2016 Instructions for form 1099-MISC

 File Form 1099-MISC, Miscellaneous Income, for each person to whom you have paid during the year: At least $10 in royalties (see the instructions for box 2) or broker payments in lieu of dividends or tax-exempt interest (see the instructions for box 8); At least $600 in:

1. rents (box 1);

2. services performed by someone who is not your employee (including parts and materials), box 7;

3. prizes and awards (see instructions for boxes 3 and 7);

4. other income payments (box 3);

5. medical and health care payments (box 6);

6. crop insurance proceeds (box 10);

7. cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish (box 7);

8. generally, the cash paid from a notional principal contract to an individual, partnership, or estate (box 3);

9. Payments to an attorney. See Payments to attorneys, later; or

10. Any fishing boat proceeds (box 5).

In addition, use Form 1099-MISC to report that you made direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment (box 9). You must also file Form 1099-MISC for each person from whom you have withheld any federal income tax (report in box 4) under the backup withholding rules regardless of the amount of the payment.

Box 1. Rents

Enter amounts of $600 or more for all types of rents, such as any of the following.

Real estate rentals paid for office space. However, you do not have to report these payments on Form 1099-MISC if you paid them to a real estate agent. But the real estate agent must use Form 1099-MISC to report the rent paid over to the property owner. See Regulations section 1.6041-1(e)(5), Example 5.

Machine rentals (for example, renting a bulldozer to level your parking lot). If the machine rental is part of a contract that includes both the use of the machine and the operator, prorate the rental between the rent of the machine (report that in box 1) and the operator’s charge (report that as nonemployee compensation in box 7).

Pasture rentals (for example, farmers paying for the use of grazing land).

Public housing agencies must report in box 1 rental assistance payments made to owners of housing projects. See Rev. Rul. 88-53, 1988-1 C.B. 384.

Coin-operated amusements. If an arrangement between an owner of coin-operated amusements and an owner of a business establishment where the amusements are placed is a lease of the amusements or the amusement space, the owner of the amusements or the owner of the space, whoever makes the payments, must report the lease payments in box 1 of Form 1099-MISC if the payments total at least $600. However, if the arrangement is a joint venture, the joint venture must file a Form 1065, U.S. Return of Partnership Income, and provide each partner with the information necessary to report the partner’s share of the taxable income. Coin-operated amusements include video games, pinball machines, jukeboxes, pool tables, slot machines, and other machines and gaming devices operated by coins or tokens inserted into the machines by individual users. For more information, see Rev. Rul. 92-49, 1992-1 C.B. 433.

Box 2. Royalties

Enter gross royalty payments (or similar amounts) of $10 or more. Report royalties from oil, gas, or other mineral properties before reduction for severance and other taxes that may have been withheld and paid. Do not include surface royalties. They should be reported in box 1. Do not report oil or gas payments for a working interest in box 2; report payments for working interests in box 7. Do not report timber royalties made under a pay-as-cut contract; report these timber royalties on Form 1099-S, Proceeds From Real Estate Transactions. Use box 2 to report

Use box 2 to report royalty payments from intangible property such as patents, copyrights, trade names, and trademarks. Report the gross royalties (before reduction for fees, commissions, or expenses) paid by a publisher directly to an author or literary agent, unless the agent is a corporation. The literary agent (whether or not a corporation) that receives the royalty payment on behalf of the author must report the gross amount of royalty payments to the author on Form 1099-MISC whether or not the publisher reported the payment to the agent on its Form 1099-MISC.

Box 3. Other Income

Enter other income of $600 or more required to be reported on Form 1099-MISC that is not reportable in one of the other boxes on the form.

Also enter in box 3 prizes and awards that are not for services performed. Include the fair market value (FMV) of merchandise won on game shows. Also include amounts paid to a winner of a sweepstakes not involving a wager. If a wager is made, report the winnings on Form W-2G.

Do not include prizes and awards paid to your employees. Report these on Form W-2. Do not include in box 3 prizes and awards for services performed by nonemployees, such as an award for the top commission salesperson. Report them in box 7.

Do not include prizes and awards paid to your employees. Report these on Form W-2. Do not include in box 3 prizes and awards for services performed by nonemployees, such as an award for the top commission salesperson. Report them in box 7.

