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Regulation and Compliance > Federal Regulation > IRS

Can't Stand Form 1099-R? Tell the IRS

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What You Need to Know

  • The agency puts its forms through paperwork reviews every three years.
  • This form is used to report annuity, life insurance and retirement plan distributions.
  • Sending out the forms for all types of distributions eats up more than 50 million hours of worker time annually.

Hopping mad about how complicated the tax forms involved with providing and owning annuities are?

You could email the Internal Revenue about your thoughts on Form 1099-R. Someone from the IRS would have to read it.

The IRS is putting the 1099-R putting through a regular review under the federal Paperwork Reduction Act of 1995, according to a notice published this week in the Federal Register. The law requires the IRS to put most of its forms through paperwork burden reviews every three years.

Taxpayers can use the review process to offer the IRS suggestions about how to make a form like the 1099-R easier to use or how to clarify the instructions. They should share their opinions as instructed to do so on the official notice.

Because the paperwork review process tends to get little attention from businesses, business groups, other interest groups and the general public, any comments submitted in response to the feedback requests may get more than the usual amount of regulator attention.

What it means: Commenting on ways to improve the Form 1099-R could give you a small chance of improving the form and a little experience with grassroots lobbying.

Form 1099-R: The Form 1099-R is a form that insurers or other payers use to report distributions from pensions, annuities, retirement plans, profit-sharing plans, individual retirement accounts, individual retirement annuities, insurance contracts and some other arrangements.

The form itself and the instructions that come with it take up eight pages in the form draft packet.

The full set of Form 1099-R instructions is 26 pages long.

Five things to know: Here are five more insights about Form 1099-R and the review process.

1. Just knowing whether the form should be used to report the cash coming out of a particular annuity can be complicated.

“Report payments of matured or redeemed annuity, endowment, and life insurance contracts,” officials say at one point in the instructions. “However, you do not need to file Form 1099-R to report the surrender of a life insurance contract if it is reasonable to believe that none of the payment is includible in the income of the recipient.”

The IRS gives many other bits of advice about when to use and when not to use the form in connection with life insurance policies and annuities.

2. The rules may depend on timing.

The IRS notes that figuring out the taxable amount is different for taxpayers with annuity starting dates coming in 1997 or earlier or after 1997.

3. The form is frequently used.

IRS estimates that about 8,000 entities send the form out about 116 million times, and that preparing and sending out the form for all types of distributions reported on the form takes up about 51 million hours of Americans’ time every year.

4. Comments on Form 1099-R are due Oct. 21.

5. The contact person for the review process is Kerry Dennis.

(Credit: Adobe Stock)


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