Compliance Question of the Week
August 8, 2011
August 9, 2011
Are there any IRS reporting requirements if the credit union plans to give each new member a $25 cash gift in connection with opening a new share deposit account?
Yes. A cash gift paid or credited in relation with the opening of a credit union deposit account is considered interest. When the interest paid to the member by the CU (or the fair market value of merchandise given) exceeds $10 within the calendar year, a 1099 INT must be completed. Therefore, the credit union would need to complete a 1099 INT form for each member who received the $25 cash gift.
Internal Revenue Code Section 1.6049-5