Rev. Rul. 69-595

Advice has been requested whether payments made to suppliers of services under health, accident, and sickness insurance plans or medical assistance programs are required to be reported on information returns, Forms 1099 and 1096, under the provisions of Section 6041 of the Internal Revenue Code of 1954 and the regulations thereunder.

Those making payments include insurance companies (including those participating in Medicare), Blue Cross-Blue Shield organizations, State agencies participating in the Medicaid program (Title XIX of the Social Security Act), and unions and employers having self-insured or self-administered plans.

Medicaid is a State-administered assistance program providing medical care for the needy, under which payments are generally made by a single State agency administering the program or its fiscal agent directly to the supplier.

Generally, health, accident, and sickness insurance policies provide that the amounts payable thereunder are payable to the insured unless the insured assigns his rights to receive payments to those persons who supplied the medical services. In many cases the insured assigns his rights to receive payment to the doctor and payment is made directly to the doctor.

Section 6041(a) of the Code provides, in part, that all persons engaged in a trade or business and making payment in the course of such trade or business to another person, of rent, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable gains, profits, and income, of $600 or more in any taxable year, shall render a true and accurate return to the Secretary of the Treasury or his delegate, under such regulations and in such form and manner and to such extent as may be prescribed by the Secretary or his delegate, setting forth the amount of such gains, profits, and income, and the name and address of the recipient of such payment.

Section 1.6041-1(a) of the Income Tax Regulations provides that the return required by section 6041(a) must be made on Forms 1099 and 1096, and a separate Form 1099 shall be furnished for each person to whom such payments of $600 or more are made. Section 1.6041-1(b) of the regulations provides that the term "all persons engaged in a trade or business," as used in section 6041(a) includes not only those so engaged for gain or profit, but also organizations the activities of which are not for the purpose of gain or profit. See also Rev. Rul. 56-176, C.B. 1956-1, 560.

Section 1.6041-3 of the regulations provides that returns of information are not required with respect to payments of any type made to corporations.

Payments of fees under the plans, programs, or policies here considered to doctors or other suppliers of health care services are made in the course of the trade or business of the persons making the payment. Accordingly, it is held that such persons are required to file Forms 1099 with respect to such payments made directly to doctors or other suppliers. A separate Form 1099 must be furnished by each payer for each doctor or other supplier to whom it makes payments aggregating $600 or more during any calendar year. Pursuant to section 1.6041-3 of the regulations payments to corporations are excepted from the information reporting requirements of section 6041 of the Code.

Under the authority of Section 7805(b) of the Code, this ruling will be applied only to payments made in calendar years beginning on and after January 1, 1969. Since most of 1969 has passed, the Service recognizes that some payers will have problems in establishing accounting systems or procedures for retrieving and reporting information with respect to amounts paid during 1969. Payers making payments under Medicare and Medicaid programs whose accounting systems and procedures are not geared to retrieving and reporting this information for 1969 will not be required to file information returns for 1969 provided they file such returns with respect to payments made on and after January 1, 1970. Furthermore, except for payments made under Medicare and Medicaid programs, the provisions of this Revenue Ruling will not be applied with respect to payments made prior to January 1, 1971.

The Service would prefer that the returns required by this Revenue Ruling be filed in magnetic tape form. The procedural requirements and specifications for magnetic tape reporting are set forth in Rev. Proc. 69-16, page 288, this Bulletin. Whether filed on paper, Form 1099, or on magnetic tape, the returns should be forwarded on or before the due date (for example, March 2, 1970 with respect to calendar year 1969 returns) for filing to any of the following addresses:

Southeast Region, P.O. Box 47-421, Doraville, Ga., 30340

Midwest Region, P.O. Box 5321, Kansas City, Mo., 64131

Central Region, P.O. Box 267, Covington, Ky., 41012

Southwest Region, P.O. Box 934, Austin, Tex., 78767

North-Atlantic Region, P.O. Box 311, Andover, Mass., 01810

Mid-Atlantic Region, P.O. Box 279, Cornwells Heights, Pa., 19020

Western Region, P.O. Box 388, Ogden, Utah, 84401

¹ Also released as Technical Information Release 1023, dated Nov. 13, 1969.