[Code of Federal Regulations]
[Title 26, Volume 13]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR]

[Page 295-304]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
Procedure and Administration--Table of Contents
 
Sec.  1.6049-4  Return of information as to interest paid and original 
issue discount includible in gross income after December 31, 1982.

    (a) Requirement of reporting--(1) In general. Except as provided in 
paragraph (c) of this section, an information return shall be made by a 
payor, as defined in paragraph (a)(2) of this section, of amounts of 
interest and original issue discount paid after December 31, 1982. Such 
return shall contain the information described in paragraph (b) of this 
section.
    (2) Payor. For payments made after December 31, 2002, a payor is a 
person described in paragraph (a)(2)(i) or (ii) of this section.
    (i) Every person who makes a payment of the type and of the amount 
subject to reporting under this section (or under an applicable section 
under this chapter) to any other person during a calendar year.
    (ii) Every person who collects on behalf of another person payments 
of the type and of the amount subject to reporting under this section 
(or under an applicable section under this chapter), or who otherwise 
acts as a middleman (as defined in paragraph (f)(4) of this section) 
with respect to such payment.
    (b) Information to be reported--(1) Interest payments. Except as 
provided in paragraphs (b) (3) and (5) of this section, in the case of 
interest other than original issue discount treated as interest under 
Sec.  1.6049-5(f), an information return on Form 1099 shall be made for 
the calendar year showing the aggregate amount of the payments, the 
name, address, and taxpayer identification number of the person to whom 
paid, the amount of tax deducted and withheld under section 3406 from 
the payments, if any, and such other information as required by the 
forms. An information return is generally not required if the amount of 
interest paid to a person aggregates less than $10 or if the payment is 
made to a person who is an exempt recipient described in paragraph 
(c)(1)(ii) of this section, unless the payor backup withholds under 
section 3406 on such payment (because, for example, the payee (i.e., 
exempt recipient) has failed to furnish a Form W-9 on request), in which 
case the payor must make a return under this section, unless the payor 
refunds the amount withheld pursuant to Sec.  31.6413(a)-3 of this 
chapter (Employment Tax Regulations). For reporting interest paid to a 
Canadian nonresident alien individual, see Sec.  1.6049-8.
    (2) Original issue discount. Except as provided in paragraph (b)(3) 
and (b)(5) of this section, in the case of original issue discount, an 
information return on Forms 1096 and 1099 shall be made for each 
calendar year of any holder of an obligation as to which there is 
original issue discount includible in gross income aggregating $10 or 
more. For calendar years before 1992, semiannual record date reporting 
under Sec.  1.6049-1(a)(1)(ii)(b)(1) may be used, and if it is used, the 
original issue discount includible in gross income is determined by 
treating each holder as holding the obligation on every day it was 
outstanding during the calendar year. An information return shall be 
made, however, in any case in which an amount of tax is required to be 
deducted and withheld under section 3406. In such case, the amount 
required to be reported is the amount subject to withholding even if the 
amount of original issue discount includible in gross income is less 
than $10. With respect to an obligation described in Sec.  1.1232-3A (e) 
or (f) (relating respectively to deposits

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in banks and similar financial institutions and to face-amount 
certificates), Sec.  1.6049-1(a)(1)(ii)(d) and the last sentence of 
Sec.  1.6049-1(a)(1)(ii)(a)(2) shall apply. The information return shall 
show:
    (i) The name, address, and taxpayer identification number of each 
record holder for whom an amount of original issue discount is 
includible in gross income;
    (ii) The account, serial, or other identifying number of each 
obligation with respect to which a return is being made;
    (iii) The aggregate amount of original issue discount includible in 
the gross income of each holder for the period during the calendar year 
for which the return is made (or, if the aggregation rules of Sec.  
1.6049-1(a)(1)(ii)(b)(2) are being used, the aggregate amount or 
original issue discount for the period such holder held the 
obligations). For calendar years before 1992, semiannual record date 
reporting under Sec.  1.6049-1(a)(1)(ii)(b)(1) may be used, and if it is 
used, the original issue discount includible in gross income is 
determined by treating each holder as holding the obligation on every 
day it was outstanding during the calendar year. For purposes of this 
section, an obligation shall be considered to be outstanding from the 
date of original issue (as defined in Sec.  1.1232-3(b)(3));
    (iv) The amount of tax withheld under section 3406, if any;
    (v) The name and address of the person filing the return: and
    (vi) Such other information as is required by the forms.

