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payment method, the REMIC will need to

transaction understatements, and fraud.

Form 8275, Disclosure Statement, and

make arrangements with its financial

See sections 6662, 6662A, and 6663.

Form 8275-R, Regulation Disclosure

institution ahead of time. Please check

Statement. Use these forms to disclose

Contributions to the REMIC

with the financial institution regarding

items or positions taken on a tax return

Generally, no gain or loss is recognized by

availability, deadlines, and costs.

that aren't otherwise adequately disclosed

the REMIC or any of the regular or

Financial institutions may charge a fee for

on the return or that are contrary to

residual interest holders when property is

payments made this way. To learn more

Treasury regulations (to avoid parts of the

transferred to the REMIC in exchange for

about the information required by a

accuracy-related penalty or certain

an interest in the REMIC. The adjusted

financial institution to make a same-day

preparer penalties).

basis of the interest received equals the

wire payment, go to

IRS.gov/

Form 8300, Report of Cash Payments

adjusted basis of the property transferred

SameDayWire.

Over $10,000 Received in a Trade or

to the REMIC.

Interest and Penalties

Business. Generally, this form is used to

The basis to the REMIC of property

report the receipt of more than $10,000 in

Interest. Interest is charged on taxes not

transferred by a regular or residual interest

cash or foreign currency in one transaction

paid by the due date, even if an extension

holder is its fair market value immediately

or a series of related transactions.

of time to file is granted. Interest is also

after its transfer.

charged on penalties imposed for failure

Form 8811, Information Return for Re-

If the transferor holds a regular interest

to file, negligence, fraud, substantial

al Estate Mortgage Investment Con-

and if the issue price of the regular interest

valuation misstatements, substantial

duits (REMICs) and Issuers of Collat-

is more than its adjusted basis, the excess

understatements of tax, and reportable

eralized Debt Obligations. A REMIC

is included in income by the regular

transaction understatements. Interest is

uses this form to provide the information

interest holder for the applicable tax years

charged from the due date (including

required by Regulations section

as if the excess were market discount on a

extensions) to the date of payment. The

1.6049-7(b)(1)(ii). This information will be

bond and the holder had made an election

interest charge is figured at a rate

published in Pub. 938, Real Estate

under section 1278(b) to include this

determined under section 6621.

Mortgage Investment Conduits (REMICs)

market discount currently. If the transferor

Reporting Information (And Other

Late filing penalty. A penalty may be

holds a residual interest and if the issue

Collateralized Debt Obligations (CDOs)).

charged if the return is filed after the due

price of the regular interest is more than its

This publication contains a directory of

date (including extensions) or the return

adjusted basis, the excess is amortized

REMICs.

doesn't show all the information required,

and included in the residual interest

Pub. 938 isn't printed. Instead, it is

unless each failure is due to reasonable

holder's income ratably over the

available on the IRS website. For more

cause.

anticipated weighted average life of the

information about Pub. 938, go to

IRS.gov/

If you receive a notice about a penalty

REMIC (as defined in Regulations section

Pub938.

after you file this return, reply to the notice

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

with an explanation of why the return was

Form 8822-B, Change of Address or

If the transferor holds a regular interest

late. We will determine if you meet the

Responsible Party—Business. This

and if the adjusted basis of the regular

reasonable-cause criteria. Don't attach an

form is used to inform the IRS of a new

interest is more than its issue price, the

explanation when you file your return.

REMIC address if the change is made

regular interest holder treats the excess as

after filing Form 1066.

If taxes are due, we will charge a

amortizable bond premium subject to the

section 6651 penalty of 5% of the unpaid

Payment of Tax Due

rules of section 171. If the transferor holds

tax for each month or part of a month the

a residual interest and if the adjusted

The REMIC must pay the tax due (page 1,

return is late, up to a maximum of 25% of

basis of the residual interest is more than

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

the unpaid tax; or, if the return is 60 days

its issue price, the excess is deductible

the 3rd month following the end of the tax

or more late, a $210 minimum or the

ratably over the anticipated weighted

year.

balance of the tax due on the return,

average life of the REMIC (as defined in

whichever is smaller. If no tax is due, we

Electronic deposit requirement.

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

may charge a section 6698 penalty of

REMICs must use electronic funds

Payments Subject to

$200 for each person who was a residual

transfer (EFT) to make all federal tax

interest holder in the REMIC at any time

Withholding at Source

deposits (such as deposits of employment

during the year for each month or part of a

tax, excise tax, and income tax).

If there are any nonresident alien

month the return is late, for up to 12

Generally, an EFT is made using the

individuals, foreign partnerships, or foreign

months. Although we can charge both the

Electronic Federal Tax Payment System

corporations as regular interest holders or

section 6651 and section 6698 penalties

(EFTPS). If you don't want to use EFTPS,

residual interest holders, and the REMIC

when taxes are due, we will generally

you can arrange for your tax professional,

has items of gross income from sources

charge only one of the penalties,

financial institution, payroll service, or

within the United States (see sections 861

whichever is greater.

other trusted third party to make electronic

through 865), see Form 1042, Annual

deposits on your behalf.

Late payment penalty. The penalty for

Withholding Tax Return for U.S. Source

To get more information about EFTPS

not paying the tax when due is usually

Income of Foreign Persons.

1 2

or to enroll in EFTPS, go to

EFTPS.gov

of 1% of the unpaid tax for each month or

Who Must Sign

call 1-800-555-4477. Additional

part of a month the tax is unpaid. The

information about EFTPS is also available

penalty can't exceed 25% of the unpaid

Startup day after November 9, 1988.

in Pub. 966.

tax. The penalty won't be charged if you

For a REMIC with a startup day after

can show reasonable cause for not paying

Same-day wire payment option. If the

November 9, 1988, Form 1066 may be

on time.

REMIC fails to submit a deposit

signed by any person who could sign the

transaction on EFTPS by 8 p.m. Eastern

return of the entity in the absence of the

Other penalties. Penalties can also be

time the day before the date a deposit is

REMIC election. Thus, the return of a

imposed for negligence, substantial

due, it can still make its deposit on time by

REMIC that is a corporation or trust would

understatements of tax, reportable

using the Federal Tax Collection Service

be signed by a corporate officer or a

(FTCS). To use the same-day wire

trustee, respectively. For REMICs with

-3-

Instructions For Form 1066 - U.s. Real Estate Mortgage Investment Conduit (Remic) Income Tax Return - 2017 Page 3

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