Municipal Bond Payment Reporting

kim.dahlke Mon, 08/08/2022 - 08:31

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Municipal Bond Payment Reporting

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Income Tax Fact Sheet 19

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Annual Reporting Requirement for Payers and Transmitters

Municipal Bond Reporting is required when a person receives $10 or more of exempt interest or exempt interest dividends and pays as a nominee to an individual who is a resident of Minnesota.

According to Minnesota law, regulated investment companies paying $10 or more in exempt-interest dividends to a Minnesota resident, or anyone receiving $10 or more in exempt-interest or exempt-interest dividends and paying as nominee to a Minnesota resident, must file information returns with the Minnesota Department of Revenue.

If you distribute payments of exempt-interest or interest-dividends on federally tax-exempt municipal bond funds, you must register and file an information return.

Complete our online reporting registration form
File your information return through the Municipal Bond Reporting Virtual Room
You must meet our guidelines for creating and submitting files

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You must complete the online reporting registration form on our website. After you submit the form, you will receive an email invitation to join our secure Virtual File Submission Room. Use this room to upload your information and file your report.

Only one representative per company can access the Virtual Room. If the email address is no longer valid for an employee who registered in the past, you must complete the online reporting registration form for the new representative. We will send an invitation to join our secure Virtual Room to that person.

Due Date [+]

The due date for issuing information returns to investors is February 15 following the year of payment.

By June 1 each year, you must use our secure filing system to electronically send us information returns for payments of exempt-interest or exempt-interest dividends.

If you cannot submit your returns by the due date, you must email us by June 1. Your email must include the date you expect to file and the reason you are unable to file on time. Send your email to: Revenue.MunicipalBondReporting@state.mn.us.

Note: You must provide this information separately from other interest or dividend information returns that are generally due on March 31 each year.

Failure to File [+]

If you fail to file a required information return by the due date, we may assess a penalty. The penalty is $50 for each information return, up to a maximum of $25,000.

In the case of a partnership, S corporation, or fiduciary, the penalty is $50 for each partner, shareholder, or beneficiary return, up to a maximum of $25,000.

Additional penalties apply if the failure to file is due to intentional disregard of the filing requirement. (See Minnesota Statute 289A.60, subdivision 8(a).)

How to File Your Report

Specifications for Creating a File [+]

Our format specifications for reporting interest and interest-dividend payments are similar to the IRS specifications for 1099-B reporting found in IRS Publication 1220. Except:

Use a Form 1099-B format to record earnings from mutual funds, money market funds, and unit investment trusts paid to individuals. Report the income as if it were taxable for federal purposes.
Use a separate “A” record for each fund reported.
On the “A” record in positions 26-27, use code “B”, left justified, to indicate this is a Form 1099-B to report both Interest and Interest-dividends. Do not use a code “6."
Use positions 40-44 of the “A” record to report the percentage of mutual fund portfolio income distribution attributable to bonds issued by Minnesota, using 4 decimal places (for example: 94.50% = ‘09450’, 98.17% = ‘09817’, 5.85% = ‘00585’, and 100% = ‘10000’).
Use positions 47-51 of the “A” record to report the percentage of mutual fund portfolio income distribution attributable to bonds issued by the following U.S. possessions: American Samoa, Puerto Rico, Guam, Virgin Islands, and Northern Mariana Islands. Use 4 decimal places to report the distribution percentage (for example: 0.86% = ‘00086’, 2.37% = ‘00237’, and 28.10% = ‘02810’).
Enter payment amounts in positions 55-66 of the payee “B” record. Right-justify and zero-fill.
Enter the CUSIP number of the security in positions 556-568 of the payee “B” record. Left-justify and blank-fill.
Enter the description of the security, including the fund name and State of issuance in positions 569-607 of the payee “B” record.

Required Information
Your file must include this information:

Amount of the exempt-interest or interest dividends.
Recipient’s (payee’s) full name, address, Social Security Number, and account number.
Percentage of mutual fund portfolio distribution attributable to bonds issued by Minnesota, containing four decimal places (five digits).
Percentage of mutual fund portfolio distribution attributable to bonds issued by U.S. possessions, containing four decimal places (five digits).
CUSIP number of the security.
Business name of payer.
Payer’s federal employer identification number (FEIN).
Name of mutual fund or bond. Enter the complete name unique to the security, such as "ABC Tax-Free Minnesota," not "ABC Tax-Free".
Name, phone number, address, and email of the contact person who created the file.

Submitting a File [+]

Form 1099-B “Hybrid Document” [+]

Important: Some of the fields and positions differ from the federal Form 1099-B.

The state of Minnesota requires use of the standard 750-character text file for reporting the federally tax-exempt interest-dividends from Mutual Funds, Money Market Funds, and Unit Investment Trusts. We require a “T” Record, “A” Record, “B” Record(s), and “F” Record. If your program already is written to include the “C” Record, you may include it in the file. Do not use semi-colons when completing your file.