Prizes and awards received in recognition of past accomplishments in religious, charitable, scientific, artistic, educational, literary, or civic fields are not reportable if:

The winners are chosen without action on their part,

The winners are not expected to perform future services, and

The payer transfers the prize or award to a charitable organization or governmental unit under a designation made by the recipient. See Rev. Proc. 87-54, 1987-2 C.B. 669

. Other items required to be reported in box 3 include the following

1. Payments as explained earlier under Deceased employee’s wages.

2. Payments as explained earlier under Indian gaming profits, payments to tribal members.

3. A payment or series of payments made to individuals for participating in a medical research study or

4. Termination payments to former self-employed insurance salespeople. These payments are not subject to self-employment tax and are reportable in box 3 (rather than box 7) if all the following apply.

a. The payments are received from an insurance company because of services performed as an insurance salesperson for the company.

b. The payments are received after termination of the salesperson’s agreement to perform services for the company.

c. The salesperson did not perform any services for the company after termination and before the end of the year

. d. The salesperson enters into a covenant not to compete against the company for at least 1 year after the date of termination.

e. The amount of the payments depends primarily on policies sold by the salesperson or credited to the salesperson’s account during the last year of the service agreement or to the extent those policies remain in force for some period after termination, or both.

f. The amount of the payments does not depend at all on length of service or overall earnings from the company (regardless of whether eligibility for payment depends on length of service).

If the termination payments do not meet all these requirements, report them in box 7.

5. Generally, all punitive damages, any damages for nonphysical injuries or sickness, and any other taxable damages. Report punitive damages even if they relate to physical injury or physical sickness. Generally, report all compensatory damages for nonphysical injuries or sickness, such as employment discrimination or defamation. However, do not report damages (other than punitive damages):

a. Received on account of personal physical injuries or physical sickness;

b. That do not exceed the amount paid for medical care for emotional distress;

c. Received on account of nonphysical injuries (for example, emotional distress) under a written binding agreement, court decree, or mediation award in effect on or issued by September 13, 1995; or

d. That are for a replacement of capital, such as damages paid to a buyer by a contractor who failed to complete construction of a building.

Damages received on account of emotional distress, including physical symptoms such as insomnia, headaches, and stomach disorders, are not considered received for a physical injury or physical sickness and are reportable unless described in (b) or (c) above. However, damages received on account of emotional distress due to physical injuries or physical sickness are not reportable.

Also report liquidated damages received under the Age Discrimination in Employment Act of 1967.

Foreign agricultural workers. Report in box 3 compensation of $600 or more paid in a calendar year to an H-2A visa agricultural worker who did not give you a valid taxpayer identification number. You must also withhold

federal income tax under the backup withholding rules. For more information, go to IRS.gov and enter “foreign agricultural workers” in the search box.

Account reported under FATCA. If you are an FFI reporting pursuant to an election described in Regulations section 1.1471-4(d)(5)(i)(A) a U.S. account required to be reported under chapter 4 to which during the year you made no payments reportable on an applicable Form 1099, enter zero in box 3. In addition, if you are an FFI described in the preceding sentence and, during the year, you made payments to the account required to be reported under chapter 4, but those payments are not reportable on an applicable Form 1099 (for example, because the payment is under the applicable reporting threshold), you must report the account on this Form 1099-MISC and enter zero in box 3

Box 4. Federal Income Tax Withheld

Enter backup withholding. For example, persons who have not furnished their TIN to you are subject to withholding on payments required to be reported in boxes 1, 2 (net of severance taxes), 3, 5 (to the extent paid in cash), 6, 7 (except fish purchases for cash), 8, 10, and 14. For more information on backup withholding, including the rate, see part N in the 2016 General Instructions for Certain Information Returns.

Also enter any income tax withheld from payments to members of Indian tribes from the net revenues of class II or class III gaming activities conducted or licensed by the tribes.

Box 5. Fishing Boat Proceeds

Enter the individual’s share of all proceeds from the sale of a catch or the FMV of a distribution in kind to each crew member of fishing boats with normally fewer than 10 crew members. A fishing boat has normally fewer than 10 crew members if the average size of the operating crew was fewer than 10 on trips during the preceding 4 calendar quarters.

In addition, report cash payments of up to $100 per trip that are contingent on a minimum catch and are paid solely for additional duties (such as mate, engineer, or cook) for which additional cash payments are traditional in the industry. However, do not report on Form 1099-MISC any wages reportable on Form W-2.

Box 6. Medical and Health Care Payments

Enter payments of $600 or more made in the course of your trade or business to each physician or other supplier or provider of medical or health care services. Include payments made by medical and health care insurers under health, accident, and sickness insurance programs. If payment is made to a corporation, list the corporation as the recipient rather than the individual providing the services. Payments to persons providing health care services often include charges for injections, drugs, dentures, and similar items. In these cases the entire payment is subject to information reporting. You are not required to report payments to pharmacies for prescription drugs.

