Instructions For Form 1099-Misc - 2006 (Page 3 of 31) in pdf

2006

Department of the Treasury

Internal Revenue Service

Instructions for

Form 1099-MISC

Section references are to the Internal Revenue Code unless otherwise noted.

recipient. Payments for which a Form 1099-MISC is not

Reminder

required include:

•

In addition to these specific instructions, you should also use

Generally, payments to a corporation; but see Reportable

the 2006 General Instructions for Forms 1099, 1098, 5498, and

payments to corporations on page MISC-2;

•

W-2G. Those general instructions include information about:

Payments for merchandise, telegrams, telephone, freight,

•

Backup withholding

storage, and similar items;

•

Magnetic media and electronic reporting requirements

Payments of rent to real estate agents, but see Regulations

•

Penalties

section 1.6041-1(e)(5), Example 5;

•

Who must file (nominee/middleman)

Wages paid to employees (report on Form W-2, Wage and

•

When and where to file

Tax Statement);

•

Taxpayer identification numbers

Business travel allowances paid to employees (may be

•

Statements to recipients

reportable on Form W-2);

•

Corrected and void returns

Cost of current life insurance protection (report on Form W-2

•

Other general topics

or Form 1099-R, Distributions From Pensions, Annuities,

Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts,

You can get the general instructions from the IRS website at

etc.);

or by calling 1-800-TAX-FORM (1-800-829-3676).

•

Payments to a tax-exempt organization, the United States, a

state, the District of Columbia, a U.S. possession, or a foreign

government; and

Specific Instructions for Form 1099-MISC

•

Certain payment card transactions if a payment card

organization has assigned a merchant/payee a Merchant

File Form 1099-MISC, Miscellaneous Income, for each person

Category Code (MCC) indicating that reporting is not required.

to whom you have paid during the year:

•

A cardholder/payor may rely on the MCC that the payment card

At least $10 in royalties or broker payments in lieu of

organization assigned to a merchant/payee to determine if a

dividends or tax-exempt interest (see Box 8 on page MISC-6);

•

payment card transaction with that merchant/payee is subject to

At least $600 in rents, services (including parts and

reporting under section 6041 or section 6041A. For more

materials), prizes and awards, other income payments, medical

information and a list of merchant types with corresponding

and health care payments, crop insurance proceeds, cash

MCCs, see Revenue Procedure 2004-43 which is on page 124

payments for fish (or other aquatic life) you purchase from

of Internal Revenue Bulletin 2004-31 at /pub/

anyone engaged in the trade or business of catching fish, or,

irs-irbs/irb04-31.pdf.

generally, the cash paid from a notional principal contract to an

individual, partnership, or estate;

Fees paid to informers. A payment to an informer as an

•

Any fishing boat proceeds; or

award, fee, or reward for information about criminal activity is

•

Gross proceeds to an attorney. See Payments to attorneys

not required to be reported if the payment is made by a federal,

on page MISC-2.

state, or local government agency, or by a nonprofit

organization exempt from tax under section 501(c)(3) that

In addition, use Form 1099-MISC to report that you made

makes the payment to further the charitable purpose of

direct sales of at least $5,000 of consumer products to a buyer

lessening the burdens of government. For more information,

for resale anywhere other than a permanent retail

see Regulations section 1.6041-3(l).

establishment. You must also file Form 1099-MISC for each

person from whom you have withheld any federal income tax

Scholarships. Do not use Form 1099-MISC to report

under the backup withholding rules regardless of the amount of

scholarship or fellowship grants. Scholarship or fellowship

the payment.

grants that are taxable to the recipient because they are paid

for teaching, research, or other services as a condition for

Be sure to report each payment in the proper box

receiving the grant are considered wages and must be reported

because the IRS uses this information to determine

on Form W-2. Other taxable scholarship or fellowship payments

whether the recipient has properly reported the

CAUTION

(to a degree or nondegree candidate) are not required to be

payment.

reported by you to the IRS on any form. See Notice 87-31,

1987-1 C.B. 475 and Regulations section 1.6041-3(n) for more

Trade or business reporting only. Report on Form

information.

1099-MISC only when payments are made in the course of your

trade or business. Personal payments are not reportable. You

Difficulty-of-care payments. Difficulty-of-care payments

are engaged in a trade or business if you operate for gain or

that are excludable from the recipient’s gross income are not

profit. However, nonprofit organizations are considered to be

required to be reported. Difficulty-of-care payments to foster

engaged in a trade or business and are subject to these

care providers are not reportable if paid for not more than 10

reporting requirements. Nonprofit organizations subject to these

children under age 19 and not more than 5 individuals age 19

reporting requirements include trusts of qualified pension or

or older. Amounts paid for more than 10 children or more than 5

profit-sharing plans of employers, certain organizations exempt

individuals are reportable on Form 1099-MISC.

from tax under section 501(c) or (d), and farmers’ cooperatives

Charitable organizations’ reimbursements for certain

that are exempt from tax under section 521. Payments by

automobile expenses. Amounts provided as reimbursements

federal, state, or local government agencies are also reportable.

for operating expenses of a passenger automobile in providing

Exceptions. Some payments are not required to be reported

relief relating to Hurricane Katrina from August 25, 2005, to

on Form 1099-MISC, although they may be taxable to the

December 31, 2006, are not reportable if certain requirements

Cat. No. 27982J

Instructions For Form 1099-Misc - 2006 Page 3

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