Form 1099 Due Diligence: Avoid Costly Mistakes

1. Introduction
2. What’s New: The Law 00:01:06
3. What’s New: E-Filing Changes 00:12:34
4. What’s New: Form 1099-NEC 00:32:00
5. 1099-NEC 00:35:27
6. 1099-NEC/July 2025Fringe Benefits Updates 00:37:11
7. The Form 1099-NEC - Reportable Payments 00:43:08
8. 1099-MISC 00:44:56
9. What’s New: Form 1099-K 00:50:00
10. What’s New: Form 1099-DA 00:54:46
11. What’s New: Form 1099-R 00:56:36
12. What’s New: Form 1099-INT 00:59:30
13. The “Other 1099’s”: The 1099-B 01:00:43
14. The “Other 1099’s”: The 1099-DIV 01:02:07
15. The “Other 1099’s”: The 1099-C 01:04:12
16. The W-9 01:05:54
17. The W-9: Name and TIN “Cheat Sheet” 01:11:20
18. The W-9: Name and TIN “Cheat Sheet” Cont’d 01:11:26
19. The W-9 - When to Get an Updated Form W-9 01:13:39
20. The W-9 - Payee Refuses to Provide a TIN 01:14:43
21. Validating Data - Identifying Your Payment: Exempt Payments 01:15:31
22. Validating Data - Identifying Your Payee 01:16:34
23. Validating Data - U.S. Persons 01:17:31
24. Validating Data - W-9 Red Flags for Non-U.S. Payees 01:18:11
25. Validating Data – Problem Payees - U.S. Corporations 01:19:05
26. Validating Data - Problem Payees - The LLC 01:19:22
27. Validating Data - Problem Payees - The LLC as the Disregarded Entity 01:20:01
28. Validating Data –The Exempt Organization 01:21:58
29. Validating Payee Data – TIN Match Program 01:22:40
30. Validating Payee Data –TIN Match Program - Delegated Authority 01:22:39
31. Watch Out For The Middleman 01:25:12
32. Backup Withholding Tips 01:26:17
33. Backup Withholding Tips - Four Triggers 01:26:40
34. Backup Withholding Tips - B-Notice 01:26:59
35. B-Notice Response Best Practices - Reasons For B-Notices 01:28:09
36. B-Notice Response Best Practices - IRS matching 01:28:38
37. B-Notice Response Best Practices - 1st Notice 01:29:10
38. B-Notice Response Best Practices - 2nd Notice 01:30:03
39. B-Notice Response Best Practices - Final B-Notice Thoughts 01:30:51
40. IRS Form 972-CG Proposed Penalty Notice and Reasonable Cause - Penalties 01:31:34
41. IRS Form 972-CG Proposed Penalty Notice and Reasonable Cause - Reasonable Cause 01:31:51
42. IRS Form 972-CG Proposed Penalty Notice and Reasonable Cause - Waiver Request Letter 01:32:06
43. Protect Yourself 01:33:16
44. Attendee Questions 01:34:48
45. Presentation Closing 01:45:35

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  Steven Mercatante

  Steven Mercatante is the principal and founder of TIR Consulting, LLC. He is a nationally recognized leader in tax reporting education and consulting on specialized compliance issues. He has conducted on-site consultation for corporate clients from across the world and led countless seminars and web [...]