The exemption from issuing Form 1099-MISC to a corporation does not apply to payments for medical or health care services provided by corporations, including professional corporations. However, you are not required to report payments made to a tax-exempt hospital or extended care facility or to a hospital or extended care facility owned and operated by the United States (or its possessions), a state, the District of Columbia, or any of their political subdivisions, agencies, or instrumentalities.

Box 7. Nonemployee Compensation

Enter nonemployee compensation of $600 or more. Include fees, commissions, prizes and awards for services performed as a nonemployee, other forms of compensation for services performed for your trade or business by an individual who is not your employee, and fish purchases for cash. Include oil and gas payments for a working interest, whether or not services are performed. Also include expenses incurred for the use of an entertainment facility that you treat as compensation to a nonemployee. Federal CAUTION ! executive agencies that make payments to vendors for services, including payments to corporations, must report the payments in this box. See Rev. Rul. 2003-66, which is on page 1115 of Internal Revenue Bulletin 2003-26 at http://www.irs.gov/pub/irs-irbs/irb03-26.pdf.

What is nonemployee compensation?     If the following four conditions are met, you must generally report a payment as nonemployee compensation.

You made the payment to someone who is not your employee.

You made the payment for services in the course of your trade or business (including government agencies and nonprofit organizations).

You made the payment to an individual, partnership, estate, or, in some cases, a corporation.

You made payments to the payee of at least $600 during the year.

IIIstrated example

1099misc-form-page

Self-employment tax. Generally, amounts reportable in box 7 are subject to self-employment tax. If payments to individuals are not subject to this tax and are not reportable elsewhere on Form 1099-MISC, report the payments in box 3. However, report section 530 (of the Revenue Act of 1978) worker payments in box 7.

Examples. The following are some examples of payments to be reported in box 7. Professional service fees, such as fees to attorneys (including corporations), accountants, architects, contractors, engineers, etc.

Fees paid by one professional to another, such as fee-splitting or referral fees.

Payments by attorneys to witnesses or experts in legal adjudication.

Payment for services, including payment for parts or materials used to perform the services if supplying the parts or materials was incidental to providing the service. For example, report the total insurance company payments to an auto repair shop under a repair contract showing an amount for labor and another amount for parts, if furnishing parts was incidental to repairing the auto.

Commissions paid to nonemployee salespersons that are subject to repayment but not repaid during.

A fee paid to a nonemployee, including an independent contractor, or travel reimbursement for which the nonemployee did not account to the payer, if the fee and reimbursement total at least $600. To help you determine whether someone is an independent contractor or an employee, see Pub. 15-A.

Payments to nonemployee entertainers for services. Use Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding, for payments to nonresident aliens.

Exchanges of services between individuals in the course of their trades or businesses. For example, an attorney represents a painter for nonpayment of business debts in exchange for the painting of the attorney’s law offices. The amount reportable by each on Form 1099-MISC is the FMV of his or her own services performed. However, if the attorney represents the painter in a divorce proceeding, this is an activity that is unrelated to the painter’s trade or business.

The attorney must report on Form 1099-MISC the value of his or her services. But the painter need not report on Form 1099-MISC the value of painting the law offices because the work is in exchange for legal services that are separate from the painter’s business.

Taxable fringe benefits for nonemployees. For information on the valuation of fringe benefits, see Pub. 15-B, Employer’s Tax Guide to Fringe Benefits.

Gross oil and gas payments for a working interest.

Payments to an insurance salesperson who is not your common law or statutory employee. See Pub. 15-A for the definition of employee. However, for termination payments to former insurance salespeople, see the instructions for box 3.

Directors’ fees as explained under Directors’ fees, earlier.

Commissions paid to licensed lottery ticket sales agents as explained under Commissions paid to lottery ticket sales agents, earlier.

Payments to section 530 (of the Revenue Act of 1978) workers. See the TIP under Independent contractor or employee, earlier.

Fish purchases for cash. See Fish purchases, earlier.

Nonqualified deferred compensation (section 409A) income. Include in box 7 the amount of all deferrals (plus earnings) reported in box 15b that are includible in gross income because the nonqualified deferred compensation (NQDC) plan fails to satisfy the requirements of section 409A. See Regulations sections 1.409A-1 through 1.409A-6.

Golden parachute payments. A parachute payment is any payment that meets all of the following conditions.