    Section 1.6049-1(a)(1)(ii)(b)(2) and, for calendar years before 
1992, Sec.  1.6049-1(a)(1)(ii) (b)(1), and (c), apply for purposes of 
this paragraph.
    (3) Returns made by middleman--(i) In general. Except as provided in 
paragraph (b)(5) of this section, every person acting as a middleman (as 
defined in paragraph (f)(4) of this section) shall make an information 
return for the calendar year. In the case of interest payments (other 
than original issue discount and other than interest described in Sec.  
1.6049-8), the information return shall be made on Form 1099 and shall 
show the aggregate amount of the interest, the name, address, and 
taxpayer identification number of the person on whose behalf received, 
the amount of tax withheld under section 3406, if any, and such other 
information as required by the forms. In the case of original issue 
discount, the information return shall show the information required to 
be shown for the person on whose behalf received, as described in 
paragraph (b)(2) of this section. See Sec.  1.6049-5(f) to determine 
whether a middleman is required to make an information return with 
respect to original issue discount. A middleman shall make an 
information return regardless of whether the middleman receives a Form 
1099. A middleman shall not be required to make an information return if 
the payment of interest aggregates less than $10 or if the payment is 
made to an exempt recipient described in paragraph (c)(1)(ii) of this 
section, unless the payor backup withholds under section 3406 on such 
payment (because, for example, the payee has failed to furnish a Form W-
9 on request), in which case the payor must make a return under this 
section, unless the payor refunds the amount withheld pursuant to Sec.  
31.6413(a)-3 of this chapter (Employment Tax Regulations).
    (ii) Forwarding of interest coupons and original issue discount 
obligations. In the case of a middleman who, from within the United 
States, forwards an interest coupon or discount obligation on behalf of 
a payee for presentation, collection or payment outside the United 
States, the middleman shall make an information return on Form 1099 for 
the calendar year showing, in the case of an interest coupon, the 
information required under paragraph (b)(3)(i) of this section and, in 
the case of a discount obligation, information required under paragraph 
(b)(2) of this section. For purposes of this paragraph (b)(3)(ii), a 
middleman is considered to forward an interest coupon or discount 
obligation on behalf of a payee for presentation, collection or payment 
outside the United States if the middleman forwards the coupon or 
obligations outside the United States on or after the date when the 
payee is entitled to be paid or at an earlier date that is within 90 
days of such date or if the middleman has actual knowledge that the

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coupon or obligation is being forwarded outside the United States for 
presentation, collection, or payment outside the United States. However, 
the transfer, although subject to information reporting under this 
section, is not subject to backup withholding under section 3406.
    (iii) Example. The following example illustrates the provisions of 
paragraph (b)(3)(ii) of this section:

    Example. Individual F, who is entitled to payment on an interest 
coupon, instructs an office of Bank M in the United States to forward 
the coupon to Bank N for collection by Bank N outside the United States. 
Bank M in the United States forwards the interest coupon to Bank N 
outside the United States. Bank M is required to make an information 
return for the calendar year under paragraph (b)(3)(ii) of this section 
showing the aggregate amount of the interest coupon forwarded, the name, 
address of the permanent residence, and the taxpayer identification 
number, if any, of Individual F and such other information as the form 
requires.
    (4) Returns made with respect to payments on certificates of deposit 
issued in bearer form. Except as provided in paragraph (b)(5) of this 
section, every person carrying on the banking business who makes 
payments of interest to another person (whether or not aggregating $10 
or more) during a calendar year with respect to a certificate of deposit 
issued in bearer form shall make an information return on Forms 1096 and 
1099. The information return shall show the information required in 
Sec.  1.6049-1(a)(1)(vi) (a) through (e) inclusive and a statement as to 
the amount of tax withheld under section 3406, if any.
    (5) Interest payments to Canadian nonresident alien individuals--(i) 
General rule. In the case of interest paid to a Canadian nonresident 
alien individual (as described in Sec.  1.6049-8(a)), the payor or 
middleman shall make an information return on Form 1042-S for the 
calendar year in which the interest is paid. The payor or middleman 
shall prepare and transmit Form 1042-S at the time and in the manner 
prescribed by section 1461 and the regulations under that section and by 
the form and its accompanying instructions. See Sec.  1.6049-6(e)(4) for 
furnishing a copy of the Form 1042-S to the payee. To determine whether 
an information return is required for original issue discount, see 
Sec. Sec.  1.6049-5(f) and 1.6049-8(a).
    (ii) Effective date. Paragraph (b)(5)(i) of this section shall be 
effective for payments made after December 31, 1996 with respect to a 
Form W-8 (Certificate of Foreign Status) furnished to the payor or 
middleman after that date.
    (c) Information returns not required--(1) Payment to exempt 
recipient--(i) In general. No information return is required with 
respect to any payment made to an exempt recipient described in 
paragraph (c)(1)(ii) of this section, except to the extent otherwise 
provided in Sec.  1.6049-5(d)(3) (ii) and (iii). However, if the payor 
backup withholds under section 3406 on such payment (because, for 
example, the payee has failed to furnish a Form W-9 on request), then 
the payor is required to make a return under this section, unless the 
payor refunds the amount withheld in accordance with Sec.  31.6413(a)-3 
of this chapter (Employment Tax Regulations).
    (ii) Exempt recipient defined. The term exempt recipient means any 
person described in paragraphs (c)(1)(ii)(A) through (Q) of this 
section. An exempt recipient is generally exempt from information 
reporting without filing a certificate claiming exempt status unless the 
provisions of this paragraph (c)(1)(ii) require a payee to file a 
certificate.

