers that truncate generally do it as a security measure. Note that this is only permitted for social security numbers, individual taxpayer identification numbers (ITINs), which are formatted like social security numbers, and ATINs (the number assigned for a child during the process of adoption before a social security number may be issued). EINs (formatted as XX-XXXXXXX) may not be truncated on Form 1099 statements. And, truncation is not permitted on Form 1099 statements furnished to the payee through electronic delivery. 
  • The customer’s account number is required on Form 1099-B, 1099-DIV, 1099-INT, 1099-OID, 1099-MISC, 1099-R and 5498 if you have multiple accounts for a recipient for whom you are filing more than one Form 1099. The unique account number is now a requirement because the IRS can’t correct 1099s unless the account number is on both the information return and the correction.