If we issue a gift card to a customer for opening an account we have to include the value of that card on a 1099 at year end. Correct?

If the card is provided to the customer for opening the account, and if the COST (not value) of the card to the bank exceeds $10, you should include it in a 1099-INT for the account at year end and report it as interest to the IRS.

If the gift is made based on something other than opening the account or adding to it (such as for starting a direct deposit or using a debit card), the IRS doesn't consider it interest, but you would include it on a 1099-MISC if the dollar amount, aggregated with similar gifts and other payments in the year amount to $600 or more.

Told that it is being sent because of an error the bank made. So if less then $600 no need to report. Correct?

John,
Do you have a reference for this? We had thought that the $10 limit applied to all customer gifts, and I would love some additional information on the distinction between what the IRS considers reportable on the 1099-INT vs. the 1099-MISC. If you happen to have it handy it would would be very helpful.

Thank you,
-nell