Auditor's Corner (Feb 2025)

IRS Form 1099

The 1099 Form is used to report non-employment income to the Internal Revenue Service. Businesses typically are required to issue a 1099 form to a taxpayer (other than a corporation) who has received at least $600 or more in non-employment income during the tax year.

For the sale of real property, a 1099-S is issued to taxpayers for real estate transactions if the taxpayer closed on a sale or exchange during the tax year. Real Estate transactions can include realizing gains or proceeds of land, commercial and industrial buildings, and residential properties such as homes or condominiums Keep in mind that proceeds realized from a real estate transaction can be exempt from taxes depending on the financial situation for the seller.

A 1099-S Certificate of Exemption can be presented to and completed by the seller at the time of closing. It will notify the settlement agency whether the transaction is tax exempt.

Settlements statements can be used as a substitute 1099-S for the seller. The sales price listed on the ALTA is the amount that will be reported to the IRS. Title and settlement software can produce a copy of the 1099-S and the seller will see the amount being reported to the IRS. The copy of the 1099S can be given to the seller along with the settlement statement to satisfy the reporting requirements to the seller. It does not need to be mailed, however if the settlement agent chooses to mail this information to the seller it must be done by February 15th of the following calendar year.

For IRS reporting, the 1099 S must be filed after December 31 of the calendar year that includes the date of closing and on or before February 28 (March 31 if filed electronically) of the following calendar year. Filing electronically is required except for low volume filers (defined as fewer than 250 returns during the calendar year).

The penalties for late filing are as follows 2024 1-30 days late ($60 per Taxpayer Identification Number, TIN) 31-days thru August 1, ($120 per TIN) after August 1st or not filed ($310 per TIN)

Each year there is a special penalty amount per TIN if the IRS determines that the business has intentionally disregarded the reporting requirement. For 2024, that amount per TIN is $630.

Underwriting Alerts

Have you ever had questions regarding underwriting alerts for Virginia properties? Maybe you need to know how many alerts were sent out in 2024 (30) or how many of those alerts were related to "LLC" (10) or "Fairfax" (6). 

You can find answers to these and more through StarsLink in Underwriting Alerts. You have easy access not only to Virginia but Maryland, DC, and FL properties, to name a few states.

Does a staff member need a StarsLink ID? Once the page opens, click on "Register here" as shown below and follow the instructions.

Please contact underwriting counsels at VAUnderwriting@OldRepublicTitle.com for specific questions regarding Underwriting Alerts.