1099 for grant money paid to resident?

[schirallicpa]

I think this is going to be my year for off-beat questions.

Village received a grant that they disburse to residents for improvements to their property. The resident applies to the village, the village approves, the resident makes improvements and then submits proof of expense to village. Village hires someone independently to inspect property and "audit" the expenditures, and then issues a check payment to the resident.

Does a 1099 need to be issued to the resident for that payment?

I am thinking no, but I have seen it done before.

[ILLMAS]

I would say there is no need to issue out 1099's because the grant purpose was fulfilled and verified, the only way I would see a home owner getting a 1099 was if they lied about getting the repairs done, made up bogus expenses and just kept the money.