Easily eFile federal tax-exempt interest to states

Certain states require special reporting of federally tax-exempt municipal securities, such as: bonds, mutual funds, money market funds, unit investment trusts, and more. State reporting requirements for federally tax exempt interest varies per state but can include: exempt interest, exempt interest dividends, accrued interest received, accrued interest paid, tax exempt original issue discount, portfolio income distributions and more.  eFileMyForms can help simplify this complex reporting in these supported states: California (CA), Connecticut (CT), Massachusetts (MA), Minnesota (MN), and New York (NY).  For more information on this service click here.  (Link to Tax Exempt Reporting Service Page)

Most of the previously listed data, which is required by the states, is already present across an assortment of federal 1099-INT, 1099-DIV, & 1099-OID tax forms – but not everything can be found there. Data, such as accrued interest paid or portfolio income attributable to the state and US territories, can require extra research or services to uncover or provide. Many states also impose a $10 threshold, meaning that any recipient receiving less than net $10 of exempt interest is not required to be reported.

States that require this type of federally tax exempt bond interest reporting generally have two requirements to complete their reporting mandates:

  • First, companies are required to notify their investors/clients that they will be reporting this information. Notification is traditionally with a PDF copy of the information that is being reported to the state on their behalf.
  • Second, states require that the reporting companies file this information, in an electronic file format, which is then submitted directly to the state through a state website or portal – using an account that the company has setup with the state.

Please see – State & Federal Government Links – for Federal Government, State Department of Revenue, and Additional Helpful Website Links to help you stay informated about current tax regulations.

Pre-Reporting Checklist:

  1. Review the sample import maps, for each state that you are required to report, here – Tax Exempt Interest Sample Import Files to ensure you have each of the necessary fields or data elements.
  2. Create state specific accounts that will be used to submit your data files after they are generated by eFileMyForms.  State specific reporting, and contact information, can be found here:
    i. CA – https://webapp.ftb.ca.gov/DirectfileCF/Help/Help20.aspx
    ii. CT – https://portal.ct.gov/DRS/Bond-Interest/Reporting-State–Local-Gov-Bond-Interest
    iii. MA – https://www.mass.gov/service-details/view-filing-requirements-for-form-1099
    iv. MN – https://www.revenue.state.mn.us/municipal-bond-reporting-information
    v. NY – https://www.tax.ny.gov/bus/multi/teb_info.htm
  3. Enter your data into the eFileMyForms sample import files. Some general notes are:
    a. Be sure to use a different PayerLocationCode for each different security that is reported under the same filing entity.
    b. Minnesota (MN) requires that each security description include either “MN” or “Minnesota”.

The Exempt Interest Reporting Process is Easy, Just:

  1. Sign-up for a FREE account.
  2. Find the appropriate tax exempt interest import file for your state here – Tax Exempt Interest Sample Import Files. Supported states are California (CA), Connecticut (CT), Massachusetts (MA), Minnesota (MN), and New York (NY).
  3. Enter your information the in import template and import your file.
    • All filing entity information would be the same as your company except the “PayerLocationCode” would be different for each security, i.e L001, L002, L003…
    • This will separate the reporting of each bond, or fund, into its own reporting bucket – which is required by the states.
  4. Generate summary and totals reports to make sure that all of your numbers match up.
  5. Place your order.
  6. Retrieve the files from your order history by following these instructions – How to Retrieve Tax Exempt Interest Files for State Reporting.
    • This will download a .txt file if there is only one reporting entity/state or will generate a .zip file if there are multiple reporting entities/states.
  7. Submit the electronic files under your state specific accounts (not provided by eFileMyForms).
  8. PDF copies of your ordered CA 592-B forms are available for download at any time. Just follow these instructions – How to Generate PDF Copies of Your Tax Exempt Interest State Forms.

Pricing

Federally Tax Exempt Municipal Bond Forms: File & PDF Generation*

Forms per OrdereFile Only (Quarterly)
1-50$3.49
51-100$2.88
101-250$1.86
251-500$1.28
501-1,000$0.87
1,001-2,500$0.53
2,501-5,000$0.36
5,001+$0.29
*All Federally Tax Exempt interest customers have a one-time, $99 setup fee to access the service. This fee will be charged to the first order of the tax year. No charge is assessed unless an order is placed.