Instructions For Forms 1099-Sa And 5498-Sa - 2006 (Page 7 of 25) in pdf

the IRS website. Go to and search for “e-services.”

may agree to use the combined reporting procedure for Forms

It is anticipated that payers who validate the TIN and name

1099-DIV only. Similarly, if the only compatible systems are in

combinations before filing information returns will receive fewer

their midwest branches, they may agree to use the combined

backup withholding (CP2100) “B” notices and penalty notices.

reporting procedure for only the midwest branches.

E-services technical support is available by calling

Combined reporting procedure. On each Form 1099,

1-866-255-0654, Monday through Friday, from 8:30 a.m. to 7:00

1098, 5498, and W-2G filed by the successor, the successor

p.m., Eastern time.

must combine the predecessor’s (before the acquisition) and

successor’s reportable amounts, including any withholding, for

A. Who Must File

the acquisition year and report the aggregate. For transactional

reporting on Form 1099-B, Proceeds From Broker and Barter

See the separate specific instructions for each form.

Exchange Transactions, the successor must report each of the

Nominee/middleman returns. Generally, if you receive a

predecessor’s transactions and each of its own transactions on

Form 1099 for amounts that actually belong to another person,

each Form 1099-B. The successor may include with the form

you are considered a nominee recipient. You must file a Form

sent to the recipient additional information explaining the

1099 with the IRS (the same type of Form 1099 you received)

combined reporting.

for each of the other owners showing the amounts allocable to

For purposes of the combined reporting procedure, the

each. You must also furnish a Form 1099 to each of the other

sharing of TINs and other information obtained under section

owners. File the new Form 1099 with Form 1096 with the

3406 for information reporting and backup withholding purposes

Internal Revenue Service Center for your area. On each new

does not violate the confidentiality rules in section 3406(f).

Form 1099, list yourself as the “payer” and the other owner as

the “recipient.” On Form 1096, list yourself as the “filer.” A

Statement required. The successor must file a statement

husband or wife is not required to file a nominee return to show

with the IRS indicating the forms that are being filed on a

amounts owned by the other. The nominee, not the original

combined basis under Rev. Proc. 99-50. The statement must:

payer, is responsible for filing the subsequent Forms 1099 to

1. Include the predecessor’s and successor’s names,

show the amount allocable to each owner.

addresses, telephone numbers, EINs, and the name and

Successor/predecessor reporting. A successor business (a

telephone number of the person responsible for preparing the

corporation, partnership, or sole proprietorship) and a

statement.

predecessor business (a corporation, partnership, or sole

2. Reflect separately the amount of federal income tax

proprietorship) may agree that the successor will assume all or

withheld by the predecessor and by the successor for each type

some of the predecessor’s information reporting responsibilities.

of form being filed on a combined basis (for example, Form

This would permit the successor to file one Form 1099, 1098,

1099-R or 1099-MISC).

5498, or W-2G for each recipient combining the predecessor’s

3. Be sent separately from Forms 1099, 1098, 5498, and

and successor’s reportable amounts, including any withholding.

W-2G by the forms’ due date to: Enterprise Computing

If they so agree and the successor satisfies the predecessor’s

Center — Martinsburg, Attn: Chief, Information Returns Branch,

obligations and the conditions described below, the

Mail Stop 360, 230 Murall Dr., Kearneysville, WV 25430. Do not

predecessor does not have to file the specified information

send Form 1042-S statements to this address. Instead, use the

returns for the acquisition year. If the successor and

address given in the Instructions for Form 1042-S; see Rev.

predecessor do not agree, or if the requirements described are

Proc. 99-50.

not met, the predecessor and the successor each must file

Forms 1099, 1098, 5498, and W-2G for their own reportable

Qualified settlement funds. A qualified settlement fund must

amounts as they usually would. For more information and the

file information returns for distributions to claimants if any

rules that apply to filing combined Forms 1042-S, see Rev.

transferor to the fund would have been required to file if the

Proc. 99-50, which is available on page 757 of Internal

transferor had made the distributions directly to the claimants.

Revenue Bulletin 1999-52 at /pub/irs-irbs/irb99-52.

For distributions to transferors, a fund is subject to the

pdf.

information reporting requirements of sections 6041 and 6041A

The combined reporting procedure is available when all the

and may be required to file Form 1099-MISC. For payments

following conditions are met.

made by the fund on behalf of a claimant or transferor, the fund

1. The successor acquires from the predecessor

is subject to these same rules and may have to file Form

substantially all the property (a) used in the trade or business of

1099-MISC for the payment to a third party. For information

the predecessor, including when one or more corporations are

reporting purposes, a payment made by the fund on behalf of a

absorbed by another corporation under a merger agreement, or

claimant or transferor is considered a distribution to the

(b) used in a separate unit of a trade or business of the

claimant or transferor and is also subject to information

predecessor.

reporting requirements.

2. The predecessor is required to report amounts, including

The same filing requirements, exceptions, and thresholds

any withholding, on information returns for the year of

may apply to qualified settlement funds as apply to any other

acquisition for the period before the acquisition.

payer. That is, the fund must determine the character of the

3. The predecessor is not required to report amounts,

payment (for example, interest, fixed and determinable income,

including withholding, on information returns for the year of

or gross proceeds from broker transactions) and to whom the

acquisition for the period after the acquisition.

payment is made (for example, corporation or individual).

Combined reporting agreement. The predecessor and the

For more information, see Regulations section 1.468B-2(l).

successor must agree on the specific forms to which the

Also, see Treasury Decision (TD) 9429 available on page 546

combined reporting procedure applies and that the successor

of Internal Revenue Bulletin 2006-10 at /pub/

assumes the predecessor’s entire information reporting

irs-irbs/irb06-10.pdf. TD 9249 relates to escrow and similar

obligations for these forms. The predecessor and successor

funds.

may agree to:

Payments to foreign persons. See the Instructions for Form

1. Use the combined reporting procedure for all Forms

1042-S, relating to U.S. source income of foreign persons, for

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

reporting requirements relating to payments to foreign persons.

2. Limit the use of the combined reporting procedure to (a)

specific forms or (b) specific reporting entities, including any

unit, branch, or location within a particular business entity that

B. Other Information Returns

files its own separate information returns. For example, if the

predecessor’s and successor’s only compatible computer or

The income information you report on the following forms must

recordkeeping systems are their dividends paid ledgers, they

not be repeated on Forms 1099 or W-2G:

GEN-3

Instructions For Forms 1099-Sa And 5498-Sa - 2006 Page 7

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