ALTA® Successful on Final IRS Reporting Rules
August 27, 2002
Washington, DC– The American Land Title Association (ALTA), was successful in having its recommendation to limit administrative burdens on the title industry included in final information reporting regulations, commonly called "middleman" regulations, issued recently by the Treasury and the IRS. Under the Internal Revenue Code Section 6041, the regulations provide more consistent guidance for payments involving a middleman -- where a person makes a payment on behalf of another person. Title companies performing closing and escrow functions would be considered middlemen. ( To Read RulesClick Here[pdf] )
ALTA has submitted comments, attended meetings, and delivered testimony before the IRS on this issue for 9 years. The final regulations include ALTA's recommendation that a settlement agent who provides real estate closing services to real estate brokers and agents and makes disbursements from an escrow account is not required to file Form 1099-MISC for services rendered. However, when the settlement agent is performing a management or oversight function, he/she must file Forms 1099-MISC. For example, when the settlement agent is instructed by the seller to hire a contractor for repairs, the agent selects the contractor, negotiates the cost and inspects the work, reporting is required. The final regulations are effective January 1, 2003.
"This is a wonderful victory for title companies and will reduce the amount of unnecessary paperwork to complete a transaction," said Ann vom Eigen, ALTA's Legislative/Regulatory Counsel. "The final regulations will help us avoid situations, as have occurred in past years, when IRS field agents would require individual agencies to report all disbursements from escrow, an incredibly onerous administrative task," said vom Eigen.
Source: American Land Title Association®
Contact ALTA at 202-296-3671 or [email protected].