1. The payment is in the nature of compensation.

2. The payment is to, or for the benefit of, a disqualified individual.

3. The payment is contingent on a change in the ownership of a corporation, the effective control of a corporation, or the ownership of a substantial portion of the assets of a corporation (a change in ownership or control).

4. The payment has (together with other payments described in (1), (2), and (3), above, made to the same individual) an aggregate present value of at least three times the individual’s base amount.

A disqualified individual is one who at any time during the 12-month period prior to and ending on the date of the change in ownership or control of the corporation (the disqualified individual determination period) was an employee or independent contractor and was, in regard to that corporation, a shareholder, an officer, or a highly compensated individual.

For more details, see Regulations section 1.280G-1. Also, see Rev. Proc. 2003-68, which is on page 398 of Internal Revenue Bulletin 2003-34 at http://www.irs.gov/pub/irs-irbs/ irb03-34.pdf, concerning the valuation of stock options for purposes of golden parachute payment rules. For the treatment of unvested shares of restricted stock, see Rev. Rul. 2005-39, available at http://www.irs.gov/irb/2005-27_IRB/ ar08.html.

Independent contractor. Enter in box 7 the total compensation, including any golden parachute payment. For excess golden parachute payments, see the box 13 reporting instructions.

For employee reporting of these payments, see Pub. 15-A.

Payments not reported in box 7. Do not report in box 7:

expense reimbursements paid to volunteers of non-profit organizations;

deceased employee wages paid in the year after death (report in box 3)(See Deceased employee’s wages, earlier);

payments more appropriately described as rent (report in box 1), royalties (report in box 2), other income not subject to self-employment tax (report in box 3), interest (use Form 1099-INT);

the cost of current life insurance protection (report on Form W-2 or Form 1099-R);

an employee’s wages, travel or auto allowance, or bonuses and prizes (report on Form W-2); and

the cost of group-term life insurance paid on behalf of a former employee (report on Form W-2).

Box 8. Substitute Payments in Lieu of Dividends or Interest

Enter aggregate payments of at least $10 received by a broker for a customer in lieu of dividends or tax-exempt interest as a result of a loan of a customer’s securities. For this purpose, a customer includes an individual, trust, estate, partnership, association, company, or corporation. See Notice 2003-67, which is on page 752 of Internal Revenue Bulletin 2003-40 at http://www.irs.gov/pub/irs-irbs/irb03-40.pdf. It does not include a tax-exempt organization, the United States, any state, the District of Columbia, a U.S. possession, or a foreign government. File Form 1099-MISC with the IRS and furnish a copy to the customer for whom you received the payment. Also, file Form 1099-MISC for and furnish a copy to an individual for whom you received a payment in lieu of tax-exempt interest.

Substitute payment means a payment in lieu of (a) a dividend, or (b) tax-exempt interest to the extent that interest (including OID) has accrued while the securities were on loan.

Box 9. Payer Made Direct Sales of $5,000 or More

Enter an “X” in the checkbox for sales by you of $5,000 or more of consumer products to a person on a buy-sell, deposit-commission, or other commission basis for resale (by the buyer or any other person) anywhere other than in a permanent retail establishment. Do not enter a dollar amount in this box.

If you are reporting an amount in box 7, you may also check box 9 on the same Form 1099-MISC. -8- Instructions for Form 1099-MISC.

The report you must give to the recipient for these direct sales need not be made on the official form. It may be in the form of a letter showing this information along with commissions, prizes, awards, etc.

Box 10. Crop Insurance Proceeds

Enter crop insurance proceeds of $600 or more paid to farmers by insurance companies unless the farmer has informed the insurance company that expenses have been capitalized under section 278, 263A, or 447.

Box 13. Excess Golden Parachute Payments

Enter any excess golden parachute payments. An excess parachute payment is the amount of the excess of any parachute payment over the base amount (the average annual compensation for services includible in the individual’s gross income over the most recent 5 tax years). See Q/A-38 through Q/A-44 of Regulations section 1.280G-1 for how to compute the excess amount.

See Golden parachute payments, earlier, for more information.

Box 14. Gross Proceeds Paid to an Attorney

Enter gross proceeds of $600 or more paid to an attorney in connection with legal services (regardless of whether the services are performed for the payer). See Payments to attorneys, earlier.

Box 15a. Section 409A Deferrals

You do not have to complete this box. For details, see Notice 2008-115, available at http://www.irs.gov/irb/2008-52_IRB/ ar10.html.

