An Express Article from the California Land Title Association
Bulletin 2005/06 –83 - January 10, 2006
The Franchise Tax Board has prepared a brochure to educate California Real Estate Brokers about 1099 reporting requirements for commission payments made to brokers and agents.
Real estate brokers are required to report real estate commission payments of $600 or more to brokers and agents on Form 1099-MISC.
Buyers and sellers don’t have reporting obligations since they are not engaged in the course of a trade or business. However, a listing broker has an obligation to report commission payments made to a buyer’s broker.
Also, each broker has an obligation to provide 1099’s to their own agents. Also, anyone required to file 250 or more information returns, must file electronically or magnetically.
A copy of the FTB brochure can be found at: http://www.ftb.ca.gov/forms/misc/4201RE.pdf (PDF)
Because of the FTB attention on the reporting obligations of real estate brokers, escrow agents may be asked to complete the 1099’s. The CLTA would suggest that each company consider the potential implications of this practice.