Payer “T” Record and Payer “F” Record – Record Layout

Enter data in the same exact format as all 1099 Record documents per current-year IRS Publication 1220 instructions.

Payer “A” Record – Record Layout

Position	Description	Instructions
1	Record Type	Enter “A.”
2-5	Payment Year	Enter “XXXX”, where XXXX stands for the current year filing period.
6	Combined Filer	Enter blank.
7-11	Blank	Enter blanks.
12-20	Payer TIN	Enter the Taxpayer Identification Number (TIN) assigned to the specific Fund or “UIT.”
21-24	Name Control	First four digits of last name. If less than four, left-justify and blank-fill.
25	Last Filing Indicator	Enter “1” if this is the last year this payer name and TIN will file. Otherwise, enter blank.
26-27	Type of Return	Enter “B” for Form 1099-B, the state of Minnesota hybrid document.
28	Amount Code	Enter “2” for stocks, bonds, and so on. Do not list other 1099-B codes.
29-39	Blank	Enter blanks.
40-44	Percent Attributable to Minnesota	Enter percentage of mutual or money market fund portfolio income distribution attributable to bonds issued by Minnesota, using 4 decimal places (e.g., 94.50% = ‘09450’, 98.17% = ‘09817’, 5.85% = ‘00585’, and 100% = 10000’)
45-46	Blank	Enter blanks.
47-51	Percentage of U.S. Possession	Enter percentage of mutual or money market fund portfolio income distribution attributable to bonds issued by the following U.S. possessions: American Samoa, Puerto Rico, Guam, Virgin Islands, and Northern Mariana Islands. Use 4 decimal places to report the distribution percentage (e.g., 0.86% = ‘00086’, 2.37% = ‘00237’, 28.10% = ‘02810’). If your company does not capture the income distribution percentage attributable to U.S. possessions, zero-fill the field.
52	Foreign Entity Indicator	Enter a “1” if the payer is a foreign entity and income is paid by the foreign entity to a U.S. resident. Otherwise, enter blank.
53-92	First Payer Name Line	Required. Enter the name of the payer whose TIN appears in positions 12-20 of the “A” Record.
93-132	Second Payer Name Line	If the Transfer (or Paying) Agent Indicator (position 133) contains a “1,” this field must contain the name of the transfer (or paying) agent. If the indicator contains a “0” (zero), this field may contain either a continuation of the First Payer Name Line or blanks.
133	Transfer Agent Indicator	Required. Identifies the entity in the Second Payer Name Line field. The indicator can be either a “1” or “0” (zero). The 1 means the entity in the Second Payer Name Line field is the transfer (or paying) agent. The zero means the entity is not the transfer (or paying) agent.
134-173	Payer Shipping Address	Required. If the Transfer Agent Indicator in position 133 is a “1” (one), enter the shipping address of the transfer (or paying) agent. Otherwise, enter the actual shipping address of the payer. The street address should include number, street, apartment or suite number, or P.O. Box if mail is not delivered to a street address. Left justify information, and fill unused positions with blanks.
174-213	Payer City	Required. If the Transfer Agent Indicator in position 133 is a “1” (one), enter the city, town, or post office of the transfer agent. Otherwise, enter the city, town, or post office of the payer. Left-justify information, and fill unused positions with blanks. Do not enter state and ZIP Code information in this field.
214-215	Payer State	Required. Enter the valid U.S. Postal Service state abbreviations. Refer to the chart of valid state abbreviations in Part A, Sec. 12 of federal Publication 1220.
216-224	Payer ZIP Code	Required. Enter the valid nine-digit ZIP Code assigned by the U.S. Postal Service. If only the first five-digits are known, left-justify information and fill the unused positions with blanks.
225-239	Payer’s Telephone Number	Enter the payer’s telephone number and extension. Omit hyphens. Left-justify information and fill unused positions with blanks.
240-499	Blank	Enter blanks.
500-507	Record Sequence Number	Required. Enter the number of the record as it appears within your file. The record sequence number for the “T” Record will always be “1” (one), since it is the first record on your file and you can have only one “T” Record in a file. Increments subsequent records by one in ascending sequence (2, 3, 4, etc.). Right-justify numbers with leading zeros in the field (e.g., the “T” Record sequence would appear as “00000001” in the field, the first “A” Record would be “00000002,” the first “B” Record, “00000003,” the second “B” Record, “00000004” and so on until you reach the final record of the file, the “F” Record).
508-748	Blank	Enter blanks.
749-750	Blank	Enter blanks or carriage return/line feed (CR/LF) characters.

