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secured property; proceeds from broker

REMIC address if the change is made

Late payment penalty. The penalty

and barter exchange transactions;

after filing Form 1066.

for not paying the tax when due is

cancellation of a debt; interest income;

usually

of 1% of the unpaid tax for

Payment of Tax Due

certain payments made under a

each month or part of a month the tax

long-term care insurance contract and

is unpaid. The penalty cannot exceed

The REMIC must pay the tax due (page

certain accelerated death benefits;

25% of the unpaid tax. The penalty will

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

miscellaneous income payments;

not be charged if you can show

day of the 4th month following the end

original issue discount; distributions

reasonable cause for not paying on

of the tax year.

from pensions, annuities, retirement or

time.

Electronic deposit requirement.

profit-sharing plans, individual

Other penalties. Penalties can also

Beginning January 1, 2011, REMICs

retirement arrangement (IRAs),

be imposed for negligence, substantial

must use electronic funds transfer to

insurance contracts, etc.; proceeds

understatements of tax, reportable

make all federal tax deposits (such as

from real estate transactions; and

transaction understatements, and fraud.

deposits of employment tax, excise tax,

distributions from an HSA, Archer MSA,

See sections 6662, 6662A, and 6663.

and income tax). Forms 8109 and

or Medicare Advantage MSA. Also, use

8109-B, Federal Tax Deposit Coupon,

these returns to report amounts that

Contributions to the REMIC

cannot be used after December 31,

were received as a nominee on behalf

2010. Generally, electronic fund

Generally, no gain or loss is recognized

of another person.

transfers are made using the Electronic

by the REMIC or any of the regular or

Generally, a REMIC must file Forms

Federal Tax Payment System (EFTPS).

residual interest holders when property

1099-INT and 1099-OID, as

If you do not want to use EFTPS, you

is transferred to the REMIC in

appropriate, to report accrued income

can arrange for your tax professional,

exchange for an interest in the REMIC.

of $10 or more of regular interest

financial institution, payroll service, or

The adjusted basis of the interest

holders. See Regulations section

other trusted third party to make

received equals the adjusted basis of

1.6049-7. Also, every REMIC must file

deposits on your behalf.

the property transferred to the REMIC.

Forms 1099-MISC if it makes payments

To get more information about

The basis to the REMIC of property

of rents, commissions, or other fixed or

EFTPS or to enroll in EFTPS, visit

transferred by a regular or residual

determinable income (see section

or call 1-800-555-4477.

interest holder is its fair market value

6041) totaling $600 or more to any one

Additional information about EFTPS is

immediately after its transfer.

person in the course of its trade or

also available in Publication 966, The

business during the calendar year.

If the transferor holds a regular

Secure Way to Pay Your Federal

interest and if the issue price of the

For more details, see the 2010

Taxes.

regular interest is more than its

General Instructions for Forms 1099,

Interest and Penalties

adjusted basis, the excess is included

1098, 5498, and W-2G.

in income by the regular interest holder

Form 8275, Disclosure Statement,

Interest. Interest is charged on taxes

for the applicable tax years as if the

and Form 8275-R, Regulation

not paid by the due date, even if an

excess were market discount on a bond

Disclosure Statement. Use these

extension of time to file is granted.

and the holder had made an election

forms to disclose items or positions

Interest is also charged on penalties

under section 1278(b) to include this

taken on a tax return that are not

imposed for failure to file, negligence,

market discount currently. If the

otherwise adequately disclosed on the

fraud, substantial valuation

transferor holds a residual interest and

return or that are contrary to Treasury

misstatements, substantial

if the issue price of the regular interest

regulations (to avoid parts of the

understatements of tax, and reportable

is more than its adjusted basis, the

accuracy-related penalty or certain

transaction understatements; the

excess is amortized and included in the

preparer penalties).

interest is charged from the due date

residual interest holder’s income ratably

(including extensions) to the date of

Form 8300, Report of Cash

over the anticipated weighted average

payment. The interest charge is figured

Payments Over $10,000 Received in

life of the REMIC (as defined in

at a rate determined under section

a Trade or Business. Generally, this

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

6621.

form is used to report the receipt of

If the transferor holds a regular

more than $10,000 in cash or foreign

Late filing penalty. A penalty may be

interest and if the adjusted basis of the

currency in one transaction or a series

charged if the return is filed after the

regular interest is more than its issue

of related transactions.

due date (including extensions) or the

price, the regular interest holder treats

return does not show all the information

Form 8811, Information Return for

the excess as amortizable bond

required, unless each failure is due to

Real Estate Mortgage Investment

premium subject to the rules of section

reasonable cause. If the failure is due

Conduits (REMICs) and Issuers of

171. If the transferor holds a regular

to reasonable cause, attach an

Collateralized Debt Obligations. A

interest and if the adjusted basis of the

explanation to the return. If no taxes

REMIC uses this form to provide the

regular interest is more than its issue

are due, the penalty is $195 for each

information required by Regulations

price, the excess is deductible ratably

month or part of a month (up to 12

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

over the anticipated weighted average

months) the return is late or does not

information will be published in Pub.

life of the REMIC (as defined in

include the required information,

938, Real Estate Mortgage Investment

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

multiplied by the total number of

Conduits (REMICs) Reporting

persons who were residual interest

Information (And Other Collateralized

Payments Subject to

holders in the REMIC during any part of

Debt Obligations (CDOs)). This

Withholding at Source

the REMIC’s tax year for which the

publication contains a directory of

return is due. If tax is due, the penalty

If there are any nonresident alien

REMICs.

is the amount stated above plus 5% of

individuals, foreign partnerships, or

Pub. 938 is not printed. Instead, it is

the unpaid tax for each month or part of

foreign corporations as regular interest

available on the IRS website. For more

a month the return is late, up to a

holders or residual interest holders, and

information about Pub. 938,

visitwww.

maximum of 25% of the unpaid tax, or if

the REMIC has items of gross income

irs.gov.

the return is more than 60 days late, a

from sources within the United States

Form 8822, Change of Address. This

$135 minimum or the balance of tax

(see sections 861 through 865), see

form is used to inform the IRS of a new

due on the return, whichever is smaller.

Form 1042, Annual Withholding Tax

-3-

Instructions For Form 1066 - U.s. Real Estate Mortgage Investment Conduit (Remic) Income Tax Return - 2010 Page 3

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