For the past ten years I have managed the financial dealings for a Frenchman doing business in the US. He has a TIN number and a CPA that files his US taxes for him each year. Everything has worked fine with the Frenchman being the primary account holder and me being the secondary. However the credit union recently sent me a 1099-INT statement that tagged me with all of the interest income for last year.
They said that they were forced to move me to the primary account holder because of a new Federal regulation. Is this really the case? Is there anything that I can do to get things as they previously were?
If the French co-owner of the account is a resident alien in the U.S., he should provide the credit union a form W-9. Then the credit union can legally consider him the primary owner of the account for interest reporting (1099-INT) purposes. However, if he is not a resident alien in the U.S., and must provide a W-8, the credit union must treat the co-owner who supplied a W-9 - you, in this case - as the individual to whom the interest or dividend payments are made, and report them accordingly on form 1099-INT.
Those are IRS requirements, and the credit union appears to be correct in their interpretation, except for its suggestion that it's a new law. It's been around for quite a while, so unless the French co-owner is a U.S. resident alien, there's nothing that can be done if you continue to be a co-owner of the account.
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If the French co-owner of the account is a resident alien in the U.S., he should provide the credit union a form W-9. Then the credit union can legally consider him the primary owner of the account for interest reporting (1099-INT) purposes. However, if he is not a resident alien in the U.S., and must provide a W-8, the credit union must treat the co-owner who supplied a W-9 - you, in this case - as the individual to whom the interest or dividend payments are made, and report them accordingly on form 1099-INT.