Rev. Rul. 70-608

Section 1. Purpose

The purpose of this Revenue Ruling is to clarify matters pertaining to the filing of information returns on Forms 1099 and 1096 for payments to health care providers. Such returns are required under section 6041 of the Internal Revenue Code of 1954, the regulations thereunder, and Revenue Ruling 69-595, C.B. 1969-2, 242.

Sec. 2. Background

Revenue Ruling 69-595 provides that persons making payments of fees aggregating $600 or more during any calendar year in the course of their trade or business under plans, programs, or policies of insurance or medical assistance to doctors and other suppliers of health care services, are required to file Forms 1099 (revised as 1099-Med. for this purpose) and 1096 with respect to such payments made directly to doctors and other suppliers. However, under the authority of section 7805(b) of the Code, except for payments made under Medicare and Medicaid programs, the provisions of Revenue Ruling 69-595 will not be applied with respect to payments made prior to January 1, 1971. The purpose of this nonretroactive application was to permit a joint Internal Revenue Service--insurance industry study of systems and procedures for retrieving and reporting information necessary to the preparation of information returns.

Sec. 3. Clarification

The study resulted in recommendations that the Service supplement Revenue Ruling 69-595 with respect to certain problem areas confronting persons required to file information returns. Such problems and the position of the Service with respect thereto are stated below:

Situation 1. Payments to health care providers may be made (a) by a person whose name is shown on the check or draft as the payer (Payer of Record); (b) by a person that is the ultimate provider of the fees being paid (Source Organization); or (c) by a person that is processing the claim and preparing the check or draft in the name of another person (Processing Organization). Sometimes these three persons are one and the same, but frequently two or three different persons are involved.

Under the above circumstances, the Service will look to the person identified as the payer on the check or draft as the one responsible for filing information returns. Such returns may be filed by an agent of the payer.

Situation 2. In many cases checks or drafts in payment for health care services are issued in the joint names of the provider of the health care services and the recipient of the services.

The provider of the health care services shall be treated as the payee of the assigned payment and his name and identifying number shall be shown on Form 1099-Med.

Situation 3. A person making payment for health care services that requires the use of a claim form containing a space for the identifying number of the provider of the health care services or the insertion of the identifying number on a check or draft will be deemed to have made a request for an identifying number under section 6109 of the Code and the regulations thereunder. Any claim form so used shall contain a provision that the identifying number is required to be furnished under authority of law.

Situation 4. Payments to persons providing health care services, including proprietary hospitals, physicians and dentists, often include charges for injections, drugs, dentures, and similar items. In such cases the entire payment is subject to information reporting. Amounts paid to pharmacies for prescription drugs are not subject to information reporting.

Situation 5. Banks and other corporations often act on behalf of doctors and dentists in billing and collecting for health care services, charging a certain percentage of the collections for their services. In such cases the banks and corporations are required to file information returns on the gross amounts collected on behalf of the doctors and dentists if such amounts aggregate $600 or more for the calendar year. Compare Rev. Rul. 67-197, C.B. 1967-1, 319.

Sec. 4. Effect on Other Documents

Revenue Ruling 69-595 is hereby supplemented.

¹ Also released as Technical Information Release 1054 dated November 17, 1970.