A payor may, in any case, require a payee that is a U.S. person not 
otherwise required to file a certificate under this paragraph (c)(1)(ii) 
to file a certificate in order to qualify as an exempt recipient. See 
Sec.  31.3406(h)-3(a)(1)(iii) and (c)(2) of this chapter for the 
certificate that a payee that is a U.S. person must provide when a payor 
requires the certificate to treat the payee as an exempt recipient under 
this paragraph (c)(1)(ii). A payor may treat a payee as an exempt 
recipient based upon a properly completed form as described in Sec.  
31.3406(h)-3(e)(2) of this chapter, its actual knowledge that the payee 
is a person described in this paragraph (c)(1)(ii), or the indicators 
described in this paragraph (c)(1)(ii).
    (A) Corporation. A corporation, as defined in section 7701(a)(3), 
whether domestic or foreign, is an exempt recipient. In addition, for 
purposes of this paragraph (c)(1), the term corporation

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includes a partnership all of whose members are corporations described 
in this paragraph (c)(1), but only if the partnership files with the 
payor a certificate stating that each member of the partnership meets 
one of the requirements of paragraph (c)(1)(ii)(A) (1) through (4) of 
this section. Absent actual knowledge otherwise, a payor may treat a 
payee as a corporation (and, therefore, as an exempt recipient) if one 
of the requirements of paragraph (c)(1)(ii)(A) (1), (2), (3), or (4), of 
this section are met before a payment is made.
    (1) The name of the payee contains an unambiguous expression of 
corporate status that is Incorporated, Inc., Corporation, Corp., P.C., 
(but not Company or Co.) or contains the term insurance company, 
indemnity company, reinsurance company, or assurance company, or its 
name indicates that it is an entity listed as a per se corporation under 
Sec.  301.7701-2(b)(8)(i) of this chapter.
    (2) The payor has on file a corporate resolution or similar document 
clearly indicating corporate status. For this purpose, a similar 
document includes a copy of Form 8832, filed by the entity to elect 
classification as an association under Sec.  301.7701-3(b) of this 
chapter.
    (3) The payor receives a Form W-9 which includes an EIN and a 
statement from the payee that it is a domestic corporation.
    (4) The payor receives a withholding certificate described in Sec.  
1.1441-1(e)(2)(i), that includes a certification that the person whose 
name is on the certificate is a foreign corporation.
    (B) Tax exempt organization--(1) In general. Any organization that 
is exempt from taxation under section 501(a) is an exempt recipient. A 
custodial account under section 403(b)(7) shall be considered an exempt 
recipient under this paragraph. A payor may treat an organization as an 
exempt recipient under this paragraph (c)(1)(ii)(B) without requiring a 
certificate if the organization's name is listed in the compilation by 
the Commissioner of organizations for which a deduction for charitable 
contributions is allowed, if the name of the organization contains an 
unambiguous indication that it is a tax-exempt organization, or if the 
organization is known to the payor to be a tax-exempt organization.
    (2) Examples. The application of the provisions of this paragraph 
(c)(1)(ii)(B) may be illustrated by the following examples:

    Example 1. The following persons maintain accounts at M Bank: N 
College, O University, and P Church. M may treat N, O, and P as exempt 
recipients even though such persons have not filed an exemption 
certificate with M because the names of the organizations contain an 
unambiguous indication that they are tax exempt organizations.
    Example 2. Q is listed in the current edition of Internal Revenue 
Service Publication 78 as an organization for which deductions are 
permitted for charitable contributions under section 170(c). Such 
listing has not been revoked by an announcement published in the 
Internal Revenue Bulletin (see Sec.  601.601(d)(2) of this chapter). A 
payor may treat Q as an exempt recipient even though Q has not filed an 
exemption certificate with the payor.
    Example 3. Employer R maintains a section 403(b)(7) custodial 
account with Regulated Investment Company S on behalf of R's employees. 
S may treat the account as an exempt recipient even though R or its 
employees have not filed an exemption certificate with S.