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• Accountable Plan 00:37:34
• Accounts Payable 00:03:55, 01:06:51
• Acquisition 01:20:29
• Artificial Intelligence (AI) 00:01:06
• Audit 00:03:41, 01:17:04
• Backup Withholding 00:33:58, 01:15:21, 01:26:21
• B-Notice 00:06:55, 00:15:41, 00:24:09, 01:26:47
• CP-2100 00:06:56, , 00:15:41, 00:24:09, 01:28:15
• DBA -Doing Business As 01:07:04
• Disregarded Entity 01:07:20, 01:09:43
• Due Diligence 00:00:04  00:09:07, 00:12:27, 00:15:57, 00:27:01, 00:55:56, 01:05:59, 01:10:25, 01:14:33, 01:20:23, 01:23:21, 01:28:48
• EIN 01:11:46, 01:18:44
• Exempt 00:41:03, 01:22:04
• Expense 00:40:55, 00:41:49, 00:42:07
• Expense Reimbursement 00:37:16, 00:39:23
• Fair Market Value 00:38:59, 00:39:16
• FATCA 00:43:08, 01:088:13
• FIRE - File Information Returns Electronically 00:13:26, 00:56:10
• Form 1042-S 01:08:45, 01:20:22
• Form 1099-B 01:00:50, 00:01:19,01:22:40
• Form 1099-C 01:04:30
• Form 1099-DA 00:54:48, 01:01:04
• Form 1099-DIV 01:02:12,01:22:40
• Form 1099-INT 00:59:32,01:22:40
• Form 1099-K 00:50:01,01:22:40
• Form 1099-MISC 00:33:18, 00:44:58, 00:55:59, 01:05:38,01:22:40
• Form 1099-NEC 00:30:50, 00:32:32,  00:35:28, 00:43:12, 00:55:59, 01:05:34,01:22:40
• Form 1099-OID 01:22:40
• Form 1099-PATR 01:22:40
• Form 1099-R 00:56:36
• Form 8809 00:29:20
• Form W-2 00:32:51, 00:36:22
• Form W-8 01:08:42
• Form W-9 01:05:56, 01:16:46, 01:26:45
• Fringe Benefits 00:37:16, 00:38:31, 00:39:23
• Golden Parachute Payments 00:35:27
• Independent Contractor 00:37:29, 01:08:24
• Information Returns Intake System (IRIS) 00:13:11, 00:14:46, 00:56:13
• Invoice 01:20:45
• IRC 6050W 00:50:26
• IRC Section 3406(a) 00:01:06
• IRC Section 6041(a) 00:01:06, 00:04:33, 00:46:31, 01:00:16
• IRC Section 6109(a)(2) 00:01:06
• IRC Section 70433 00:04:22, 00:46:27
• IRS Notice 972CG 00:24:04
• ITIN 01:18:28
• Limited Liability Company (LLC) 01:07:02, 01:09:38, 01:19:22
• Merger 01:20:29
• Nonresident Alien (NRA) 01:17:12, 01:18:24
• Overtime 00:36:39
• Resident Alien 01:18:36
• Sole Proprietor 01:07:05, 01:11:14
• Substantial Presence Test (SPT) 01:18:40
• Tax Exempt Organization Search Tool 01:21:58
• TIN 00:24:11, 00:55:46, 01:06:25, 01:10:14, 01:14:22, 01:14:46, 01:28:34
• TIN Match Program 00:55:47, 01:10:21, 01:22:40
• Transaction 00:39:01, 00:51:02, 00:56:28, 01:00:53, 01:25:45
• Transmitter Control Code 00:14:22
• Unrelated Business Income (UBI) 00:40:52
• Vendor 00:23:51, 00:32:58, 00:47:54, 01:06:09, 01:08:58, 01:13:42, 01:22:02, 01:29:12
• Wage 00:41:28

Accountable Plan: An accountable plan is a plan that follows the Internal Revenue Service (IRS) regulations for reimbursing workers for business expenses in which reimbursement is not counted as income. ... However, these expenses must be business-related to fall under an accountable plan.

Accounts Payable (AP): The amount of money a company owes creditors (suppliers, etc.) in return for goods and/or services they have delivered.

Acquisition: An acquisition is referred to as a business transaction in which one firm buys all or part of another company's stock or assets. The acquisition commonly happens to gain control of and expand on the target company's strengths while also capturing energies. This can also be accountable for an acquisition definition.

Artificial Intelligence (AI): Artificial intelligence is intelligence demonstrated by machines, as opposed to the natural intelligence displayed by humans or animals.

Audit: A formal examination of an organization's or individual's accounts or financial situation

B-Notice: A notice from the IRS stating that one or more tax ID numbers were missing from a 1099 or do not match the IRS records.