If you complete this box, enter the total amount deferred during the year of at least $600 for the nonemployee under all nonqualified plans. The deferrals during the year include earnings on the current year and prior year deferrals. For additional information, see Regulations sections 1.409A-1 through 1.409A-6.

For deferrals and earnings under NQDC plans for employees, see the Instructions for Forms W-2 and W-3.

Box 15b. Section 409A

Income Enter all amounts deferred (including earnings on amounts deferred) that are includible in income under section 409A because the NQDC plan fails to satisfy the requirements of section 409A. Do not include amounts properly reported on a Form 1099-MISC, corrected Form 1099-MISC, Form W-2, or Form W-2c for a prior year. Also, do not include amounts that are considered to be subject to a substantial risk of forfeiture for purposes of section 409A. For additional information, see Regulations sections 1.409A-1 through 1.409A-6; Notice 2008-113, available at http://www.irs.gov/irb/2008-51_IRB/ ar12.html; Notice 2008-115; Notice 2010-6, which is available at http://www.irs.gov/irb/2010-03_IRB/ar08.html; and Notice 2010-80, available at http://www.irs.gov/irb/2010-51_IRB/ ar08.html.

The amount included in box 15b is also includible in box 7

Boxes 16–18. State Information

These boxes may be used by payers who participate in the Combined Federal/State Filing Program and/or who are required to file paper copies of this form with a state tax department. See Pub. 1220 for more information regarding the Combined Federal/State Filing Program. They are provided for your convenience only and need not be completed for the IRS. Use the state information boxes to report payments for up to two states. Keep the information for each state separated by the dash line. If you withheld state income tax on this payment, you may enter it in box 16. In box 17, enter the abbreviated name of the state and the payer’s state identification number. The state number is the payer’s identification number assigned by the individual state. In box 18, you may enter the amount of the state payment.

If a state tax department requires that you send them a paper copy of this form, use Copy 1 to provide information to the state tax department. Give Copy 2 to the recipient for use in filing the recipient’s state income tax return

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2016 Instructions for Form 1099-INT

File Form 1099-INT, Interest Income, for each person

1. To whom you paid amounts reportable in boxes 1, 3, and 8 of at least $10 (or at least $600 of interest paid in the course of your trade or business described in the instructions for Box 1. Interest Income, later),

2. For whom you withheld and paid any foreign tax on interest, or

3. From whom you withheld (and did not refund) any federal income tax under the backup withholding rules regardless of the amount of the payment.

Report only interest payments made in the course of your trade or business including federal, state, and local government agencies and activities deemed nonprofit, or for which you were a nominee/middleman. Report tax-exempt interest that is not original issue discount (OID) on Form 1099-INT. You do not need to report tax-exempt interest that is OID. Report interest that is taxable OID in box 1 or 8 of Form 1099-OID, Original Issue Discount, not on Form 1099-INT. Report exempt-interest dividends from a mutual fund or other regulated investment company (RIC) on Form 1099-DIV.

Exceptions to reporting. No Form 1099-INT must be filed for payments made to exempt recipients or for interest excluded from reporting.

Box 1. Interest Income

Enter interest not included in box 3. Include amounts of $10 or more, whether or not designated as interest, that are paid or credited to the person’s account by savings and loan associations, mutual savings banks not having capital stock represented by shares, building and loan associations, cooperative banks, homestead associations, credit unions, or similar organizations. Include interest on bank deposits, accumulated dividends paid by a life insurance company, indebtedness (including bonds, debentures, notes, and certificates other than those of the U.S. Treasury) issued in registered form or of a type offered to the public, or amounts from which you withheld federal income tax or foreign tax. In addition, report interest of $10 or more attributable to a TIH of a WHFIT, or accrued by a real estate mortgage investment conduit (REMIC), a financial asset securitization investment trust (FASIT) regular interest holder, or paid to a collateralized debt obligation (CDO) holder, as explained later.

Also include interest of $600 or more paid in the course of your trade or business not meeting the above criteria, such as interest on delayed death benefits paid by a life insurance company, interest received with damages, interest on a state or federal income tax refund, or interest attributable to certain notional principal contracts with nonperiodic payments. See Regulations section 1.446-3T(g)(4).

Include in box 1 any accrued qualified stated interest on bonds sold between interest dates (or on a payment date). Also show OID on short-term obligations of 1 year or less and interest on all bearer certificates of deposit.

Do not include in box 1 interest on tax-free covenant bonds or dividends from money market funds (which are reportable on Form 1099-DIV). Do not include any description in box 1

Interest to holders of tax credit bonds. Report tax credits in amounts of $10 or more allowed from the following tax credit bonds.

