The Tax Times: 2016 Form 1099's are FATCA Compliant

Wednesday, January 27, 2016

2016 Form 1099's are FATCA Compliant

IRS has issued the final version of 2016 Form 1099's which contain a checkbox to be used if the form is being used to meet requirements of the Foreign Account Tax Compliance Act (FATCA).

The 2016 Forms Form 1099-B (Proceeds from Broker and Barter Exchange Transactions), 1099-DIV (Dividends and Distributions), 1099-INT (Interest Income), 1099-OID (Original Issue Discount) and 1099-MISC (Miscellaneous Income) each contain a checkbox entitled "FATCA filing requirement" that the form instructions instruct taxpayers to complete if they are using the form to meet the requirements of either of those regs.

A new checkbox was added to 2016 Form 1099-B to identify an FFI or U.S. payor filing this form to satisfy its chapter 4 reporting requirement. If the FATCA filing requirement box is checked, the payer is reporting on this Form 1099 to satisfy its chapter 4 account reporting requirement. A taxpayer who receives a Form 1099-B with the FATCA box checked, may also have a Form 8938 filing requirement.

For 2016's Form 1099-B, there is a third box which is labeled "Ordinary" Brokers, etc. are now required to determine whether the gain or loss is short-term or long-term and whether any portion of the gain or loss is ordinary. They are permitted to check up to 2 boxes if a portion of the gain or loss is ordinary and the remaining portion is short-term or long-term. They may not report both short-term and long-term gain or loss on the same Form 1099-B.

Towards the bottom of Form 1099-B is an unnumbered box for "Account number". Historically, an account number was required if the broker, etc. had multiple accounts for a recipient for whom it was filing more than one Form 1099-B.

For 2016, the instructions to Box 9 note that brokers, etc. should not include in that box amounts related to contracts that were open on Dec. 31, 2015 and were transferred to another broker during 2016. Any person that transfers custody of a "specified security" to a broker, after one of several statutorily specified dates, must give the broker a written transfer statement within 15 days after the date of settlement for the transfer.

The 2016 Form 1099-B instructions provide that the transfer statement information required in the case of a debt instrument has been expanded and that a transfer statement is required for the transfer of a section 1256 option occurring on or after Jan. 1, 2016.

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