IRS Rules

Question 1

What is the interest threshold for mortgage interest reporting?

Answer 1

$600

Question 2

T or F

Only those in the business of lending money must report mortgage interest earned over the threshold.

Answer 2

FALSE

Question 3

If there are multiple borrowers on a mortgage, the mortgage interest report must be in the name of:

Answer 3

the primary borrower or payor

Question 4

A bank must request a TIN for all obligations incurred after:

Answer 4

31-Dec-87

Question 5

A bank must take all reasonable steps to obtain a TIN:

Answer 5

at the time the obligation is incurred

Question 6

If the bank does not obtain a TIN it must request one at least:

Answer 6

annually until the customer responds

Question 7

TIN requests must inform the payor that the TIN is required by the IRS and that the payor is subject to:

Answer 7

a $50 penalty if not provided

Question 8

What is the penalty for not filing a mortgage interest report?

Answer 8

$100 per return, $1.5 million per year OR $250 per return if intentional

Question 9

Abandonment occurs when facts and circumstances indicate the borrower intended to and has permanently:

Answer 9

discarded the property and the lender has reason to know of the abandonment

Question 10

Lenders must file a form 1099A with the IRS by _________________ the property is foreclosed or abandoned.

Answer 10

Feb 28 of the year following the calendar year

Question 11

What is the purpose of backup withholding?

Answer 11

To ensure that individuals report on their tax returns the correct amount of interest and dividends earned.

Question 12

T or F

Annualized payments of interest less than $10 are not subject to backup withholding.

Answer 12

TRUE

Question 13

Banks must use a Form W9 to request a TIN from each accountholder at:

Answer 13

the time of account opening

Question 14

Banks must require ______ to exempt a customer from backup withholding.

Answer 14

certification of exempt status

Question 15

On brokered accounts where the TIN is provided orally, the bank has _____ to secure a valid TIN certification, provided that 28% of the reportable amounts remain in the account.

Answer 15

30 days

Question 16

If the customer has applied for but not received a TIN, customers may write _______ on the Form W9 and the bank will not have to begin backup withholding for ________ unless:

Answer 16

* awaiting TIN

* 60 calendar days

* the payee makes a withdrawal of more than $500 in one transaction

Question 17

If no TIN is received, the bank must withhold:

Answer 17

28% of all interest or dividend payments

Question 18

A bank cannot stop backup withholding until:

Answer 18

it receives notice that correct information has been received from either the IRS or the SSA

Question 19

When a bank receives a C notice from the IRS that an accountholder is underreporting interest or dividends, the bank must:

Answer 19

begin backup withholding at a rate of 28 percent within 30 days of receipt

Question 20

Substitutes for TINs include:

Answer 20

SSN, EIN, ITIN

Question 21

Banks must keep W9 forms for:

Answer 21

three years from account opening

Question 22

What is the purpose of discharged debt reporting?

Answer 22

to report taxable income attributed to a taxpayer through the discharge of indebtedness

Question 23

Lenders who receive interest payments on qualified student loans must report payments that:

Answer 23

may be deductible by the borrower as interest paid

Question 24

Lenders must file an information return with the IRS by Feb 28 on all covered student loans where:

Answer 24

the borrower paid $600 or more in interest

Question 25

If a lender has more than 250 student loan interest forms to file, it must do so:

Answer 25

electronically or by magnetic media

Question 26

Foreign financial institutions must report US accounts to either the

Answer 26

IRS or the respective tax authority

Question 27

Foreign financial institutions must conduct due diligence to ascertain:

Answer 27

whether they have US accounts