    (C) Individual retirement plan. An individual retirement plan as 
defined in section 7701(a)(37) is an exempt recipient. A payor may treat 
any such plan of which it is the trustee or custodian as an exempt 
recipient under this paragraph (c)(1) without requiring a certificate.
    (D) United States. The United States Government and any wholly-owned 
agency or instrumentality thereof are exempt recipients. A payor may 
treat a person as an exempt recipient under this paragraph (c)(1) 
without requiring a certificate if the name of such person reasonably 
indicates it is described in this paragraph (c)(1).
    (E) State. A State, the District of Columbia, a possession of the 
United States, a political subdivision of any of the foregoing, wholly-
owned agency or instrumentality of any one or more of the foregoing, and 
a pool or partnership composed exclusively of any of the foregoing are 
exempt recipients. A payor may treat a person as an exempt recipient 
under this paragraph (c)(1) without requiring a certificate if the

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name of such person reasonably indicates it is described in this 
paragraph (c)(1) or if such person is known generally in the community 
to be a State, the District of Columbia, a possession of the United 
States or a political subdivision or a wholly-owned agency or 
instrumentality of any one or more of the foregoing (for example, an 
account held in the name of ``Town of S'' or ``County of T'' may be 
treated as held by an exempt recipient under this paragraph 
(c)(1)(ii)(E)).
    (F) Foreign government. A foreign government, a political 
subdivision of a foreign government, and any wholly-owned agency or 
instrumentality of either of the foregoing are exempt recipients. A 
payor may treat a foreign government or a political subdivision thereof 
as an exempt recipient under this paragraph (c)(1) without requiring a 
certificate provided that its name reasonably indicates that it is a 
foreign government or provided that it is known to the payor to be a 
foreign government or a political subdivision thereof (for example, an 
account held in the name of the ``Government of V'' may be treated as 
held by a foreign government).
    (G) International organization. An international organization and 
any wholly-owned agency or instrumentality thereof are exempt 
recipients. The term international organization shall have the meaning 
ascribed to it in section 7701(a)(18). A payor may treat a payee as an 
international organization without requiring a certificate if the payee 
is designated as an international organization by executive order 
(pursuant to 22 U.S.C. 288 through 288(f)).
    (H) Foreign central bank of issue. A foreign central bank of issue 
is an exempt recipient. A foreign central bank of issue is a bank which 
is by law or government sanction the principal authority, other than the 
government itself, issuing instruments intended to circulate as 
currency. See Sec.  1.895-1(b)(1). A payor may treat a person as a 
foreign central bank of issue (and, therefore, as an exempt recipient) 
without requiring a certificate provided that such person is known 
generally in the financial community as a foreign central bank of issue 
or if its name reasonably indicates that it is a foreign central bank of 
issue.
    (I) Securities or commodities dealer. A dealer in securities, 
commodities, or notional principal contracts, that is registered as such 
under the laws of the United States or a State or under the laws of a 
foreign country is an exempt recipient. A payor may treat a dealer as an 
exempt recipient under this paragraph (c)(1) without requiring a 
certificate if the person is known generally in the investment community 
to be a dealer meeting the requirements set forth in this paragraph 
(c)(1) (for example, a registered broker-dealer or a person listed as a 
member firm in the most recent publication of members of the National 
Association of Securities Dealers, Inc.).
    (J) Real estate investment trust. A real estate investment trust, as 
defined in section 856 and Sec.  1.856-1, is an exempt recipient. A 
payor may treat a person as a real estate investment trust (and, 
therefore, as an exempt recipient) without requiring a certificate if 
the person is known generally in the investment community as a real 
estate investment trust.
    (K) Entity registered under the Investment Company Act of 1940. An 
entity registered at all times during the taxable year under the 
Investment Company Act of 1940, as amended (15 U.S.C. 80a-1), (or during 
such portion of the taxable year that it is in existence), is an exempt 
recipient. An entity that is created during the taxable year will be 
treated as meeting the registration requirement of the preceding 
sentence provided that such entity is so registered at all times during 
the taxable year for which such entity is in existence. A payor may 
treat such an entity as an exempt recipient under this paragraph (c)(1) 
without requiring a certificate if the entity is known generally in the 
investment community to meet the requirements of the preceding sentence.
    (L) Common trust fund. A common trust fund, as defined in section 
584(a), is an exempt recipient. A payor may treat the fund as an exempt 
recipient without requiring a certificate provided that its name 
reasonably indicates that it is a common trust fund or

