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Compliance T or Frefunded ATM fees are interest
WASHINGTON (3/11/08)—If a credit union decides to refund foreign ATM fees to its members, does it have to treat the refund as interest and file a Internal Revenue Service (IRS) Form 1099 INT? The Credit Union National Association compliance team advises that any credit union considering such a refund program should look closely at the issue. “According to the IRS Information Return Hotline, the IRS has not issued anything on this particular issue and would prefer to determine if filing is appropriate on a case by case basis,” according to CUNA’s Compliance Challenge. The IRS requires the filing of a 1099 INT for any interest payments made to a consumer in relation to a deposit account, whether or not it is designated as interest, when it provides an incentive for the consumer to open or maintain a deposit account with a particular institution. “Interest” has been found to mean actual interest accrued on an account and monetary gifts or merchandise provided to consumers in connection with opening or maintaining an account with a particular institution. “So, it could be argued that ATM fee refunds offered as an incentive to keep existing members or solicit new members could be considered interest,” the Challenge says. For those considering a refund program, or other initiatives that bring up tax concerns, here’s the IRS Information Return Reporting Hotline: 1-866-455-7438.


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