The Bank wants to offer a $50 premium to new business customers who establish a new business checking we're offering. Ops wants to issue a 1099-int but is this a problem since businesses can't earn interest? Thanks.

As far as I am aware, this is a no-no.

What if a free gift is offered to a business when it signs up for merchant services?

What about points given to Business Accounts for balances that add up to a $$ reduction of maintenance fees charged and credited against the account monthly?

You could issue them a 1099 - MISC.

Pizza Queen -- A $50 premium to a business for opening a checking account is not permitted under Regulation Q. But you can pay that amount for signing up for merchant services, anonymous.

Paying "points" against balances to reduce maintenance fees is also kosher, Murph. But don't show it on the statement as interest. The best idea is to show the net fee amount, or to show the gross fee, less the "balance credit," and the net fee. Just don't use the word "interest." It freaks out your examiners.

John, what if we don't require a minimum balance and don't require that the funds stay on deposit with us for a certail period of time, I thought the 1997 amendment to Reg Q stated that the $10/$20 limits don't apply and won't be considered interest as long as the things I mention above are in effect??

Yes, that is correct, PQ, provided that you conform to the other premiums rules. I humbly beg your pardon for having left that "slice" out of the pie.

Thanks as always John. No need to beg my pardon dear....