Responses to Whether Certain City/RDA Payments to Individuals are 1099 Reportable 

1.	I'm still in the preliminary status of checking this myself, but according to Dave Jewell of Hamner & Jewell (our consultants) and Dave Figg(someone who did consulting for Port Hueneme) these façade amounts are NOT TAXABLE.  Also, I just managed to find out that the relocation payments we made to many of the downtown merchants and apartment dwellers are not taxable under Federal Regulations...  Hope that this helped.  I know the deadline has passed, but you can still correct whatever action you took.  Please let me know if you heard anything differently.  We are in the same boat - and I did not issue 1099's on these renovations.

2.	The City of Encinitas has done what we call "facade grants" to local businesses for several years.   We have always issued the 1099 for these grants.    Together with our A/P staff, I tried to find something in the IRS bulletin that might address this issue...and could not find anything.   We would rather err on the side of conservative...so we go ahead and issue the 1099.

3.	We haven't had this particular situation, since we loan the money for FACADE improvements to business owners.  We reimburse the business owner for their improvement expenses, then 1099 them.  The business owner simply offsets the "income" against the cost of the improvements.  If we were granting funds for a particular use like this, I'm thinking that we would 1099 the grants too.

4.	When in doubt, err on the side of caution and send the companies a 1099.

5.	We have grants available to store owners for facade improvement purposes which vary in amount; we've reported those amounts paid out if they were reportable, meaning as long as the payee is not a corporation.

6.	I recently attended the Diehl Evans Tax Seminar in December and the subject of grants for housing rehab loans came up and whether they are taxable to the recipient.  The answer was they are not taxable.  Contact Bill Morgan at Diehl Evans to be sure.

7.	City of Napa does not provide 1099's to recipients of our façade improvement grants.  We make then do the work with prior approval from us on the design and amount we'll pay, submit to us payment records and then we reimburse them.  We're assuming that it's a business expense for them anyway and not seen as a revenue.  

8.	I would report on a 1099.  I can't find a reason that it would be exempt.

9.	While I don't know the answer to your question, our basic procedure in cases where there is some doubt, (and it is impossible to get the same answer to an IRS question from two different IRS agents) is to go ahead and give them the 1099 and let the recipient deal with it on their 1040 with their own accountant.