.Clean renewable energy bonds.

.New clean renewable energy bonds.

• Qualified energy conservation bonds.

• Qualified zone academy bonds.

• Qualified school construction bonds.

• Build America bonds (Tax Credit).

Treat these amounts as paid on the credit allowance date. The credit allowance dates are March 15, June 15, September 15, December 15, and the last day on which the bond is outstanding. For bonds issued during the 3-month period ending on a credit allowance date and for bonds which are redeemed or mature, the amount of the credit is determined ratably based on the portion of the 3-month period during which the bond is outstanding.

Generally, interest paid is not required to be reported to the list of recipients below. However, if they are holders of the tax credit bonds listed above, the interest must be reported.

.A corporation.

.A dealer in securities or commodities required to register as such under the laws of the United States, a state, the District of Columbia, or a possession of the United States.

.A real estate investment trust (REIT) as defined in section 856.

.An entity registered at all times during the tax year under the Investment Company Act of 1940.

.A common trust fund as defined in section 584(a).

.Any trust which is exempt from tax under section 664(c).

Box 2. Early Withdrawal Penalty

Enter interest or principal forfeited because of an early withdrawal of time deposits, such as an early withdrawal from a certificate of deposit (CD), that is deductible from gross income by the recipient. Do not reduce the amount reported in box 1 by the amount of the forfeiture. For detailed instructions for determining the amount of forfeiture deductible by the depositor, see Rev. Ruls. 75-20, 1975-1 C.B. 29, and 75-21, 1975-1 C.B. 367.

Box 3. Interest on U.S. Savings Bonds and Treas. Obligations

Enter interest on U.S. Savings Bonds, Treasury bills, Treasury notes, and Treasury bonds. Do not include in box 1.

If you make payment on a U.S. Savings Bond or other U.S. obligation on which interest is reportable, enter your name, address, and federal identification number on Form 1099-INT and Form 1096, Annual Summary and Transmittal of U.S. Information Returns, not those of the U.S. Treasury Department or the Bureau of Public Debt.

Box 4. Federal Income Tax Withheld

Enter backup withholding. For example, if a recipient does not furnish its TIN to you in the manner required, you must backup withhold at a 28% rate on payments required to be reported in box 1 (which may be reduced by the amount reported in box 2), box 3, and box 8 on this form.

For information on requesting the recipient’s TIN, see part J in the 2016 General Instructions for Certain Information Returns.

Box 5. Investment Expenses

For single-class REMICs only, see Box 5. Investment Expenses under Rules for REMICs, FASITs, and Issuers of CDOs, later.

Box 6. Foreign Tax Paid

Enter any foreign tax paid on interest.Report this amount in U.S. dollars.

Box 7. Foreign Country or U.S. Possession

Enter the name of the foreign country or U.S. possession for which the foreign tax was paid and reported in box 6.

Box 8. Tax-Exempt Interest

Enter interest of $10 or more that is credited or paid to the person’s account if that interest is used to finance government operations and is issued by a state, the District of Columbia, a U.S. possession, an Indian tribal government, or their political subdivisions, or qualified volunteer fire departments. A political subdivision may include port authorities, toll road commissions, utility services authorities, and community redevelopment agencies. Include in box 8 any accrued qualified stated interest on these bonds sold between interest dates (or on a payment date).

Any exempt-interest dividends from a mutual fund or other RIC are reported on Form 1099-DIV.

No information reporting for tax-exempt OID under section 6049 will be required until such time as the IRS and Treasury provide future guidance.

Include specified private activity bond interest in box 9 and in the total for box 8. See the instructions for box 9, next.

Box 9. Specified Private Activity Bond Interest

Enter interest of $10 or more from specified private activity bonds. Generally, “specified private activity bond” means any private activity bond defined in section 141 and issued after August 7, 1986. See section 57(a)(5) for more details. Also see the Instructions for Form 6251, Alternative Minimum Tax—Individuals, available at http://www.irs.gov/form6251.