Backup Withholding: Backup withholding is the tax that is levied on investment income, at an established tax rate, as the investor withdraws it. Backup withholding helps to ensure that government tax-collecting agencies (such as the IRS or Canada Revenue Agency) will be able to receive income taxes owed to them from investors' earnings. (www.investopedia.com)

CP-2100: It is a notice that tells a payer that he or she may be responsible for backup withholding. It is accompanied by a listing of missing, incorrect, and/or not currently issued payee TINs. Largevolume filers will receive a CD or DVD data file CP2100, mid-size filers receive a paper CP2100, andsmall filers receive a paper CP2100A.

DBA -Doing Business As: Sometimes it makes sense for a company to do business under a different name. To do this, the company has to file what's known as a DBA, meaning "doing business as." A DBA is also known as a "fictitious business name," "trade name," or "assumed name."

Disregarded Entity: A disregarded entity refers to a business entity with one owner that is not recognized for tax purposes as an entity separate from its owner. A single-member LLC ( “SMLLC”), for example, is considered to be a disregarded entity. (www.pntax.com)

Due Diligence: Due diligence is a process or effort to collect and analyze information before making a decision or conducting a transaction so a party is not held legally liable for any loss or damage. The term applies to many situations but most notably to business transactions.

EIN: The Employer Identification Number, also known as the Federal Employer Identification Number or the Federal Tax Identification Number, is a unique nine-digit number assigned by the Internal Revenue Service to business entities operating in the United States for the purposes of identification.

Exempt : Exempt employee is a term that refers to a category of employees set out in the Fair Labor Standards Act. They do not receive overtime pay, nor do they qualify for the minimum wage

Expense: Offset (an item of expenditure) as an expense against taxable income.

Expense Reimbursement: Expense reimbursement is a method for paying employees back when they spend their own money on business-related expenses. These expenses generally occur when an employee is traveling for business but can occur in other work-related situations. (www.thebalancecareers.com)

FIRE - File Information Returns Electronically: The IRS FIRE system is the electronic network used to accept and process most types of filing forms. Technically, it stands for File Information Returns Electronically.

Fair Market Value (FMV): The term fair market value is used throughout the Internal Revenue Code among other federal statutory laws in the USA including Bankruptcy, many state laws, and several regulatory bodies. In litigation in many jurisdictions in the United States, the fair market value is determined at a hearing.

Form 1042-S: Form 1042-S is used to report amounts paid to foreign persons (including persons presumed to be foreign) who are subject to income tax withholding. For an individual taxpayer, Form 1042-S is a document provided to you (and the IRS) by the payer of the income reported.

Form 1094-C: Form 1094-C is used to report to the IRS summary information for each employer and to transmit Forms 1095-C to the IRS. Form 1095-C is used to report information about each employee.

Form 1099-B: Proceeds From Broker and Barter Exchange Transactions is an Internal Revenue Service (IRS) tax form that is issued by brokers or barter exchanges. The form lists the gains or losses of all broker or barter exchange transactions.

Form 1099-C: According to the IRS, nearly any debt you owe that is canceled, forgiven or discharged becomes taxable income to you. You'll receive a Form 1099-C, "Cancellation of Debt," from the lender that forgave the debt.

Form 1099-DA: This form is specifically designed to handle the reporting for cryptocurrency and digital assets.

Form 1099-DIV : Form 1099-DIV: Dividends and Distributions is an Internal Revenue Service (IRS) form sent to investors who receive distributions from any type of investment during a calendar year. Investors can receive multiple 1099-DIVs. Each Form 1099-DIV should be reported on an investor's tax filing.

Form 1099-INT: Form 1099-INT is the IRS tax form used to report interest income. The form is issued by all payers of interest income to investors at year end and includes a breakdown of all types of interest income and related expenses. Payers must issue Form 1099-INTs for any party to whom they paid at least $10 of interest during the year.

Form 1099-K: A payment settlement entity (PSE) must file Form 1099-K for payments made in settlement of reportable payment transactions for each calendar year. A PSE makes a payment in settlement of a reportable payment transaction, that is, any payment card or third party network transaction, if the PSE submits the instruction to transfer funds to the account of the participating payee to settle the reportable payment transaction.

