Form 1099 Due Diligence: Avoid Costly Mistakes

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Webinar Details$219

Webinar Length: 100 Minutes
Guest Speaker: Steven Mercatante
Industry: Taxation and Accounting
Credit: CPE 2.0
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The seemingly never-ending and complicated changes to the 1099 forms require you to stay diligent. Reporting issues are commonly a top priority and there is no better way to stay up to date on the issues, exercise best practices, practice due diligence, and avoid costly mistakes. The IRS thinks Forms 1099 are important. They asked and Congress agreed to increase the failure to timely file and the failure to file a correct Information Return penalties for Forms filed. This webinar will go over developing a best practices manual and includes helpful hints on ways to avoid potential penalties and those time consuming “B” Notices.

What better way to prepare for the coming Form 1099 filing season that to learn current preparing and filing guidelines, along with the latest helpful hints.

Current Topics:

What’s New – Filing Dates
What’s New – Penalty Increases and Abatements
Compliance Responsibility of Income Tax Preparer
Compliance Responsibility of Payer
Definition of Due Diligence

Forms 1099:

Identifying Types of Payments Requiring 1099s
Identifying Types of Entities Who Should Receive a 1099
Most Common 1099 Mistakes
Use IRS e-Services to Avoid TIN and Name Matching Problems

Introduction
Todays’s Regulatory Climate 00:01:06
What’s New - The 1099-NEC 00:06:09
30The W-9 00:15:16
The W-9 - When is Form W-9 Perjury Certificate required? 00:20:57
Validating Data - When to Get an Updated Form W-9 00:22:30
Validating Data - Payee Refuses to Provide a TIN 00:26:03
Validating Data - Payments Reportable on Forms 1099 00:27:59
Validating Data - Identifying Your Payment: Exempt Payments 00:28:42
Validating Data - Identifying Your Payee: How to Know Who’s Who 00:32:44
Validating Data - Problem Payees 00:34:04
Validating Data - Problem Payees - The LLC 00:36:50
Validating Data - Problem Payees - The LLC as the Disregarded Entity 00:38:13
Validating Data - The Exempt Organization 00:40:44
Validating Data - The Exempt Organization (cont.) 00:44:14
Validating Payee Data - TIN Match Program 00:45:57
Validating Payee Data - TIN Match Program (cont.) 00:47:07
Validating Payee Data - TIN Match Program (cont.) 00:49:30
Validating Payee Data - TIN Match Program (cont.) 00:51:33
Reporting Data - The Basics 00:53:53
Form 1099-MISC Mistakes to Avoid - Requirements 00:55:32
Form 1099-MISC Mistakes to Avoid - Royalties 00:59:20
Form 1099-MISC Mistakes to Avoid - Prizes/Awards/Attorney/Settlements 01:01:09
Form 1099-MISC Mistakes to Avoid - Deceased Employee Payments 01:07:38
Form 1099-MISC Mistakes to Avoid - Backup Withholding 01:09:32
Form 1099-MISC Mistakes to Avoid - Medical Service Payments 01:11:06
Form 1099-MISC Mistakes to Avoid - Medical Service Payments (cont.) 01:12:15
Form 1099-MISC Mistakes to Avoid - Form 1099-MISC Box 7 01:13:01
Form 1099-MISC Mistakes to Avoid - Form 1099-MISC Box 7 (cont.) 01:16:44
Form 1099-MISC Mistakes to Avoid - Form 1099-MISC Box 9 01:17:03
Form 1099-MISC Mistakes to Avoid - Form 1099-MISC Box 14 01:17:32
Form 1099-MISC Mistakes to Avoid - Form 1099-MISC Box 14 Exceptions 01:18:22
Form 1099-MISC Mistakes to Avoid - Form 1099-MISC Box 15a and 15b NQDC 01:18:56
Form 1099-MISC Mistakes to Avoid - Form 1099-MISC Box 15a 01:22:15
Form 1099-MISC Mistakes to Avoid - Form 1099-MISC Box 15b 01:22:38
Penalty Notice Mistakes to Avoid - IRS Notice 972CG 01:23:07
Protect Yourself - Presentation Closing 01:29:22

1099-NEC 00:06:30
B-Notice 00:05:24
C-Notice 00:20:57
DBA 00:16:22
Disregarded Entity 00:16:41, 00:38:19
D-Notice 00:20:57
EIN 00:24:46
FATCA 00:15:46
Form 1042-S 00:32:44
Form 1099-B 00:20:57, 00:45:57
Form 1099-DIV 00:20:57, 00:45:57
Form 1099-INT 00:20:57, 00:45:57
Form 1099 MISC 00:01:06, 00:08:36, 00:55:32
Form 1099-OID 00:20:57, 00:45:57
Form 1099-PATR 00:20:57, 00:45:57
Form 8832 00:37:49
Form W-2 01:08:04
Form W-9 00:15:16
IRC Section 3406(a) 00:01:06:
IRC Section 6041(a) 00:01:06, 01:18:22
IRC Section 6109(a)(2) 00:01:06
IRS Notice 972CG 00:10:39, 01:23:07, 00:51:33
Limited Liability Company (LLC) 00:37:01
Nonqualified Deferred Compensation (NQDC) 01:19:12
PATH Act 00:08:03
Tax Exempt Organization Search Tool 00:41:07
Tax Gap 00:01:37
TIN 00:15:27
TIN Match Program 00:46:07

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.

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.

C-Notice: Backup withholding notice from the IRS stating that the non-employee has understated income and is subject to backup withholding.

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)

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.

FATCA: FATCA was enacted in 2010 by Congress to target non-compliance by U.S. taxpayers using foreign accounts. FATCA requires foreign financial institutions (FFIs) to report to the IRS information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. (www.treasury.gov). FACTA (Fair and Accurate Credit Transactions Act) is an amendment to FCRA (Fair Credit Reporting Act ) that was added, primarily, to protect consumers from identity theft. The Act stipulates requirements for information privacy, accuracy and disposal and limits the ways consumer information can be shared.

Form 1042-S: Form 1042, also "Annual Withholding Tax Return for U.S. Source Income of Foreign Persons", is used to report tax withheld on certain income of foreign persons.

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-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-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 8832: Form 8832 is the Entity Classification Election form from the IRS. It is filed to elect a tax status other than the default status for your entity. For example, an LLC can elect to be taxed as a C Corporation.

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-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/)

IRC Section 3406(a): Requires that, under certain circumstances, including failure ot payee 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 6109(a)(2): Requires that a payee provide a TIN to the payer when the payment will be reportable on an information return.

IRS Notice 972CG: The IRS started mailing 972CG penalty notices in July 2013 regarding 1099's with missing or incorrect TIN/Name Combinations. A 972CG is a NOTICE OF PROPOSED CIVIL PENALTY. A simple way to prevent this costly penalty is to verify that your information is correct prior to filing.

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.

Nonqualified Deferred Compensation (NQDC): A nonqualified deferred compensation (NQDC) plan is an elective or non-elective plan, agreement, method, or arrangement between an employer and an employee (or service recipient and service provider) to pay the employee or independent contractor compensation in the future. (www.irs.gov)

PATH Act: The Protecting Americans from Tax Hikes (PATH) Act was created to protect taxpayers and their families against fraud and permanently extend many expiring tax laws. The law, which was enacted in December of 2015, affects the timing of certain refunds filed before February 15, 2017.

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

Tax Gap: The gross tax gap is the difference between true tax liability for a given tax year and the amount that is paid on time. It is comprised of the nonfiling gap, the underreporting gap, and the underpayment (or remittance) gap.

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.

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