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Department of the Treasury

Internal Revenue Service

Instructions for Form

1099-PATR

(Revised April 2005)

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

regardless of the amount of the payment. A cooperative

What’s New

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

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

Pass-through credits. The American Jobs Creation Act of

the members may ask for and receive exemption from filing

2004 added two credits to the list of pass-through credits on

Form 1099-PATR. See Form 3491, Consumer Cooperative

Form 1099-PATR. The small ethanol producer credit (Form

Exemption Application, for information about how to apply for

6478) is available for tax years ending after October 22, 2004.

The credit for low sulfur diesel fuel production (Form 8896) is

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

stock on Form 1099-DIV, Dividends and Distributions.

available for tax years ending after December 31, 2002. See

Box 10 on page PATR-2.

Exceptions. Generally, you are not required to file Form

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

Deduction for domestic production activities income. The

American Jobs Creation Act of 2004 also added new section

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

199, income attributable to domestic production activities. A

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

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

Statements to Recipients

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

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

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

the qualified production activities income (QPAI) of the taxpayer

statement to the recipient. For more information about the

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

requirement to furnish an official form or acceptable substitute

regard to section 199) for the taxable year.

statement to recipients in person, by statement mailing, or

electronically, see part H in the 2005 General Instructions for

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

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

for cooperatives to pass through to their patrons receiving

certain patronage dividends or certain qualified per-unit retain

2nd TIN Not.

allocations from the cooperative a deduction equal to their

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

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

twice within 3 calendar years that the payee provided an

the cooperative, and must have been designated by the

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

cooperative in a written notice mailed to its patrons during the

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

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

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

have been engaged in the manufacturing, producing, growing,

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

extracting, or marketing of any agricultural or horticultural

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

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

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

498 of Internal Revenue Bulletin 2005-7 at

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

irs-irbs/irb05-07.

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

Box 6 that was previously used to report pass-through

taxpayer on receipt of the second notice. See Backup

credits will be used to report the deduction under section 199.

Withholding in the General Instructions for Forms 1099, 1098,

The open box below boxes 8 and 9 is designated as box 10 and

5498, and W-2G for more information.

will be used to report additional pass-through credits not

For information on the TIN Matching System offered by

reported in boxes 7 or 8.

TIP

the IRS, see the 2005 General Instructions for Forms

Reminder

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

In addition to these specific instructions, you should also use

Account Number

the 2005 General Instructions for Forms 1099, 1098, 5498, and

The account number is required if you have multiple accounts

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

•

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

Backup withholding

•

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

Magnetic media and electronic reporting requirements

•

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

Penalties

•

part P in the 2005 General Instructions for Forms 1099, 1098,

Who must file (nominee/middleman)

•

5498, and W-2G.

When and where to file

•

Taxpayer identification numbers

Box 1. Patronage Dividends

•

Statements to recipients

•

Enter the total patronage dividends paid in cash (qualified or

Corrected and void returns

•

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

Instructions For Form 1099-Patr - Federal Taxable Distributions Received From Cooperatives - 2005 Page 3

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