Box 10. Market Discount

For a taxable or tax-exempt covered security acquired with market discount, if the taxpayer notified you that a section 1278(b) election was made, enter the amount of market discount that accrued on the debt instrument during the tax year in the amount of $10 or more. For more details, see Regulations section 1.6045-1(n). Also see TD 9616, available at http://www.irs.gov/irb/2013-20_IRB/ ar07.html. Unless the taxpayer notified you that the taxpayer did not make a section 1276(b) election, use the constant yield method described in section 1276(b)(2) to determine the accruals of market discount for the debt instrument. See Regulations section 1.6045-1T(n)(11)(i) (B). For a taxable covered security with original issue discount, report the accruals of market discount on Form 1099-OID rather than on Form 1099-INT. For a tax-exempt covered security with original issue discount and no qualified stated interest (for example, a zero coupon debt instrument), you are not required to report the accruals of market discount in this box or on Form 1099-OID.

Box 11. Bond Premium

For a taxable covered security acquired at a premium, enter the amount of bond premium amortization allocable to the interest paid during the tax year, unless you were notified in writing that the holder did not want to amortize bond premium under section 171. See Regulations sections 1.6045-1(n)(5) and 1.6049-9(b). If you are required to report bond premium amortization and you reported a net amount of interest in box 1, leave this box blank.

Box 12. Bond Premium on U.S. Treasury Obligations

For a U.S. Treasury obligation that is a covered security, enter the amount of bond premium amortization allocable to the interest paid during the tax year, unless you were notified in writing that the holder did not want to amortize bond premium under section 171. See Regulations sections 1.6045-1(n)(5) and 1.6049-9(b). If you are required to report bond premium amortization and you reported a net amount of interest in box 3, leave this box blank.

Box 13. Bond Premium on Tax-Exempt Bond

For a tax-exempt covered security acquired at a premium, enter the amount of bond premium amortization allocable to the interest paid during the tax year. If you reported a net amount of interest in box 8 or 9, whichever is applicable, leave this box blank.

Box 14. Tax-Exempt and Tax Credit Bond CUSIP No.

For single bonds or accounts containing a single bond, enter the CUSIP number of the tax-exempt bond for which tax-exempt interest is reported in box 8 or tax credit bond (including build America bond and specified tax credit bond) for which a tax credit or taxable interest, as applicable, is reported in box 1. Enter the CUSIP number of the bond for which interest was paid or tax credit was allowed. If the tax-exempt interest or the tax credit is reported in the aggregate for multiple bonds or accounts, enter “various.”

Boxes 15–17. State Information

These boxes may be used by payers who participate in the Combined Federal/State Filing Program and/or who are required to file paper copies of this form with a state tax department. See Publication 1220 for more information regarding the Combined Federal/State Filing Program. They are provided for your convenience only and need not be completed for the IRS. Use the state information boxes to report payments for up to two states. Keep the information for each state separated by the dash line. If you withheld state income tax on this payment, you may enter it in box 17. In box 15, enter the abbreviated name of the state, and in box 16, enter the payer’s state identification number. The state number is the payer’s identification number assigned by the individual state.

If a state tax department requires that you send them a paper copy of this form, use Copy 1 to provide information to the state tax department. Give Copy 2 to the recipient for use in filing the recipient’s state income tax return.

Rules for Widely Held Fixed Investment Trusts (WHFITs) Trustees and middlemen must report the gross amount of interest attributable to the TIH for the calendar year on Form 1099-INT if that amount exceeds $10. If the trustee provides WHFIT information using the safe harbor rules in Regulations section 1.671-5(f)(1) or (g)(1), the trustee or middleman must determine the amounts reported on Form 1099-INT under Regulations section 1.671-5(f)(2) or (g)(2), as appropriate.

Requirement to furnish a tax information statement to the TIH. A tax information statement that includes the information provided to the IRS on Form 1099-INT, as well as additional information identified in Regulations section 1.671-5(e) must be provided to TIHs. The written tax information statement must be furnished to the TIH by March 15. The amount of an item of a trust expense that is attributable to a TIH must be included on the tax information statement provided to the TIH and is not required to be included in box 5 on the Form 1099-INT.

WHFIT interest income information may be included in summary totals reported to the IRS and the TIH. Information about WHFIT interest income may also be included in a composite statement furnished to the TIH.

For more filing requirements, see the 2016 General Instructions for Certain Information Returns.

2016 Instructions for Form 1099-K

Specific Instructions A payment settlement entity (PSE) must file Form 1099-K, Payment Card and Third Party Network Transactions, for payments made in settlement of reportable payment transactions for each calendar year. A PSE makes a payment in settlement of a reportable payment transaction, that is, any payment card or third party network transaction, if the PSE submits the instruction to transfer funds to the account of the participating payee to settle the reportable payment transaction.

