Instructions For Form 1066 - 2007 (Page 3 of 8) in pdf

a tax return that are not otherwise

payment. The interest charge is figured

life of the REMIC (as defined in

adequately disclosed on the return or

at a rate determined under section

Regulations section 1.860E-1(a)(3)(iv)).

that are contrary to Treasury

6621.

If the transferor holds a regular

regulations (to avoid parts of the

Late filing penalty. A penalty may be

interest and if the adjusted basis of the

accuracy-related penalty or certain

charged if the return is filed after the

regular interest is more than its issue

preparer penalties).

due date (including extensions) or the

price, the regular interest holder treats

Form 8300, Report of Cash Payments

return does not show all the information

the excess as amortizable bond

Over $10,000 Received in a Trade or

required, unless each failure is due to

premium subject to the rules of section

Business. Generally, this form is used

reasonable cause. If the failure is due

171. If the transferor holds a regular

to report the receipt of more than

interest and if the adjusted basis of the

to reasonable cause, attach an

$10,000 in cash or foreign currency in

explanation to the return. If no taxes

regular interest is more than its issue

one transaction or a series of related

price, the excess is deductible ratably

are due, the penalty is $50 for each

transactions.

month or part of a month (up to 5

over the anticipated weighted average

life of the REMIC (as defined in

months) the return is late or does not

Form 8811, Information Return for

include the required information,

Regulations section 1.860E-1(a)(3)(iv)).

Real Estate Mortgage Investment

multiplied by the total number of

Conduits (REMICs) and Issuers of

Payments Subject to

persons who were residual interest

Collateralized Debt Obligations. A

Withholding at Source

holders in the REMIC during any part of

REMIC uses this form to provide the

the REMIC’s tax year for which the

information required by Regulations

If there are any nonresident alien

return is due. If tax is due, the penalty

section 1.6049-7(b)(1)(ii). This

individuals, foreign partnerships, or

is the amount stated above plus 5% of

information will be published in Pub.

foreign corporations as regular interest

the unpaid tax for each month or part of

938, Real Estate Mortgage Investment

holders or residual interest holders, and

a month the return is late, up to a

Conduits (REMICs) Reporting

the REMIC has items of gross income

maximum of 25% of the unpaid tax, or if

Information (And Other Collateralized

from sources within the United States

the return is more than 60 days late, a

Debt Obligations (CDOs)). This

(see sections 861 through 865), see

$100 minimum or the balance of tax

publication contains a directory of

Form 1042, Annual Withholding Tax

due on the return, whichever is smaller.

REMICs.

Return for U.S. Source Income of

Pub. 938 is not printed. Instead, it is

Late payment penalty. The penalty

Foreign Persons.

available on the IRS website. For more

for not paying the tax when due is

Who Must Sign

information about Pub. 938, visit www.

usually

of 1% of the unpaid tax for

irs.gov.

each month or part of a month the tax

Startup day after November 9, 1988.

is unpaid. The penalty cannot exceed

Form 8822, Change of Address. This

For a REMIC with a startup day after

25% of the unpaid tax. The penalty will

form is used to inform the IRS of a new

November 9, 1988, Form 1066 may be

not be charged if you can show

REMIC address if the change is made

signed by any person who could sign

reasonable cause for not paying on

after filing Form 1066.

the return of the entity in the absence of

time.

the REMIC election. Thus, the return of

Payment of Tax Due

Other penalties. Penalties can also

a REMIC that is a corporation or trust

The REMIC must pay the tax due (page

be imposed for negligence, substantial

would be signed by a corporate officer

1, Section II, line 3) in full by the 15th

understatements of tax, reportable

or a trustee, respectively. For REMICs

day of the 4th month following the end

with only segregated pools of assets,

transaction understatements, and fraud.

of the tax year. Enclose with Form 1066

See sections 6662, 6662A, and 6663.

the return would be signed by any

a check or money order for the amount

person who could sign the return of the

Contributions to the REMIC

due payable to the “United States

entity owning the assets of the REMIC

Treasury.”

under applicable state law.

Generally, no gain or loss is recognized

The REMIC may be required to

by the REMIC or any of the regular or

Startup day before November 10,

residual interest holders when property

deposit its tax using the Electronic

1988. A REMIC with a startup day

Federal Tax Payment System (EFTPS).

is transferred to the REMIC in

before November 10, 1988, may elect

exchange for an interest in the REMIC.

If this requirement applies, use EFTPS

to apply the rules for REMICs with a

to deposit the tax.

The adjusted basis of the interest

startup day after November 9, 1988 (as

received equals the adjusted basis of

described in Regulations section

If the REMIC is not required to

the property transferred to the REMIC.

1.860F-4(c)(2)(iii)). Otherwise, Form

deposit its tax using EFTPS, it may do

1066 must be signed by a residual

so voluntarily. To do this, the REMIC

The basis to the REMIC of property

interest holder or, as provided in

must be enrolled in EFTPS.

transferred by a regular or residual

section 6903, by a fiduciary as defined

interest holder is its fair market value

For information about EFTPS, visit

in section 7701(a)(6) who is acting for

immediately after its transfer.

or see Publication 966,

the REMIC and who has furnished

The Secure Way to Pay Your Federal

If the transferor holds a regular

adequate notice as described in

Taxes for Business and Individual

interest and if the issue price of the

Regulations section 301.6903-1(b).

Taxpayers-EFTPS.

regular interest is more than its

In the prior paragraph, the term

adjusted basis, the excess is included

Interest and Penalties

“startup day” means any day selected

in income by the regular interest holder

by a REMIC that is on or before the first

Interest. Interest is charged on taxes

for the applicable tax years as if the

day on which interests in such REMIC

not paid by the due date, even if an

excess were market discount on a bond

are issued. Otherwise, “startup day” is

extension of time to file is granted.

and the holder had made an election

defined in the instructions for Item B —

Interest is also charged on penalties

under section 1278(b) to include this

Date REMIC started later.

imposed for failure to file, negligence,

market discount currently. If the

fraud, substantial valuation

transferor holds a residual interest and

Paid preparer’s information. If

misstatements, substantial

if the issue price of the regular interest

someone prepares the return and does

understatements of tax, and reportable

is more than its adjusted basis, the

not charge the REMIC, that person

transaction understatements; the

excess is amortized and included in the

should not sign the return or complete

interest is charged from the due date

residual interest holder’s income ratably

the paid preparer’s space. Generally,

(including extensions) to the date of

over the anticipated weighted average

anyone who is paid to prepare the

-3-

Instructions For Form 1066 - 2007 Page 3

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