Form 1099-LS Checklist: 2022 Tax Year Filing Guide
Purpose and Overview
Form 1099-LS reports reportable life insurance policy sales under IRC Section 6050Y for the 2022 tax year. Acquirers must report amounts paid to sellers and identify all parties using complete taxpayer identification numbers. The form communicates transaction details to the IRS through Copy A, to payment recipients through Copy B, and to issuers through Copy C.
Critical Filing Deadlines
Understanding the three distinct deadlines is essential for compliance.
- Filing with IRS: February 28, 2023, for paper submissions; March 31, 2023, for electronic filing via the FIRE system
- Furnishing to Payment Recipients: February 15, 2023, for Copy B
- Furnishing to Issuers: January 17, 2023, at the latest for Copy C, subject to specific timing rules based on the later of 20 calendar days after the reportable policy sale or five calendar days after the end of the applicable state law rescission period
Step-by-Step Completion Checklist
Verify Reporting Obligation
Confirm that a reportable policy sale occurred under Section 6050Y during calendar year 2022 and that you are the acquirer required to report the transaction. A reportable policy sale generally involves acquiring any interest in a life insurance contract where the acquirer has no substantial family, business, or financial relationship with the insured person.
Complete Acquirer Information
Enter the acquirer’s legal name, complete street address, city, state, ZIP code, country if applicable, and phone number in the ACQUIRER section. Do not abbreviate. Enter the acquirer’s complete taxpayer identification number (EIN or SSN) in the designated box. The form will mask digits on Copy B for recipient protection, but your complete TIN must be reported to the IRS on Copy A.
Provide the acquirer’s information, contact name, address, phone number, and email in the designated section if different from the acquirer’s principal address. This allows payment recipients to direct questions about the form to the relevant parties.
Enter Payment Recipient Details
Record the payment recipient’s legal name, street address, city, state, ZIP code, country if applicable, and complete TIN. This is the person or entity that sold the policy interest to you. Ensure the TIN is complete and accurate on Copy A filed with the IRS, even though Copies B and C may display only the last four digits for privacy.
Record Policy Number
Enter the exact policy number assigned by the life insurance issuer. This unique identifier corresponds to the specific life insurance contract acquired in the reportable policy sale. Obtain the policy number from contract documentation or by contacting the issuer if necessary.
Report Transaction Amount
Enter the amount paid to the payment recipient in Box 1, including the decimal point and cents portion. Do not use a dollar sign; instead, display the full amount in the format 00000.00. Include all consideration paid for the reportable policy sale, whether cash, property, or other value. The 2022 General Instructions specifically require showing the cents portion of money amounts.
Document Sale Date
Enter the date of sale in Box 2 using the MM/DD/YYYY format as specified in the current General Instructions for Certain Information Returns. Record the actual date when the reportable policy sale transaction closed and ownership transferred.
Identify Issuer Information
Enter the name of the life insurance company that bears the risk on the policy as of the sale date. This is ordinarily the policy administrator or issuer responsible for paying death benefits under the contract. For transactions involving policy transfers during the year, verify the correct issuer as of the specific sale date.
Mark Correction or Void Boxes
Mark the VOID box if the form is being discarded or replaced. Mark the CORRECTED box if this form corrects a previously filed 2022 Form 1099-LS for the same transaction. When filing corrected returns, all fields are completed accurately with the corrected information.
Prepare Copy A for IRS Filing
Prepare Copy A (scannable red form) for filing with Form 1096 by the applicable deadline. Do not print Copy A from the IRS website. The current General Instructions Part O warns that website-printed copies cannot be scanned and subject filers to penalties. Order official scannable Copy A forms from the IRS or file electronically through the FIRE system to avoid scannable form requirements.
Furnish Copy B to Payment Recipient
Furnish Copy B (black form) to the payment recipient by February 15, 2023. This copy may be printed from the IRS website and delivered to the recipient. Copy B informs the recipient of the reported amount and provides information necessary for tax return preparation.
Key Compliance Requirements for 2022
Form Version Continuity
Form 1099-LS remained in effect for 2022 with no line renumbering or structural changes from its December 2019 revision. Acquirers must continue using the same box layout and data fields. The continuous-use format means updates occur as needed rather than annually.
Official Scannable Forms Required
The 2022 General Instructions specify that Copy A must be an official IRS-printed scannable form. Printing Copy A from the website subjects filers to penalties under Part O. You can order official forms from the IRS or choose to file electronically through the FIRE system, which does not require scannable forms.
Electronic Filing Through the FIRE System
Electronic filing via the FIRE system remains available for 2022. Filers must use software conforming to Publication 1220 specifications. The FIRE system is the designated platform for Form 1099-LS electronic filing. Note that the AIR system, which handles Affordable Care Act Information Returns (Forms 1094 and 1095), does not support Form 1099-LS.
Electronic filing offers the extended March 31 deadline, elimination of scannable form requirements, faster processing, and immediate receipt confirmation. Acquirers filing 250 or more forms must file electronically unless they are granted a waiver.
Payment Recipient Tax Treatment
Payment recipients must report amounts shown in Box 1 on their 2022 tax return. The specific tax treatment depends on applicable IRC provisions. Recipients generally must determine their basis in the policy, calculate gain or loss under Section 1001, and consider whether any portion qualifies for exclusion under Section 101 or other applicable provisions.
Section 6050Y establishes reporting requirements rather than income recognition rules. Section 6050Y(b) specifically addresses issuer reporting obligations and does not create exclusions for payment recipients. Recipients should consult tax professionals to determine proper reporting based on individual circumstances.
Issuer Cross-Filing Requirement
Issuers receiving Form 1099-LS from an acquirer must file the corresponding Form 1099-SB under Section 6050Y(b) to comply with their parallel reporting obligation. This requirement remains unchanged for 2022. The issuer uses information from Copy C, along with their records regarding the seller’s investment, to complete Form 1099-SB.
This interconnected reporting structure explains why issuers receive Copy C by the accelerated January 17 deadline. Issuers need time to gather additional information and prepare their own submissions.
Best Practices and Recommendations
Maintain Documentation
Keep complete records of all reportable policy sales throughout 2022, including acquisition date, parties involved, consideration paid, policy number, issuer information, and relevant correspondence. These records support your reporting and provide evidence of compliance.
Create Deadline Calendar
Establish a filing calendar noting January 17, 2023, for issuers; February 15, 2023, for payment recipients; and February 28 or March 31, 2023, for IRS filing. Build buffer time into internal processes to accommodate corrections or questions before deadlines expire.
Verify TIN Accuracy
Confirm taxpayer identification numbers are accurate before filing. Use IRS TIN Matching services when available to validate TINs against IRS records. Incorrect TINs trigger backup withholding notices and penalties. Verification before submission prevents costly corrections.
Review Before Submission
Conduct thorough reviews before submission. Verify all required fields are complete, amounts include cents portions, dates use proper formatting, and TINs are accurate. Check that the correct boxes are marked for corrections or void designations. Review reduces the need for amended returns.
Quick Reference Summary
- Form Version: December 2019 revision (continuous use through 2022)
- IRS Filing: February 28, 2023 (paper) or March 31, 2023 (electronic via FIRE)
- Payment Recipients: February 15, 2023
- Issuers: January 17, 2023 (subject to transaction-specific timing rules)
- Copy A Source: Official IRS stock or electronic filing only; website downloads prohibited
- Box 1 Reporting: Include decimal point and cents portion (format: 00000.00)
- Box 2 Format: MM/DD/YYYY exact date required
- Electronic System: FIRE only (not AIR system)
Keep copies of all submitted forms and supporting documentation for verification of compliance.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
