Latest IRS Regulation on Timber Sale Transaction Reporting - Form 1099-S Now Required
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The IRS will now require collection of lump-sum timber sale transaction information. In its newly released regulation (Treasury Decision or T.D.9450) in the federal register, May 29, 2009, lump-sum sales or exchanges of standing timber must be reported on Form 1099-S, Proceeds from Real Estate Transactions, effective for sales after May 28, 2009. A timber seller must also be furnished a copy of the form or a substitute statement.
Prior to this new regulation, only pay-as-cut type of timber sales were subject to Form 1099 reporting (Sec. 6050N). This new regulation ends the practice of not filing 1099 for lump-sum timber sale transaction.
Officials recommend timber owners, buyers, foresters, mills, CPAs, attorneys, and other parties involved in administering timber sales learn and comply with this new tax law requirement.
The IRS cited two reasons for such mandatory reporting in the proposed regulation (on November 29, 2007, (REG-155669-04): First, the IRS noted it has found some taxpayers under-reporting income from lump-sum or outright sales of timber.Ó Second, the IRS said the disparate treatment of lump-sum and pay-as-cut timber transactions for information reporting purposes is not sound tax administration.