IBA Compliance Connection

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We would like to encourage check writers to use their debit cards more by rewarding them by depositing a certain amount into their accounts after they have incurred 20 debit card transactions in a month. Can we do this under Illinois law? Do we need to report this to the IRS?

Apr 29, 2015

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Yes, we believe you may create such a rewards program – we are not aware of any law or regulation that would prohibit it. If rewards paid to a particular customer exceed $10 in value in a calendar year, you will have to report the rewards on the 1099-INT Form.

For resources related to our guidance, please see below:

IRS Rev. Proc. 2000-30 (December 31, 1999) (stating that the 1099-INT form must be used to report all payments of interest over $10 in a calendar year)
IRS 1099-INT Webpage (includes links to the current 1099-INT form and instructions, among other information)