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provided that it is known to the payor to be a common trust fund.
    (M) Financial institution. A financial institution such as a bank, 
mutual savings bank, savings and loan association, building and loan 
association, cooperative bank, homestead association, credit union, 
industrial loan association or bank, or other similar organization, 
whether organized in the United States or under the laws of a foreign 
country is an exempt recipient. A financial institution also includes a 
clearing organization defined in Sec.  1.163-5(c)(2)(i)(D)(8) and the 
Bank for International Settlements. A payor may treat any person 
described in the preceding sentence as an exempt recipient without 
requiring a certificate if the person's name (including a foreign name, 
such as ``Banco'' or ``Banque'') reasonably indicates the payee is a 
financial institution described in the preceding sentence. In the case 
of a foreign person, a payor may also treat a person on such list as the 
Internal Revenue Service may publish or approve (such as in the Thomson 
Bank Directory or a list approved by the Federal Reserve Board).
    (N) Trust. A trust which is exempt from tax under section 664(c) 
(i.e., a charitable remainder annuity trust or a charitable remainder 
unitrust) or is described in section 4947(a)(1) (relating to certain 
charitable trusts) is an exempt recipient. A payor which is a trustee of 
the trust may treat the trust as an exempt recipient without requiring a 
certificate.
    (O) Nominees or custodians. A nominee or custodian.
    (P) Brokers. A broker as defined in section 6045(c) and Sec.  
1.6045-1(a)(1).
    (Q) Swap dealers. A dealer in notional principal contracts as 
defined in Sec.  1.446-3(c)(4)(iii).
    (iii) Exempt recipient no longer exempt. Any person who ceases to be 
an exempt recipient shall, no later than 10 days after such cessation, 
notify the payor in writing when it ceases to be an exempt recipient 
unless it reasonably appears that the person formerly qualifying as an 
exempt recipient will not thereafter receive a reportable payment from 
the payor. If a payor treats a person as an exempt recipient by 
requiring the exempt recipient to file a certificate claiming exempt 
status, that person shall revoke the certificate as provided in the 
preceding sentence. If the exempt recipient terminates its relationship 
with the payor prior to the time that the notice of change in status is 
otherwise required, the exempt recipient is not required to notify the 
payor. If, however, the person who formerly qualified as an exempt 
recipient later reinstates the relationship with the payor, the person 
must, prior to receiving a reportable payment from such relationship, 
notify the payor that it no longer qualifies as an exempt recipient in 
case the payor relies upon the previous treatment.
    (2) Payments by certain middlemen. An information return shall not 
be required if:
    (i) The record owner is required to file a fiduciary return on Form 
1041 disclosing the name, address, and taxpayer identification number of 
the actual owner, and furnishes Form K-1 to each actual owner containing 
the information required to be shown on the form, including amounts 
withheld under section 3406;
    (ii) The record owner is a nominee of a banking institution or trust 
company exercising trust powers, and such banking institution or trust 
company is required to file a fiduciary return on Form 1041 disclosing 
the name, address, and identifying number of the actual owner, and 
furnishes Form K-1 to each actual owner containing the information 
required to be shown on the form, including amounts withheld under 
section 3406;
    (iii) The record owner is a banking institution or trust company 
exercising trust powers, or a nominee thereof, and the actual owner is 
an organization exempt from taxation under section 501(a) for which such 
banking institution or trust company files an annual return, but only if 
the name, address, and taxpayer identification number of the record 
owner is included on or with the Form 1041 fiduciary return filed for 
the estate or trust or the annual return filed for the tax exempt 
organization.
    (d) Special rules--(1) Aggregation of payments. For purposes of 
paragraph (b) of this section, until such time as the Commissioner 
determines that it is

