Par. 2. An undesignated centerheading and Secs. 1.529-0 through 1.529-6 are added to read as follows:
(a) Taxable distributions. The portion of any distribution made during the calendar year by a QSTP that represents earnings shall be reported by the payor as described in this section.
(b) Requirement to file return--(1) Form of return. A payor must file a return required by this section on Form 1099-G. A payor may use forms containing provisions similar to Form 1099-G if it complies with applicable revenue procedures relating to substitute Forms 1099. A payor must file a separate return for each distributee who receives a taxable distribution.
(2) Payor. For purposes of this section, the term ``payor'' means the officer or employee having control of the program, or their designee.
(3) Information included on return. A payor must include on Form 1099-G--
(i) The name, address, and taxpayer identifying number (TIN) (as defined in section 7701(a)(41)) of the payor;
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(ii) The name, address, and TIN of the distributee;
(iii) The amount of earnings distributed to the distributee in the calendar year; and
(iv) Any other information required by Form 1099-G or its instructions.
(4) Time and place for filing return. A payor must file any return required by this paragraph (b) on or before February 28 of the year following the calendar year in which the distribution is made. A payor must file the return with the IRS office designated in the instructions for Form 1099-G.
(5) Returns required on magnetic media. If a payor is required to file at least 250 returns during the calendar year, the returns must be filed on magnetic media. If a payor is required to file fewer than 250 returns, the prescribed paper form may be used.
(6) Extension of time to file return. For good cause, the Commissioner may grant an extension of time in which to file Form 1099- G for reporting taxable earnings under section 529. The application for extension of time must be submitted in the manner prescribed by the Commissioner.
(c) Requirement to furnish statement to the distributee--(1) In general. A payor that must file a return under paragraph (b) of this section must furnish a statement to the distributee. The requirement to furnish a statement to the distributee will be satisfied if the payor provides the distributee with a copy of the Form 1099-G (or a substitute statement that complies with applicable revenue procedures) containing all the information filed with the Internal Revenue Service and all the legends required by paragraph (c)(2) of this section by the time required by paragraph (c)(3) of this section.
(2) Information included on statement. A payor must include on the statement that it must furnish to the distributee--
(i) The information required under paragraph (b)(3) of this section;
(ii) The telephone number of a person to contact about questions pertaining to the statement; and
(iii) A legend as required on the official Internal Revenue Service Form 1099-G.
(3) Time for furnishing statement. A payor must furnish the statement required by paragraph (c)(1) of this section to the distributee on or before January 31 of the year following the calendar year in which the distribution was made. The statement will be considered furnished to the distributee if it is mailed to the distributee's last known address.
(4) Extension of time to furnish statement. For good cause, the Commissioner may grant an extension of time to furnish statements to distributees of taxable earnings under section 529. The application for extension of time must be submitted in the manner prescribed by the Commissioner.
(d) Backup withholding. Distributions from a QSTP are not subject to backup withholding.
(e) Effective date. The reporting requirements set forth in this section apply to distributions made after December 31, 1998.