Instructions For Form 1099-Patr - 2006 (Page 3 of 25) in pdf

2006

Department of the Treasury

Internal Revenue Service

Instructions for Form

1099-PATR

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

Statements to Recipients

Reminder

If you are required to file Form 1099-PATR, you must provide a

In addition to these specific instructions, you should also use

statement to the recipient. For more information about the

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

requirement to furnish an official form or acceptable substitute

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

•

statement to recipients in person, by statement mailing, or

Backup withholding

•

electronically, see part M in the 2006 General Instructions for

Magnetic media and electronic reporting requirements

•

Forms 1099, 1098, 5498, and W-2G.

Penalties

•

Who must file (nominee/middleman)

2nd TIN Not.

•

When and where to file

•

You may enter an “X” in this box if you were notified by the IRS

Taxpayer identification numbers

•

twice within 3 calendar years that the payee provided an

Statements to recipients

•

incorrect taxpayer identification number (TIN). If you mark this

Corrected and void returns

•

box, the IRS will not send you any further notices about this

Other general topics

account. However, if you received both IRS notices in the same

You can get the general instructions from the IRS website at

year, or if you received them in different years but they both

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

related to information returns filed for the same year, do not

check the box at this time. For purposes of the two notices in

3-year rule, you are considered to have received one notice.

You are not required to send a second “B” notice to the

Specific Instructions for Form

taxpayer on receipt of the second notice. See part N in the 2006

1099-PATR

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

more information.

File Form 1099-PATR, Taxable Distributions Received From

Cooperatives, for each person to whom the cooperative has

For information on the TIN Matching System offered by

paid at least $10 in patronage dividends and other distributions

TIP

the IRS, see the 2006 General Instructions for Forms

described in section 6044(b) or from whom you withheld any

1099, 1098, 5498, and W-2G.

federal income tax under the backup withholding rules

regardless of the amount of the payment. A cooperative

Account Number

determined to be primarily engaged in the retail sale of goods or

The account number is required if you have multiple accounts

services that are generally for personal, living, or family use of

for a recipient for whom you are filing more than one Form

the members may ask for and receive exemption from filing

1099-PATR. Additionally, the IRS encourages you to designate

Form 1099-PATR. See Form 3491, Consumer Cooperative

an account number for all Forms 1099-PATR that you file. See

Exemption Application, for information about how to apply for

part L in the 2006 General Instructions for Forms 1099, 1098,

this exemption. Report dividends paid on a cooperative’s capital

5498, and W-2G.

stock on Form 1099-DIV, Dividends and Distributions.

Deduction for domestic production activities income. A

Box 1. Patronage Dividends

maximum deduction percentage equal to 9% is to be phased in

Enter the total patronage dividends paid in cash (qualified or

over 5 years. The deduction percentage for 2005 and 2006 is

“consent” checks), qualified written notices of allocation (face

3%. The deduction is the applicable percentage of the lesser of

amount), and other property (except nonqualified written notices

the qualified production activities income (QPAI) of the taxpayer

of allocation).

for the taxable year, or the taxable income (determined without

regard to section 199) for the taxable year.

Box 2. Nonpatronage Distributions

Section 199(d)(3) and Notice 2005-14 provide special rules

This box applies only to farmers’ cooperatives exempt from tax

for cooperatives to pass through to their patrons receiving

under section 521. Enter the total nonpatronage distributions

certain patronage dividends or certain qualified per-unit retain

paid in cash (qualified or “consent” checks), qualified written

allocations from the cooperative a deduction equal to their

notices of allocation (face amount), and other property. Do not

portion of the cooperative’s QPAI that would be deductible by

include nonqualified written notices of allocation.

the cooperative, and must have been designated by the

cooperative in a written notice mailed to its patrons during the

Box 3. Per-Unit Retain Allocations

payment period under section 1382(d). The cooperative must

Enter the total per-unit retain allocations paid in cash, qualified

have been engaged in the manufacturing, producing, growing,

per-unit retain certificates (face amount), and other property.

extracting, or marketing of any agricultural or horticultural

product during the period. Notice 2005-14 is available on page

Box 4. Federal Income Tax Withheld

498 of Internal Revenue Bulletin 2005-7 at /pub/

Enter backup withholding. For example, persons who have not

irs-irbs/irb05-07.pdf.

furnished their TIN to you in the manner required are subject to

Exceptions. Generally, you are not required to file Form

withholding at a 28% rate on payments required to be reported

1099-PATR for payments made to a corporation, a tax-exempt

in boxes 1, 2, 3, and 5 to the extent such payments are in cash

organization, the United States, a state, a possession, or the

or qualified check. See Regulations section 31.3406(b)(2)-5 for

District of Columbia. See Regulations section 1.6044-3(c).

more information on backup withholding by cooperatives.

Cat. No. 27984F

Instructions For Form 1099-Patr - 2006 Page 3

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