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feasible to require aggregation of payments on two or more accounts, 
insurance contracts, or investment certificates, and, until this section 
is amended accordingly to provide for reporting on an aggregate basis, 
the requirement for filing Form 1099 under this section will be met if a 
person making payments of interest subject to reporting files a separate 
Form 1099 with respect to each account, insurance contract, or 
investment certificate. In the case of obligations described in section 
6049(b)(1)(A), separate Forms 1099 may be filed as provided in the 
preceding sentence with respect to holdings in different issues.
    (2) Treatment of original issue discount. The amount of original 
issue discount subject to reporting under section 6049 shall be the 
amount of original issue discount includible in the gross income of any 
holder that is treated as paid under Sec.  1.6049-5(f).
    (3) Conversion into United States dollars of amounts paid in foreign 
currency--(i) Conversion rules. When a payment is made in foreign 
currency, the U.S. dollar amount of the payment shall be determined by 
converting such foreign currency into U.S. dollars on the date of 
payment at the spot rate (as defined in Sec.  1.988-1(d)(1)) or pursuant 
to a reasonable spot rate convention. For example, a withholding agent 
may use a month-end spot rate or a monthly average spot rate. A spot 
rate convention must be used consistently with respect to all non-dollar 
amounts withheld and from year to year. Such convention cannot be 
changed without the consent of the Commissioner or the Commissioner's 
delegate.
    (ii) Special rule for Sec.  1.988-5(a) transactions where the payor 
on both components of a qualified hedging transaction is the same 
person--(A) In general. Interest or original issue discount on a 
qualified debt instrument that is part of a qualified hedging 
transaction under Sec.  1.988-5(a) shall be computed for section 6049 
reporting purposes under the rules described in Sec.  1.988-5(a)(9)(ii) 
if--
    (1) The payor on the qualified debt instrument and the counterparty 
to the Sec.  1.988-5(a) hedge are the same person; and
    (2) The payee complies with the requirements of Sec.  1.988-5(a) and 
so notifies its payor prior to the date required for filing Form 1099 as 
required by this section.
    (B) Effective date. The provisions of this paragraph (d)(3)(ii) 
apply to transactions entered into after December 31, 2000.
    (4) Determination of person to whom interest or original issue 
discount is paid or for whom it is received. Section 1.6049-1(a)(3) and 
(4) shall apply with respect to payments of interest and original issue 
discount after December 31, 1982.
    (5) Payments by governmental units. In the case of payments made by 
any governmental unit or any agency or instrumentality thereof, the 
officer or employee having control of the payment of interest or 
original issue discount (or the person appropriately designated for 
purposes of this section) shall make the returns and statements required 
under section 6049.
    (6) When payment deemed made--(i) In general. Except as provided in 
paragraph (d)(6)(ii) of this section, for purposes of section 6049, 
interest is deemed to have been paid when it is credited or set apart to 
a person without any substantial limitation or restriction as to the 
time or manner of payment or condition upon which payment is to be made, 
and is made available to him so that it may be drawn at any time, and 
its receipt brought within his own control and disposition.
    (ii) Instruments paid on presentment or demand. In the case of a 
payment made on an obligation described in paragraph (e)(2) of this 
section (relating to transactional reporting), interest is deemed to 
have been paid at the time the obligation is presented for payment. For 
example, interest represented by a coupon detached from a bond is 
considered paid for purposes of section 6049 when the coupon is 
presented for payment.
    (7) Magnetic media requirement. For rules relating to permission to 
submit the information required by Form 1099 on magnetic tape or other 
media, see Sec.  1.9101-1. For the requirement to submit the information 
required by Form 1099 on magnetic media for payments after December 31, 
1983, see section 6011(e) and Sec.  301.6011-2 of this chapter 
(Regulations on Procedure and Administration).

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    (8) Obligations that are not exempt from taxation. When an issuer of 
an obligation that is not exempt from taxation receives an envelope or 
``shell'', signed by the payee, stating that interest on the obligation 
is exempt from taxation under section 103(a) (as described in Sec.  
1.6049-5(b)(2), the issuer shall make an information return under 
section 6049. The information return shall show the name, address, and 
taxpayer identification number of the person who signed the statement 
claiming that interest on the obligation is exempt from taxation, the 
amount of interest paid, and such other information as is required by 
the form. An information return is required regardless of the amount of 
interest. The issuer shall also furnish a written statement to such 
person showing the information required by Sec.  1.6049-6(b).
    (9) Savings bonds--(i) In general. A person who makes payment on a 
United States savings bond when the bond is presented for payment shall 
report the difference between the amount to be paid and the amount paid 
for the bond. The amount subject to reporting shall not be reduced to 
take into account:
    (A) Amounts previously included in the income of a holder as a 
result of an election under section 454 to include annually the increase 
in the redemption price of the bond; or
    (B) Amounts accrued prior to transfer of the bond where the bond has 
been reissued in the name of the person presenting the bond for payment.