A PSE is a domestic or foreign entity that is a merchant acquiring entity, that is, a bank or other organization that has the contractual obligation to make payment to participating payees in settlement of payment card transactions; or a third party settlement organization (TPSO), that is, the central organization that has the contractual obligation to make payments to participating payees of third party network transactions.

Note. Healthcare networks, in-house accounts payable departments, and automated clearing houses do not qualify as TPSOs and do not report under section 6050W.

A participating payee is any person, including any governmental unit (and any agency or instrumentality of a governmental unit) who accepts a payment card, or any account number or other indicia associated with a payment card, as payment or accepts payment from a TPSO in settlement of a third party network transaction.

A payment card is any card, including any stored-value card (having prepaid value, including gift cards), issued according to an agreement or arrangement that provides for all of the following.

.One or more issuers of the cards.

.A network of persons unrelated to each other, and to the issuer, who agree to accept the cards as payment.

.Standards and mechanisms for settling the transactions between the merchant acquiring entities and the persons who agree to accept the cards as payment.

Box 1a. Gross Payment Card/Third Party Network Transactions

Enter in box 1a the gross amount of the total reportable payment card/third party network transactions for the calendar year. Gross amount means the total dollar amount of total reportable payment transactions for each participating payee without regard to any adjustments for credits, cash equivalents, discount amounts, fees, refunded amounts, or any other amounts. The dollaamount of each transaction is determined on the date of the transaction.

Exception for de minimis payments. A TPSO is required to report any information concerning third party network transactions of any participating payee only if for the calendar year:

.The gross amount of total reportable payment transactions exceeds $20,000, and

.The total number of such transactions exceeds 200.

For examples of reportable payment transactions, including responsible filing parties, see Regulations section 1.6050W-1(e).

Box 1b. Card Not Present Transactions

Enter in box 1b the gross amount of the total reportable payment card/third party network transactions for the calendar year where the card was not present at the time of the transaction or the card number was keyed into the terminal. Typically, this relates to online sales, phone sales, or catalogue sales. Gross amount means the total dollar amount of total reportable payment transactions for each participating payee without regard to any adjustments for credits, cash equivalents, discount amounts, fees, refunded amounts, or any other amounts. The dollar amount of each transaction is determined on the date of the transaction.

Box 2. Merchant Category Code

Enter the 4-digit merchant category code (MCC) used by the payment card industry to classify the payee for the payment card transactions reported on this Form 1099-K. If you or the entity on whose behalf you are filing uses an industry classification system other than, or in addition to, MCCs, assign to each payee an MCC that most closely corresponds to the description of the payee’s business. Note. If you or the entity on whose behalf you are filing is a TPSO or does not use any industry classification system for its payees, you should not complete this box.

If a payee has receipts classified under more than one MCC, you may either:

.File separate Forms 1099-K reporting the gross receipts for each MCC,or

. File a single Form 1099-K reporting total gross receipts and the MCC which corresponds to the largest portion of the total gross receipts.

Box 3. Number of Payment Transactions

Enter the number of payment transactions (not including refund transactions) processed through the payment card/ third party payer network.

Box 4. Federal Income Tax Withheld

Enter backup withholding. Persons who have not furnished their taxpayer identification number to you in the manner required are subject to backup withholding on payments required to be aggregately reported in box 1a.

A payment made by a TPSO is a reportable payment potentially subject to section 3406 backup withholding only if the payee has received payment from the TPSO in more than 200 transactions (the monetary threshold is not considered for this purpose) within a calendar year. Thereare no limiting thresholds for payments made in settlement of payment card transactions that are subject to section 3406 backup withholding.

For more information on backup withholding, including the applicable rate, see part N in the 2016 General Instructions for Certain Information Returns.

Boxes 5a Through 5l

Enter in the appropriate box the gross amount of the total reportable payment transactions for each month of the calendar year.

Boxes 6 Through 8. State Information

These boxes may be used by filers who participate in the Combined Federal/State Filing Program and/or who are required to file paper copies of this form with a state taxdepartment. See Publication 1220 for more information regarding the Combined Federal/State Filing Program. They are provided for your convenience only and need not be completed for the IRS. Use the state information boxes to report payments for up to two states. Keep the information for each state separated by the dash line. If you withheld state income tax on this payment, you may enter it in box 8. In box 6, enter the abbreviated name of the state. In box 7, enter the filer’s state identification number. The state number is the filer’s identific

ation number assigned by the individual state.

If a state tax department requires that you send them a paper copy of this form, use Copy 1 to provide information to the state tax department. Give Copy 2 to the payee for use in filing the payee’s state income tax return.