We recently discussed this issue with an IRS, and their unofficial guidance is that banks should be selecting a single payor of record when reporting mortgage interest on 1098 forms. Both the regulations and the instructions for Form 1098 refer only to a single “payor of record,” which should be the principal borrower on the loan. Form 1098 Instructions26 CFR 1.6050H-1(b)(3). The IRS’s unofficial guidance is that banks should not be splitting 1098 interest reporting and should report all interest as paid by one borrower, the principal borrower.