Our Transportation department gives certain customers a 5% discount up front on their bill, and then later (twice per year) will issue them a check for another 5% rebate if they are still an active customer and continue to use our hauling services.

Would the 5% rebate payment be 1099 reportable?  I'm not sure if this should be considered a refund, which wouldn't be reportable, or if it should be considered income since they have to meet certain criteria in order to get it (i.e. be an active customer). 

If it is reportable, would it go in box 3 (Other) since it's not really compensation for any services performed?

We would like to hold a promotion where we award money to students to be used as a scholarship at a university/college.  We would actually pay the university the money and they would give the student the scholarship.  Who's liable for giving out the tax forms to the student?

One of our subsidiairies has hosted a golf tournament in which certain individuals were awarded plaques based on their performance in the tournament.  The plaques cost around $80 each and clearly exceed the de minimus value. We have requested that our subsidiary collect W9 information from the winners of the plaques, but they are hesitant to do so.  Can you please confirm that the plaques would represent a reportable prize?  Also, does it matter that they are claiming that the registration fee for the tournament covered the cost of the plaques?  I don't think this would matter since the awards were based on performance (not everyone who participated got one).  They are also requesting IRS code section numbers that detail this reporting requirement?  Can you assist in pointing me to the correct code sections?  Thanks for your help with this!

We are a non-profit foundation to support a state university.  We often pay vendors for items (gifts/awards) that are given to students or alumni.  We normally collect W9 information from recipients who receive items in exess of $75, but don't report it because we have yet to have anyone receive items totalling $600 or more in a calendar year.  Just last week, we have had three items in excess of $600 each that have been given as gifts/awards and we are not sure how to handle them. 

One is a crystal that has been purchased from and engraved by a local jeweler and was presented to a student who won a poetry contest.  The total cost of the crystal was $1,000. 

The other two items were medals which were presented to alumni.  The base cost of the medals was $405 each, but there was also a die charge for the personalization and shipping charges.  The total invoice was $1,499.50 (or $749.75 each). 

We have been told by the AP department at the university that these types of awards (plaques, medals, trophies, etc.) should not result in a 1099 being issued because they are personalized and do not have a fair market value.  Is that correct, or should we issue 1099-MISC's for the cost of these awards? 

Also, we have gotten conflicting information regarding sending 1099-MISC forms to donors who are given appreciation gifts.  If we give a donor an appreciation gift in excess of $600 (i.e. - football tickets), would that be something we would report on a 1099?  We have always assumed that this is reportable, but have recently been told by another consulting firm that we should never send a 1099 to a donor.

My question is about the reporting requirement (W-2 or 1099-MISC) for performance bonus awards paid to high performer and overachieving employees.  I assume it would be on a W-2, but am I still within the law to report the performance bonus on a 1099-MISC form if in the event that we can not do it on a W-2 form?  Please let us know as soon as possible.

Our company recently implemented a rewards programs in which employees can earn points and redeem them for rewards.  Our company already prepaid the points and the applicable sales taxes to the vendor administering the rewards program.  As current employees redeemed their points, we report the fair value (regardless of the amount) of what the employees redeemed on their paycheck so they can be taxed and included on the W2.   We don't make a distinction of how much of the points redeemed were from service awards versus performance awards.  In my research, it looks like the IRS allows a certain amount that can be exempt for tax reporting if the reward has something to do with service.  Should we be reporting everything or should we try to distinguish the portion of the points that is taxable?

For employees who separated, they are given three months from the separation date to complete the redemption of any rewards points.  If they redeemed $600 or more worth of points, our plan is to report this under 1099 Misc.  If it's below $600, then we don't report.  Again, we don't make a distinction of much of the points were for service versus performance.  We also don't report if the employees who separate chose not to redeem the points for rewards.  Please advise if this policy is in compliance with the IRS requirements.

Regarding prizes and awards for non-employees, in determining "Fair Market Value" of a prize (example: ipad), are items such as freight and sales tax included when determining whether it is reportable on Form 1099-MISC in Box 3 under the $600 threshold?

We have the Family Owned Business Institute that has a program called the Research Scholar.  People prepare a proposal that underwent a blind review process.  The winners of the program are awarded a $5,000 "stipend" that is paid out now for the participant to convert the research into a publishable, refereed article with appropriate references to the Family Owned Business Institute.  In addition, they are expected to disseminate the results of the research to members of the business community, students and other constituencies as appropriate through meetings, seminars, publications and the classroom.  Also, the finished paper needs to be turned in for consideration as a prensentation at the 2012 Family Enterprise Research Conference.

Could we consider this as a fellowship type payment or is it more of a prize and treated as a 1099 reportable payment?

Does the decision change if both employees and non employees were awarded stipends?

One of our television stations will be conducting a sweepstakes in May with a viewer winning a 3 year car lease – see prize description below.  Their question:  So that the winner does not have such a huge tax hit for 2011, is it possible to issue a 1099 each year, prorating this year’s amount, and then dividing the amount for the last 2 years?

One (1) winner will receive a paid 3 year lease on a 2011 car from, retail value $6,084.  Winner must have a valid state drivers’ license, provide proof of insurance, and comply with all other lease terms. Winner is responsible for excise or property tax, MV fees, excess wear and tear, physical damage, maintenance and mileage over 12,000 annually or 36,000 total.

We have awarded a science fair prize of $250 to a high school student who is attending high school in the US while her father teaches/works/researches at a local university.  The father files as a resident alien in the US. 

Do we need to report or withhold on the payment to the daughter?  Do we need to get documentation for the daughter and/or the father?  What other information do I need to obtain to consider whether there is a filing or withholding requirement for this prize?