IRS Rules Flashcards
What is the interest threshold for mortgage interest reporting?
$600
T or F
Only those in the business of lending money must report mortgage interest earned over the threshold.
FALSE
If there are multiple borrowers on a mortgage, the mortgage interest report must be in the name of:
the primary borrower or payor
A bank must request a TIN for all obligations incurred after:
31-Dec-87
A bank must take all reasonable steps to obtain a TIN:
at the time the obligation is incurred
If the bank does not obtain a TIN it must request one at least:
annually until the customer responds
TIN requests must inform the payor that the TIN is required by the IRS and that the payor is subject to:
a $50 penalty if not provided
What is the penalty for not filing a mortgage interest report?
$100 per return, $1.5 million per year OR $250 per return if intentional
Abandonment occurs when facts and circumstances indicate the borrower intended to and has permanently:
discarded the property and the lender has reason to know of the abandonment
Lenders must file a form 1099A with the IRS by _________________ the property is foreclosed or abandoned.
Feb 28 of the year following the calendar year
What is the purpose of backup withholding?
To ensure that individuals report on their tax returns the correct amount of interest and dividends earned.
T or F
Annualized payments of interest less than $10 are not subject to backup withholding.
TRUE
Banks must use a Form W9 to request a TIN from each accountholder at:
the time of account opening
Banks must require ______ to exempt a customer from backup withholding.
certification of exempt status
On brokered accounts where the TIN is provided orally, the bank has _____ to secure a valid TIN certification, provided that 28% of the reportable amounts remain in the account.
30 days
If the customer has applied for but not received a TIN, customers may write _______ on the Form W9 and the bank will not have to begin backup withholding for ________ unless:
* awaiting TIN
* 60 calendar days
* the payee makes a withdrawal of more than $500 in one transaction
If no TIN is received, the bank must withhold:
28% of all interest or dividend payments
A bank cannot stop backup withholding until:
it receives notice that correct information has been received from either the IRS or the SSA
When a bank receives a C notice from the IRS that an accountholder is underreporting interest or dividends, the bank must:
begin backup withholding at a rate of 28 percent within 30 days of receipt
Substitutes for TINs include:
SSN, EIN, ITIN
Banks must keep W9 forms for:
three years from account opening
What is the purpose of discharged debt reporting?
to report taxable income attributed to a taxpayer through the discharge of indebtedness
Lenders who receive interest payments on qualified student loans must report payments that:
may be deductible by the borrower as interest paid
Lenders must file an information return with the IRS by Feb 28 on all covered student loans where:
the borrower paid $600 or more in interest
If a lender has more than 250 student loan interest forms to file, it must do so:
electronically or by magnetic media
Foreign financial institutions must report US accounts to either the
IRS or the respective tax authority
Foreign financial institutions must conduct due diligence to ascertain:
whether they have US accounts
