Rev. Rul. 64-131

The Internal Revenue Service has received inquiries concerning taxpayer identifying numbers and the filing of information returns with respect to interest payments on amounts held by banks on behalf of individuals such as incompetents, wards, minors, or missing persons, and amounts held by banks in connection with litigation pending judicial determination of the person entitled to such amounts.

The facts presented in these inquiries are summarized as follows:

A bank has a number of accounts containing funds deposited by reason of a court order under various circumstances, such as funds attributable to litigation, funds held for individual incompetents, wards, or for minors until they reach majority, and funds held for persons whose whereabouts are unknown or who cannot be contacted. Separate accounts are maintained for each individual or litigation, as the case may be. The title of the account, as recorded on the books of the bank, indicates both the name of the court or designated guardian, committee, or other person having charge of the individual's property (hereinafter referred to as `the duly authorized representative') and other necessary identifying data such as the name of the individual or designation of the litigation involved. Interest on these accounts is credited at regular intervals by the bank. When an account is closed, the interest is paid over to the person ultimately entitled to the funds in the account.

Section 1.6109-1(b)(2)(i) of the Income Tax Regulations provides, in general, that when a return, statement, or other document with respect to any person is required to be made by another person for any period commencing after December 31, 1962, the account number or the employer identification number, as the case may be, of the person with respect to whom the return, statement, or other document is required to be made shall be: (a) requested of such person by the person required to make such return, statement, or other document; (b) furnished by such person to the person required to make the return, statement, or other document; and (c) included in the return, statement, or other document by the person required to make it.

Section 6049(a) of the Internal Revenue Code of 1954 provides, in general, that every person who makes payments of interest aggregating $10 or more to any person during any calendar year shall make a return setting forth the aggregate amount of such payments and the name and address of the person to whom paid. Section 1.6049-1(a) of the regulations provides that such return shall be made on Forms 1096, U.S. Annual Information Return, and 1099, U.S. Information Return.

The circumstances in connection with each type of account and the appropriate handling of requirements for information returns and identifying numbers are discussed separately.

(1) MINORS, WARDS, AND INCOMPETENTS-

The duly authorized representative of a minor, ward, or incompetent individual should ascertain whether such individual has a taxpayer identifying number (social security number). If such an individual has an identifying number, it should be furnished to the payer of interest making payments aggregating $10 or more during any calendar year.

However, if the minor, ward, or incompetent individual does not have a number, then his duly authorized representative should procure and furnish a social security number for the individual concerned. Application for the number should be made on a Form SS-5, Application for Social Security Account Number, or Form 3227, Application for Account Number, signed by such representative for the minor, ward, or incompetent individual.

(2) MISSING PERSONS-

In the case of a missing person or a person who can otherwise not be contacted by his duly authorized representative it is usually impossible to ascertain whether the missing person is required to obtain a taxpayer identifying number, or to obtain an identifying number on his behalf. Accordingly, it is held that when a person makes credits of interest aggregating $10 or more in any calendar year to the account of a missing person, and requests a taxpayer identifying number for that account, the duly authorized representative may simply report to the payer that it is not possible to communicate with the person, stating that his whereabouts are unknown or that he cannot be contacted.

Nothing in this Revenue Ruling is intended to relieve any payer from filing an information return on Forms 1099 and 1096 showing among other things, the name and last known address of persons involved.

(3) AMOUNTS HELD PENDING TERMINATION OF LITIGATION-

Accounts established for funds deposited pending the termination of litigation are held by the bank until such time as the person ultimately entitled to the funds is decided by the court. Thereafter, the appropriate official of the court authorizes the closing of the account and payment by the bank of the funds therein to the person decided by the court to be entitled to such funds. Under these circumstances, the bank (the payer of interest) is not required to report amounts of interest aggregating $10 or more during a calendar year credited to such an account until it is notified by the appropriate official of the court of the person entitled to the funds in the account. The bank must obtain the taxpayer identifying number of the person entitled to the funds and should report on one Form 1099 the payment of interest to such person. The interest subject to reporting on the Form 1099 includes all the interest accrued on the account, since the person ultimately entitled to the funds (the payee) has not received or accrued such interest at any time prior to the court's decision.