Department of the Treasury 2008 Internal Revenue Service

Instructions for Form

1099-PATR

Section references are to the Internal Revenue Code unless organization, the United States, a state, a possession, or the

otherwise noted. District of Columbia. See Regulations section 1.6044-3(c).

Statements to Recipients

What’s New If you are required to file Form 1099-PATR, you must provide a

statement to the recipient. For more information about the The following changes have been made to the 2008 requirement to furnish an official form or acceptable substitute Instructions for Form 1099-PATR. statement to recipients in person, by statement mailing, or • The Caution for box 6 has been revised to reflect the electronically, see part M in the 2008 General Instructions for

allowance under new final Regulations section 1.199-6 of the Forms 1099, 1098, 5498, and W-2G.

section 199 deduction to the cooperative. The allowance of the

deduction at the entity level changes the tax treatment of the 2nd TIN Not.

cooperative’s deduction under section 1382. You may enter an “X” in this box if you were notified by the IRS • Section 8211(a) of the U.S. Troop Readiness, Veterans Care, twice within 3 calendar years that the payee provided an Katrina Recovery, and Iraq Accountability Act extended the incorrect taxpayer identification number (TIN). If you mark this work opportunity credit through August 31, 2011. box, the IRS will not send you any further notices about this • In the instructions for Box 10. Other Credits and Deductions, account. However, if you received both IRS notices in the same the reference to Form 8861, Welfare-To-Work Credit, has been year, or if you received them in different years but they both deleted from the list of pass-through credits due to its repeal as related to information returns filed for the same year, do not a separate credit. Instead, qualified second-year wages are check the box at this time. For purposes of the two notices in reported on Form 5884, Work Opportunity Credit. Also, the 3-year rule, you are considered to have received one notice. reference to Form 5884-A, Employee Retention Credit, which You are not required to send a second “B” notice to the expired after 2006, has been deleted. taxpayer on receipt of the second notice. See part N in the 2008

General Instructions for Forms 1099, 1098, 5498, and W-2G for

Reminder more information.

In addition to these specific instructions, you should also use For information on the TIN Matching System offered by the 2008 General Instructions for Forms 1099, 1098, 5498, and the IRS, see the 2008 General Instructions for Forms W-2G. Those general instructions include information about the 1099, 1098, 5498, and W-2G.

TIP

following topics.

• Backup withholding. Account Number • Electronic reporting requirements. The account number is required if you have multiple accounts • Penalties. for a recipient for whom you are filing more than one Form • Who must file (nominee/middleman). 1099-PATR. Additionally, the IRS encourages you to designate • When and where to file. an account number for all Forms 1099-PATR that you file. See • Taxpayer identification numbers. part L in the 2008 General Instructions for Forms 1099, 1098, • Statements to recipients. 5498, and W-2G. • Corrected and void returns.

• Other general topics. Box 1. Patronage Dividends

You can get the general instructions from the IRS website at Enter the total patronage dividends paid in cash (qualified or

www.irs.gov or by calling 1-800-TAX-FORM (1-800-829-3676). “consent” checks), qualified written notices of allocation (face

amount), and other property (except nonqualified written notices

of allocation).

Specific Instructions for Form Box 2. Nonpatronage Distributions

1099-PATR This box applies only to farmers’ cooperatives exempt from tax

under section 521. Enter the total nonpatronage distributions File Form 1099-PATR, Taxable Distributions Received From paid in cash (qualified or “consent” checks), qualified written Cooperatives, for each person to whom the cooperative has notices of allocation (face amount), and other property. Do not paid at least $10 in patronage dividends and other distributions include nonqualified written notices of allocation. described in section 6044(b) or from whom you withheld any

federal income tax under the backup withholding rules Box 3. Per-Unit Retain Allocations regardless of the amount of the payment. A cooperative Enter the total per-unit retain allocations paid in cash, qualified determined to be primarily engaged in the retail sale of goods or per-unit retain certificates (face amount), and other property. services that are generally for personal, living, or family use of

the members may ask for and receive exemption from filing Box 4. Federal Income Tax Withheld Form 1099-PATR. See Form 3491, Consumer Cooperative Enter backup withholding. For example, persons who have not Exemption Application, for information about how to apply for furnished their TIN to you in the manner required are subject to this exemption. Report dividends paid on a cooperative’s capital withholding at a 28% rate on payments required to be reported stock on Form 1099-DIV, Dividends and Distributions. in boxes 1, 2, 3, and 5 to the extent such payments are in cash

Exceptions. Generally, you are not required to file Form or qualified check. See Regulations section 31.3406(b)(2)-5 for

1099-PATR for payments made to a corporation, a tax-exempt more information on backup withholding by cooperatives.