Payer “B” Record – Record Layout

Position	Description	Instructions
1	Record Type	Enter “B.”
2-5	Payment Year	Enter “XXXX”, where XXXX stands for the current year filing period.
6	Combined Reason Indicator	Required for corrections only. Blank if not being submitted to correct information..
7-10	Name Control	If determinable, enter the first four characters of the surname of the person whose TIN is being reported in positions 12-20 of the “B” Record. Otherwise, enter blanks.
11	Type of TIN	1 = EIN 2 = SSN 2 = ITIN 2 = ATIN Blank = N/A If the type of TIN is not determinable, enter a blank.
12-20	Payee’s Taxpayer Identification Number (TIN)	Required. Enter the nine-digit TIN of the payee (SSN, ITIN, ATIN, or EIN). If an ID number has been applied for but not received, enter blanks. Do not enter hyphens or alpha characters.
21-40	Payer’s Account # for Payee	Required if submitting more than one information return of the same type for the same payee. Enter any number assigned by the payer to the payee that can be used by the IRS to distinguish between information returns.
41-44	Payer’s Office Code	Enter office code of payer. Otherwise, enter blanks. For payers with multiple locations, this field may be used to identify the location of the office submitting the information return.
45-54	Blank	Enter blanks.
55-66	Payment Amount 1	Enter dollars and cents of the federally tax-exempt interest-dividend payment. The right-most two positions represent cents in the payment amount fields. Do not enter dollar signs, commas, plus signs (+), decimal points, or negative payments.
67-78	Payment Amount 2	Enter zeros (0’s). On a federal Form 1099-B the Stock, Bond payment would go here, but do not enter any dollar amount here.
79-270	IRS Other Payment Amounts	Enter zeros (0’s).
271-286	Blank	Enter blanks.
287	Foreign Country Indicator	If the address of the payee is in a foreign country, enter a “1” (one) in this field. Otherwise, enter blank.
288-327	First Payee Name Line	Required. Enter the name of the payee (preferably surname first) whose TIN was provided in positions 12-20 of the Payee “B” Record. Left-justify and fill unused positions with blanks.
328-367	Second Payee Name Line	If there are multiple payees (e.g., partners, joint owners, or spouses), use this field for those names not associated with the TIN provided in positions 12-20 of the “B” Record, or if not continue the name in this field. Left-justify and fill unused positions with blanks.
368-407	Payee Mailing Address	Required. Enter mailing address of payee. Street address should include number, street, apartment or suite number, or P.O. Box if mail is not delivered to street address. This field must not contain any data other than the payee’s mailing address.
408-447	Blank	Enter blanks.
448-487	Payee City	Required. Enter the city, town, or post office. Left-justify information and fill unused positions with blanks. Enter APO or FPO if applicable. Do not enter state and ZIP Code information in this field.
488-489	Payee State	Required. Enter the valid U.S. Postal Service state abbreviations for states or the appropriate postal identifier (AA, AE or AP) described in Part A, Sec. 12 of the federal Publication 1220.
490-498	Payee Zip Code	Required. Enter the valid ZIP Code (nine or five-digit) assigned by the U.S. Postal Service. If only the first five digits are known, left-justify information and fill the unused positions with blanks.
499	Blank	Enter blanks.
500-507	Record Sequence Number	Required. Enter the number of the record as it appears within your file. The record sequence number for the “T” Record will always be “1” (one), since it is the first record on your file and you can have only one “T” Record in a file. Increment subsequent records by one in ascending numerical sequence (2, 3, 4, etc.).
508-555	Blank	Enter blanks.
556-568	CUSIP Number	Enter the CUSIP (Committee on Uniform Security Identification Procedures) number of the Mutual Fund, Money Market Fund, or Unit Investment Trust reported for amount Code 1. Enter “0s” (zeros) if the number is not available. Left-justify information and fill unused positions with blanks.
569-607	Description	Enter the complete name of the Mutual fund, Money Market Fund, Unit Investment Trust, or Municipal Bond. For example, enter “ABC Tax-Free Minnesota Fund,” not just “ABC Tax-Free Fund.” Any Fund or Bond attributable to Minnesota must contain the word “Minnesota” in its description. You may also use the standard Postal Service state acronym of “MN.” Avoid using other abbreviations
608-662	Blank	Enter blanks.
663-722	Special Data Entries	This portion of the “B” Record may be used to record information for state reporting or for the filer’s own purposes. If this field is not used, enter blanks.
723-750	Blank	Enter blanks.

Additional forms and information, including fact sheets and frequently asked questions, are available on our website.

Website: www.revenue.state.mn.us
Email: revenue.municipalbondreporting@state.mn.us
Phone: 651-556-5071

Contact Info

Contact form

Phone [+]

Questions

651-296-3781
800-652-9094

Hours [+]

Address [+]

Mail your income tax return to:

Minnesota Revenue
Mail Station 0010
600 N. Robert St.
St. Paul, MN 55146-0010

Mail your property tax refund return to :

Minnesota Revenue
Mail Station 0020
600 N. Robert St.
St. Paul, MN 55146-0020

Mail your tax questions to:

Minnesota Revenue
Mail Station 5510
600 N. Robert St.
St. Paul, MN 55146-5510

Street address (for deliveries):
Minnesota Revenue
Individual Income Tax
600 N. Robert St.
St. Paul, MN 55101

Returns and payments may be placed in the night deposit box located in front of our building.

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Last Updated

December 11, 2024