With respect to a savings bond that is reissued in another person's 
name, the amount subject to reporting when the bond is reissued is the 
amount of interest that has accrued. With respect to a savings bond that 
is exchanged in a tax-deferred transaction (as described in section 
1037), the amount subject to reporting is the amount of cash paid to the 
holder at the time of the transaction.
    (ii) Examples. The application of the provisions of paragraph 
(d)(9)(i) of this section may be illustrated by the following examples:

    Example (1). On June 10, 1943, A purchases a $50 Series E savings 
bond. The amount paid for the savings bond is $37.50. A elects under 
section 454 to include the increase in the redemption price of the bond 
annually in income. A presents the bond to Bank M to be cashed on July 
1, 1983. The amount to be paid on the bond on that date is $204.96. Bank 
M is required to make an information return under section 6049 showing 
that it paid $167.46 (the difference between $204.96 and $37.50) of 
interest, without regard to A's election to include annually the 
increase in the redemption price of the bond.
    Example (2). On December 1, 1970, B purchases a $500 Series E 
savings bond. The amount paid for the bond is $375. On August 1, 1984, 
the bond is reissued by the Bureau of Public Debt by deleting B's name 
and inserting the name of B's child. At the time of reissue, the 
redemption value of the bond is $1,015.80. The accrued interest is 
$640.80 (the difference between $1,015.80 and $375). The reissue is a 
taxable transaction, and B must include in income the accrued interest 
at the time of reissue. The Bureau of Public Debt is required to make an 
information return under section 6049 showing that it paid $640.80 of 
interest to B.
    Example (3). Assume the same facts as in example (2) except that B 
exchanges the bond for a Series HH savings bond in the amount of $1,000 
issued in B's name. The exchange is tax-deferred under section 1037. The 
Bureau of Public Debt stamps a legend on the bond stating that interest 
of $625 has been deferred. The amount of $15.80 is paid to B. The Bureau 
of the Public Debt must make an informatiion return showing that it paid 
$15.80 of interest to B.
    Example (4). Assume the same facts as in example (3) except that the 
exchange is not a tax-deferred exchange. The Bureau of the Public Debt 
must make an information return showing that it paid $640.80 of interest 
to B.

    (e) Transactional reporting--(1) In general. An information return 
required to be made under paragraph (b) of this section may be made on a 
transaction-by-transaction basis, rather than on an annual aggregation 
basis, if payment described in paragraph (e)(2) of this section is made 
by a person described in paragraph (e)(3) of this section.
    (2) Payments subject to transactional reporting. An information 
return may be made on a transactional basis if payment is made on:
    (i) A United States savings bond,
    (ii) An interest coupon (but see Sec.  1.6049-5(b) which provides 
that no information return is required to be made with respect to an 
interest coupon that is exempt from taxation),
    (iii) A discount obligation having a maturity at issue of 1 year or 
less, including commercial paper and short-

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term government obligations defined in section 1232(a)(3), and
    (iv) Any obligation similar to those described in subdivisions (i) 
through (iii).

The information return with respect to payments on the types of 
obligations described in this paragraph shall be made on Form 1099-INT. 
A payor may include all interest paid in one transaction on one 
information return, irrespective of whether obligations of different 
issuers are paid as part of the transaction.
    (3) Persons subject to transactional reporting. A person may make a 
return on a transactional basis if the person is:
    (i) A middleman (as defined in paragraph (f)(4) of this section) who 
is required to make an information return under paragraph (b)(3) of this 
section with respect to any payment described in paragraph (e)(2) of 
this section, or
    (ii) A Federal agency making payments on a United States savings 
bond.
    (4) Transaction defined. For purposes of this paragraph (e), a 
transaction means a payment at one time on one or more obligations. For 
example, if an individual who is exempt from withholding under section 
3406 presents at one time five Series EE bonds on each of which $3 of 
interest has accrued, $15 of interest will be paid as part of the 
transaction. Accordingly, an information return is required under Sec.  
1.6049-4 (a)(2)(iii) because the interest paid in the transaction 
exceeds $10. If only three of the savings bonds were presented, however, 
no return would be required even if the remaining two bonds were 
redeemed the following day. See paragraph (a)(2)(i) of this section for 
the requirement that an information return be made if any amount of tax 
is withheld under section 3406.
    (5) Information required. The information return for any transaction 
under paragraph (e) of this section shall show the following:
    (i) The name, address, and taxpayer identification number of the 
person to whom the interest is paid;
    (ii) The name and address of the person filing the form;
    (iii) The amount of interest paid;
    (iv) The amount of tax withheld under section 3406, if any; and
    (v) Such other information as is required by the form.
    (f) Definitions. For purposes of section 6049, this section, and 
Sec. Sec.  1.6049-5 and 1.6049-6:
    (1) Person. The term person includes any governmental unit, 
international organization, and any agency or instrumentality thereof. 
Therefore, interest paid by one of these entities must be reported 
unless one of the exceptions under section 6049 applies.
    (2) Natural person. The term natural person means any individual, 
but shall not include a partnership (whether of not composed entirely of 
individuals), a trust, or an estate.
    (3) Obligation. The term obligation includes bonds, debentures, 
notes, certificates, and other evidences of indebtedness regardless of 
how denominated.
    (4) Middleman--(i) In general. The term middleman means any person. 
including a financial institution as described in paragraph 
(c)(1)(ii)(M) of this section, a broker as defined in section 6045(c), 
or a nominee, who makes payment of interest for, or collects interest on 
behalf of, another person, or otherwise acts in a capacity as 
intermediary between a payor and a payee. For example, a person (other 
than an issuer of an obligation) who makes payment on an interest coupon 
of the obligation to another person is a middleman, irrespective of 
whether such person purchases the coupon for his own account, accepts 
the coupon as agent for the payee, or otherwise deals with the coupon. 
The term ``middleman'' also includes a trustee, including a corporate 
trustee of a trust where the trust is the payee. See Sec.  1.6049-
4(c)(2) providing that the trustee does not have to make an information 
return on Form 1099 to a beneficiary if the trustee is required to file 
Form 1041 and furnishes Form K-1 to the beneficiary showing the 
information required to be shown on the form, including amounts withheld 
under section 3406. A person shall be considered to be a middleman as to 
any portion of an interest payment made to such person which portion is 
actually owned by another person, whether or not the other person's name 
is also shown on the information return filed with respect to such 
interest payment, except that a husband or

