In our view, neither the title company nor your bank would be responsible for filing the 1099-MISC form for the disbursements to providers of services related to the loan.

When your bank makes payments to such non-employees on behalf of someone else (for example, on behalf of a borrower), the IRS rules require you to file a 1099-MISC if: (1) your bank performs management or oversight functions with respect to the payments, or (2) you have “a significant economic interest in the payment . . . that would be compromised if the payment were not made . . . .”

In our view, your bank does not satisfy either test in the situation you described. In addition, the IRS rules indicate that settlement agents who make disbursements to loan service providers from an escrow account also do not incur reporting obligations under either test.

For resources related to our guidance, please see:

• Income Tax Regulations, Return of information as to payments of $600 or more. 26 CFR 1.6041-1(e)(1) (“A person that makes a payment in the course of its trade or business on behalf of another person is the payor that must make a return of information under this section with respect to that payment if the payment is described in paragraph (a) of this section and, under all the facts and circumstances, that person (i) Performs management or oversight functions in connection with the payment (this would exclude, for example, a person who performs mere administrative or ministerial functions such as writing checks at another's direction); or (ii) Has a significant economic interest in the payment (i.e., an economic interest that would be compromised if the payment were not made, such as by creation of a mechanic’s lien on property to which the payment relates, or a loss of collateral).”)

• Income Tax Regulations, Return of information as to payments of $600 or more. 26 CFR 1.6041-1(e)(5) Example 3 (“Settlement agent F provides real estate closing services to real estate brokers and agents. F deposits money received from the buyer or lender in an escrow account and makes payments from the account to real estate agents or brokers, appraisers, land surveyors, building inspectors, or similar service providers according to the provisions of the real estate contract and written instructions from the lender. F may also make disbursements pursuant to oral instructions of the seller or purchaser at closing. F is not performing management or oversight functions and does not have a significant economic interest in the payments, and is not subject to the information reporting requirements of section 6041. For the rules relating to F's obligation to report the gross proceeds of the sale, see section 6045(e) and § 1.6045-4.”)