As published in Scotsman Guide's Residential Edition, January 2005.
RS Form 1098, titled “Mortgage Interest Statement,” is used primarily to report mortgage interest of at least $600 received from a borrower. The form also includes a box to report points paid on the purchase of a principal residence, as well as refunds of overpaid interest. In order to avoid costly penalties, lenders can take steps today to reduce their liability.
First, this information must be provided to the borrower and filed with the Internal Revenue Service according to the following deadlines:
January 31, 2005: All 1098s must be printed and mailed to borrowers.
February 28, 2005: All 1098s must be filed on paper (IRS Copy A) or on diskette (Magnetic Media) with the IRS. Lenders may only file up to 250 forms on paper.
March 31, 2005: All 1098s must be filed electronically (E-File) with the IRS. The IRS grants an automatic 30-day extension to E-filers to encourage electronic transmission. Files are transmitted via the on-line FIRE System, which stands for “File Information Returns Electronically.”
August 1, 2005: All corrected 1098s must be filed with the IRS either on paper, via diskette, or electronically.
A lender should keep detailed records on when 1098 forms have been provided to borrowers and filed with the IRS. The IRS may assess a $50 penalty per 1098 for late filing or for failure to issue the form to the borrower.
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