Form 1099-MISC: The Form 1099-MISC is an Internal Revenue Service (IRS) tax return document used to report miscellaneous payments made to nonemployee individuals, such as independent contractors, during the calendar year. (www.shrm.org)

Form 1099-NEC: In the context of 1099 tax filing, NEC stands for “Nonemployee Compensation” (the first letters of the three words None, Employee and Compensation). Most tax payers recognize NEC as box 7 on Form 1099-MISC. NEC is used to report income paid to independent-contractors / the-self-employed (referred to as 1099 employees for simplification purposes). So, while employers report income that gets paid to employees on Box 1 (Wages, tips, other compensation) of the W2 form, payers report income that gets paid to none-employees on Box 7 (NEC) of the 1099-MISC form. As an individual, if you received form 1099-MISC instead of Form W-2 then the payer did not consider you an employee and did not withhold income tax or social security and Medicare tax.

Form 1099-OID: Form 1099-OID is a tax form intended to be submitted to the Internal Revenue Service by the holder of debt instruments which were discounted at purchase to report the taxable difference between the instruments' actual value and the discounted purchase price.

Form 1099-PATR: File Form 1099-PATR, Taxable Distributions Received From Cooperatives, for each person to whom the cooperative has paid at least $10 in patronage dividends and other distributions described in section 6044(b), or from whom you withheld any federal income tax under the backup withholding rules regardless of the amount of the payment.

Form 1099-R: Form 1099-R is a tax form from the Internal Revenue Service (IRS) for reporting distributions from annuities, profit-sharing plans, retirement plans, IRAs, insurance contracts, or pensions.

Form 1099-S: A Form 1099-S is a tax document used to ensure that the full amount received for a real estate sale of some kind is accurately reported. A 1099-S can also be used to report income made on a rental property or investment property. For selling real estate, the buyer must complete and file their own 1099-S.

Form 8809: Use Form 8809 to request an initial or additional extension of time to file only the forms shown on line 6 for the current tax year.

Form 945: IRS Form 945 is titled Annual Return of Withheld Federal Income Tax. Form 945 is used to report withheld federal income tax from nonpayroll payments, including distributions from qualified retirement plans.

Form W-2: Form W-2 is an Internal Revenue Service tax form used in the United States to report wages paid to employees and the taxes withheld from them. Employers must complete a Form W-2 for each employee to whom they pay a salary, wage, or other compensation as part of the employment relationship. - Wikipedia (https://en.wikipedia.org/)

Form W-8: Form W-8 is filled out by foreign entities (citizens and corporations) in order to claim exempt status from certain tax withholdings. The form is used to declare an entity's status as non-resident alien or foreign national who works outside of the United States.

Form W-9: Form W-9 (officially, the "Request for Taxpayer Identification Number and Certification") is used in the United States income tax system by a third party who must file an information return with the Internal Revenue Service (IRS). It requests the name, address, and taxpayer identification information of a taxpayer (in the form of a Social Security Number or Employer Identification Number). - Wikipedia (https://en.m.wikipedia.org/)

Fringe Benefits: An extra benefit supplementing an employee's salary, for example, a company car, subsidized meals, health insurance, etc.

Golden Parachute Payments: Golden parachute payments are payments of compensation made to individuals whose companies experience a change in control

IRC 6050W : Section 6050W requires information returns to be made for each calendar year by merchant acquiring entities and third party settlement organizations with respect to payments made in settlement of payment card transactions and third party payment network transactions occurring in that calendar year.

IRC Section 3406(a): Requires that, under certain circumstances, including the payee's failure to provide a TIN, the payer must perform backup withholding.

IRC Section 6041(a): Provides that persons engaged in trade or business must report certain payments on an information return.

IRC Section 6045: Every person doing business as a broker shall, when required by the Secretary, make a return, in accordance with such regulations as the Secretary may prescribe, showing the name and address of each customer, with such details regarding gross proceeds and such other information as the Secretary may by forms or regulations require with respect to such business.

IRC Section 6109(a)(2): Requires that a payee provide a TIN to the payer when the payment will be reportable on an information return.

IRC Section 6724: I.R.C. § 6724(a) Reasonable Cause Waiver — No penalty shall be imposed under this part with respect to any failure if it is shown that such failure is due to reasonable cause and not to willful neglect.