[[Page 304]]

wife will not be considered as acting in the capacity of a middleman 
with respect to his or her spouse. A person who, from within the United 
States, forwards an interest coupon or discount obligation on behalf of 
a payee for presentation, collection or payment outside the United 
States is also a middleman for purposes of this section (but the 
transfer, although subject to information reporting under this section, 
does not make the payment subject to backup withholding under section 
3406).
    (ii) Example. The application of the provisions of paragraph (f)(4) 
of this section may be illustrated by the following example:

    Example. In January, 1984, Broker B purchases on behalf of its 
customer, Individual A, and obligation issued by partnership RR in a 
public offering on that date. Broker B holds the obligation for A 
throughout 1984. Broker B is required to make an information return 
showing the amount of original issue discount treated as paid to A under 
Sec.  1.6049-5(f).

    (g) Time and place for filling a return for the payment of 
interest--(1) Annual return. Except as provided in paragraph (g)(2) of 
this section, the returns required under this section for any calendar 
year for the payment of interest shall be filed after September 30 of 
such year, but not before the payor's final payment to the payee for the 
year, and on or before February 28 (March 31 if filed electronically) of 
the following year. Such returns shall be filed with the appropriate 
Internal Revenue Service Center, the address of which is listed in the 
instructions for Form 1096. For extensions of time for filing returns 
under this section, see Sec.  1.6081-1.
    (2) Transactional return. In the case of a return under paragraph 
(e) of this section, relating to returns on a transactional basis, such 
return shall be filed at any time but in no event later than February 28 
(March 31 if filed electronically) of the year following the calendar 
year in which the interest was paid. The return shall be filed with the 
appropriate Internal Revenue Service Center, the address of which is 
listed in the instructions for Form 1096. For extensions of time for 
filing returns under this section, see Sec.  1.6081-1.
    (3) Cross-reference to penalty. For provisions relating to the 
penalty provided for failure to file timely a correct information return 
required under section 6049(a) and Sec.  1.6049-4(a)(1), see Sec.  
301.6721-1 of this chapter (Procedure and Administration Regulations). 
See Sec.  301.6724-1 of this chapter for the waiver of a penalty if the 
failure is due to reasonable cause and is not due to willful neglect.

[T.D. 7881, 48 FR 12968, Mar. 28, 1983, as amended by T.D. 8366, 56 FR 
49518, Sept. 30, 1991; T.D. 8664, 61 FR 17573, Apr. 22, 1996; T.D. 8734, 
62 FR 53480, Oct. 14, 1997; T.D. 8804, 63 FR 72188, Dec. 31, 1998; T.D. 
8856, 64 FR 73412, Dec. 30, 1999; T.D. 8881, 65 FR 32207, 32212, May 22, 
2000; T.D. 8895, 65 FR 50407, Aug. 18, 2000; T.D. 9010, 67 FR 48759, 
July 26, 2002]