Question: Lina is preparing the Form 1041, U.S. Income Tax Return for Estates and Trusts, and Schedule K-1 (Form 1041), Beneficiary’s Share of Income, Deductions and Credits, for three beneficiaries. Personal information is available for two of the beneficiaries. But the address and taxpayer identification number (TIN) are missing for the third beneficiary, and the individual is not responding to requests for the information. How should Lina file the Schedule K-1 for this absent beneficiary?

Answer: According to the IRS instructions, Lina should recognize that the trust’s fiduciary must request and provide a TIN for each beneficiary or face penalties for failure to do so. Individuals are responsible for giving their TINs to the fiduciary when asked. Form W-9 is used to request this information.

Reg §301.6109-1(c) provides instructions for requesting the TIN and preparing an affidavit noting lack of compliance with a TIN request. If there is reasonable cause for the noncompliance, it should be explained in an affidavit signed and attached to the transmittal form.

The K-1 is then prepared without the missing information.

If the request procedure and/or affidavit policy is not followed, a penalty of $50 may be imposed under §6721 for each missing/incorrect TIN as seen in the chart on the IRS website. Note that an additional penalty under §6722 may be imposed if the payee statement is furnished late or fails to include all the required information. To abate the penalty, if one is imposed, respond with a reasonable cause as to why the information is missing and to establish that the fiduciary acted responsibly both before and after the failure occurred.