IRC Section 70433: An "IRC Section 70433" refers to a provision within the U.S. tax code related to recent changes for reporting payments made on Forms 1099-MISC and 1099-NEC. The section is not part of the current official Internal Revenue Code but was enacted as part of a recent piece of legislation, the "One Big Beautiful Bill Act" (OBBBA). Specifically, Section 70433 does the following: Increases the reporting threshold, adds inflation adjustments, and affects backup withholding.

Independent Contractor: An independent contractor is a person or entity contracted to perform work or provide services to another entity as a non-employee. As a result, independent contractors must pay their own Social Security and Medicare taxes. - Investopedia (https://www.investopedia.com/)

Information Returns Intake System (IRIS): The Information Returns Intake System (IRIS) Taxpayer Portal is a system that provides a no cost online. method for taxpayers to electronically file Form 1099 series. The Taxpayer Portal allows you to enter. data to create Forms 1099 by either keying in the information or uploading a .csv file.

Invoice: An invoice, bill or tab is a commercial document issued by a seller to a buyer, relating to a sale transaction and indicating the products, quantities, and agreed prices for products or services the seller had provided the buyer. Payment terms are usually stated on the invoice.

Limited Liability Company (LLC): An LLC is a corporate structure where members cannot be held accountable for the company’s debts or liabilities. This can shield business owners from losing their entire life savings if, for example, someone were to sue the company. Can be a single member (much like a sole proprietor) or a multi-member. It shares certain traits of both corporations as well as partnerships or sole proprietorships. It is not a corporation.

Merger: A merger is a business deal where two existing, independent companies combine to form a new, singular legal entity. Mergers are voluntary. Typically, both companies are of a similar size and scope and both stand to gain from the transaction.

Overtime: Overtime is time and a half of what an employee earns for every hour worked over 40 in a workweek. The FLSA salary threshold is the minimum salary employers must pay employees for them to be exempt from overtime wages.

Resident Alien : A resident alien is a foreign person who is a permanent resident of the country in which he or she resides but does not have citizenship. To fall under this classification in the United States, a person needs to either have a current green card or have had one in the previous calendar year.

Sole Proprietor: A business that legally has no separate existence from its owner. The sole proprietorship is the simplest business form under which one can operate a business. The sole proprietorship is not a legal entity. It simply refers to a person who owns the business and is personally responsible for its debts.

Substantial Presence Test (SPT) : The Substantial Presence Test (SPT) is a criterion used by the Internal Revenue Service (IRS) in the United States to determine whether an individual who is not a citizen or lawful permanent resident in the recent past qualifies as a "resident for tax purposes" or a "nonresident for tax purposes"; it is a form of physical presence test. The SPT should be used in conjunction with the Green Card Test (the criterion that the individual possessed a valid Green Card at any time of the year). An individual who satisfies either one or both of these tests is treated as a resident for tax purposes.

TIN: A Taxpayer Identification Number is an identifying number used for tax purposes in the United States and in other countries under the Common Reporting Standard. In the United States, it is also known as a Tax Identification Number or Federal Taxpayer Identification Number.

TIN Match Program: TIN Matching is part of a suite of Internet-based pre-filing e-services that allows “authorized payers” the opportunity to match 1099 payee information against IRS records prior to filing information returns.

Tax Exempt Organization Search Tool: Tax Exempt Organization Search helps users find information about a tax-exempt organization’s federal tax status and filings.

Transmitter Control Code (TCC): The Transmitter Control Code (TCC) is an identifier that the IRS uses to distinguish different electronic filing companies. It's necessary when you need to file for a correction. Getting a TCC depends on how you file your 1099 forms

Unrelated Business Income (UBI): For most organizations, unrelated business income is income from a trade or business, regularly carried on, that is not substantially related to the charitable, educational, or other purpose that is the basis of the organization's exemption

Vendor: A vendor is a person or business that supplies goods or services to a company. Another term for the vendor is the supplier. In many situations, a company presents the vendor with a purchase order stating the goods or services needed, the price, delivery date, and other terms.

Wage: A fixed regular payment, typically paid on a daily or weekly basis, made by an employer to an employee, especially to a manual or unskilled worker.