Cat. No. 27984F
Box 5. Redemption of Nonqualified Notices and whole or in significant part any qualifying production property

Retain Allocations marketed by the cooperative that its patrons have

manufactured, produced, grown, or extracted. Agricultural or For farmers’ cooperatives qualifying under section 521 only, horticultural products also include fertilizer, diesel fuel, and enter all redemptions of nonqualified written notices of other supplies used in agricultural or horticultural production allocation issued as patronage dividends or nonqualified written that are manufactured, produced, grown, or extracted by the notices of allocation issued as nonpatronage allocations. Also cooperative. enter nonqualified per-unit retain certificates issued with respect A maximum deduction percentage equal to 9% is to be to marketing. phased in over 5 years. The deduction percentage for 2007, Pass-Through Credits and Deductions 2008, and 2009 is 6%. The deduction is the applicable

Report in the appropriate boxes the patron’s share of unused percentage of the lesser of the qualified production activities

credits and deductions that the cooperative is passing through income (QPAI) of the taxpayer for the taxable year, or the

to the patron. taxable income (determined without regard to section 199) for

the taxable year. Box 6. Domestic Production Activities Written notice. In order for the patron to qualify for the Deduction deduction, the cooperative is required to designate the patron’s

portion of the section 199 deduction in a written notice mailed to A cooperative must reduce its section 1382 deduction the patron no later than the 15th day of the ninth month by an amount equal to the portion of any patronage following the close of the tax year The cooperative may use the CAUTION dividend or per-unit retain allocation, including any

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same written notice, if any, that it uses to notify patrons of their advances on these paid in cash during the year, that is respective allocations of patronage dividends, or may use a attributable to the cooperative’s section 199 deduction passed separate timely written notice to comply with the written notice through to its patrons during the year. See Regulations section requirement for this deduction. 1.199-6 for more details.

Deduction for domestic production activities income. Box 7. Investment Credit

Section 199(d)(3) and Regulations section 1.199-6 provide Enter the total investment credit for the patron.

special rules for cooperatives to pass through, if elected, to their Box 8. Work Opportunity Credit patrons receiving certain patronage dividends or certain per-unit Enter the total work opportunity credit for the patron. retain allocations from the cooperative a deduction equal to

their portion of the cooperative’s qualified production activities Box 9. Patron’s AMT Adjustment income (QPAI) that would be deductible by the cooperative and Enter the total alternative minimum tax (AMT) patronage have been designated by the cooperative in a written notice dividend adjustment for the patron. mailed to its patrons during the payment period specified under

section 1382(d). The deduction for QPAI applies to any Box 10. Other Credits and Deductions

cooperative that is engaged in the manufacturing, producing, For the patron, state separately in box 10 the type and amount growing, or extracting in whole or significant part of any of each of the following credits and deductions. agricultural or horticultural product, or the marketing of • The small ethanol producer credit (Form 6478). agricultural or horticultural products. • The renewable electricity, refined coal, and Indian coal

If any amount of a patronage dividend or qualified per-unit production credit (Form 8835).

retain allocation is received by a patron from the cooperative, • The empowerment zone and renewal community

and such amount is allocable to QPAI that is deductible under employment credit (Form 8844).

section 199(a), then the amount is deductible from the gross • The Indian employment credit (Form 8845).

income of the patron and is reported in box 6. However, if no • The small agri-biodiesel producer credit (Form 8864).

written notice (see below) was sent within the payment period • The low sulfur diesel fuel production credit (Form 8896).

or if the cooperative does not pass through the deduction to the • The energy efficient appliance credit (Form 8909).

patron, leave box 6 blank. • The deduction for capital costs incurred by small refiner

To determine the portion of the cooperative’s QPAI that cooperatives when complying with EPA sulfur regulations.

would be deductible, the cooperative’s taxable income is • The deduction for expensing qualified refinery property under

computed without taking into account any deduction allowable section 179C.

under section 1382(b) or (c) relating to patronage dividends, The Indian employment credit is due to expire after per-unit retain allocations, and nonpatronage distributions. In December 31, 2008. the case of a cooperative engaged in the marketing of CAUTION

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agricultural and horticultural products, the cooperative is treated

as having manufactured, produced, grown, or extracted in

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