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1099 Reporting of Closing Fees Delayed Three Center Plaza, Boston MA 02108 Tel: 800-370-6466 Fax: 617-742-5000
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NEWS ALERT 1099 Reporting of Closing Fees Delayed The
Internal Revenue Service has issued a notice delaying the implementation of
regulations that would require the filing of 1099 forms for attorneys’ closing
fees. Section
6045 (f) of the Internal Revenue Code, which was added by the Taxpayer Relief
Act of 1997, requires businesses to report payments made to attorneys in
connection with legal services.
Proposed IRS regulations would have expanded reporting requirements to
include payments made for real estate closings and disbursements from an
attorney’s IOLTA account. The American Land Title Association (ALTA) reports
on this latest development in 1099 reporting of legal fees on its web site (www.alta.org). The
IRS originally issued its proposed regulations in May of 1999.
During the subsequent comment period numerous objections and comments
were filed, including those made by ALTA. In its testimony and comment, ALTA
sought exceptions in the regulations for disbursements of mortgage loans and for
persons acting as paying agents not exercising oversight. In response to the
numerous comments it received, the IRS delayed the effective date of the
regulations through 2000. With
its most recent notice (Notice 2000-7) the IRS has extended that delay through
2001. Notice 2001-7 is scheduled to appear in Internal Revenue Bulletin 2001-4,
dated January 22, 2001. The full ALTA report can be viewed on their web site at www.alta.org. The specific web page covering Notice 2000-7 is at www.alta.org/content/govt/2001/update_01.htm.
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Old Republic Title Insurance Group |
