Form 1099 Due Diligence: Avoid Costly Mistakes

1. Introduction
2. What’s New - The Law 00:01:18
3. What’s New - Big 1099/W-2 E-Filing Changes Are In The Works 00:13:36
4. What’s New - Form 1099-NEC 00:27:07
5. 1099-NEC 00:33:57
6. 1099-NEC - Box 4 - Backup Withholding 00:34:24
7. 1099-NEC - Expense Reimbursements/Accountable Plans 00:38:03
8. 1099-NEC - Expense Reimbursement/Fringe benefits 00:39:03
9. 1099-NEC/July 2025 Fringe Benefits Updates 00:41:56
10. What’s New: Form 1099-MISC 00:48:25
11. 1099-MISC 00:50:53
12. What’s New: Form 1099-K 00:53:56
13. Form 1099-K: Expect Changes in 2025 00:55:57
14. What’s New: Form 1099-R 00:57:05
15. Form 1099-R: Expect Changes in 2025 00:59:14
16. Form 1099-B: Expect Changes in 2025 00:59:35
17. The W-9 01:01:09
18. The W-9: Name and TIN “Cheat Sheet” 01:05:25
19. The W-9: Name and TIN “Cheat Sheet” Cont’d 01:05:49
20. The W-9 - When to Get an Updated Form W-9 01:07:36
21. The W-9 - Payee Refuses to Provide a TIN 01:10:18
22. Validating Data - Identifying Your Payment: Exempt Payments 01:10:48
23. Validating Data - Identifying Your Payee 01:11:34
24. Validating Data - U.S. Persons 01:14:29
25. Validating Data - W-9 Red Flags for Non-U.S. Payees 01:15:32
26. Validating Data – Problem Payees - U.S. Corporations 01:16:05
27. Validating Data - Problem Payees - The LLC 01:16:17
28. Validating Data - Problem Payees - The LLC as the Disregarded Entity 01:16:37
29. Validating Data –The Exempt Organization 01:18:01
30. Validating Payee Data – TIN Match Program 01:18:11
31. Validating Payee Data –TIN Match Program - Using The Tool 01:18:36
32. Validating Payee Data –TIN Match Program - Delegated Authority 01:18:54
33. Watch Out For The Middleman 01:20:03
34. Backup Withholding Tips 01:21:08
35. Backup Withholding Tips - Four Triggers 01:21:15
36. Backup Withholding Tips - B-Notice 01:23:11
37. B-Notice Response Best Practices - 1st Notice 01:24:28
38. B-Notice Response Best Practices - 2nd Notice 01:27:13
39. B-Notice Response Best Practices - Final B-Notice Thoughts 01:28:13
40. IRS Form 972-CG Proposed Penalty Notice and Reasonable Cause - Penalties 01:29:09
41. IRS Form 972-CG Proposed Penalty Notice and Reasonable Cause - Responding 01:
42. IRS Form 972-CG Proposed Penalty Notice and Reasonable Cause - The Law 01:31:39
43. IRS Form 972-CG Proposed Penalty Notice and Reasonable Cause - Waiver Request Letter 01:32:15
44. Protect Yourself 01:32:26
45. Attendee Questions 01:38:00
46. Presentation Closing 01:42:22

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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 00:38:22
• Accounts Payable (AP) 00:06:29
• Artificial Intelligence (AI) 00:10:17, 01:34:44
• Audit 01:12:49
• Backup Withholding 00:34:26, 00:36:05, 01:10:22,  01:21:08
• B-Notice 00:04:30, 00:36:13, 01:23:11
• Contract 01:10:17
• CP-2100 01:23:17, 01:28:23
• CP-2100-A  01:24:28
• DBA -Doing Business As 01:04:38, 01:06:32, 01:24:58
• De Minimis 00:40:56
• Disregarded Entity 01:02:01, 01:04:31
• Due Diligence 00:00:07, 00:07:37, 00:48:29, 01:32:35
• EIN 01:06:15, 01:08:08, 01:24:44
• Exempt 00:43:15, 01:10:28
• Expense 00:38:42, 00:45:36
• Expense Reimbursement 00:38:08
• Fair Market Value (FMV) 00:46:07
• FATCA 01:02:52
• FIRE - File Information Returns Electronically 00:14:35, 00:16:21, 0:18:14
• Form 1099-B 00:59:36
• Form 1099-DIV 01:18:11
• Form 1099-INT 01:18:11
• Form 1099-K 00:53:56, 000:56:31, 01:11:22
• Form 1099-MISC 00:03:11, 00:27:15, 00:36:38
• Form 1099-NEC 00:03:11, 00:27:15, 00:34:07, 00:36:24, 00:41:29, 00:51:47
• Form 1099-OID  01:18:11
• Form 1099-PATR  01:18:11
• Form 1099-R 00:57:07
• Form 945 00:34:24
• Form W-2 00:14:33, 00:32:25. 0042:30
• Form W-9 01:01:10, 01:05:01, 01:10:39, 01:26:19
• Fringe Benefits 00:38:06, 00:39:08
• Golden Parachute Payments 00:51:53
• Information Returns Intake System (IRIS) 00:14:22, 00:15:22, 00:18:21, 00:22:41
• IRC 6050W 01:10:48
• IRC Section 132 00:45:02
• IRC Section 3406(a) 00:07:28
• IRC Section 6041(a) 00:07:28
• IRC Section 6109(a)(2) 00:07:28, 01:06:38
• IRS Notice 972CG 01:28:16, 01:32:43
• ITIN 01:15:48
• Limited Liability Company (LLC) 01:01:59, 01:04:37, 01:14:33, 01:16:17, 01:25:01
• Nonresident Alien (NRA) 01:14:54
• Reasonable Cause 01:33:31
• Resident Alien 01:12:45, 01:14:51
• Sole Proprietor 01:02:01, 01:04:52, 01:06:26, 01:08:39
• Tax Cuts and Jobs Act 00:45:52
• Tax Exempt Organization Search Tool 01:18:07
• TIN 01:04:22, 01:05:00, 01:18:14, 01:23:25, 01:33:41
• TIN Match Program 01:18:12
• Transaction 00:54:21
• Transmitter Control Code (TCC) 00:13:36
• Unrelated Business Income (UBI)43:12
• Vendor 00:15:10, 00:32:22, 00:35:46, 01:01:44, 01:09:34, 01:20:16
• Wage 00:44:13

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.

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.

CP2100-A: It is a notice that tells a payer that he or she may be responsible for backup withholding. It isaccompanied 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.

Contract: A written or spoken agreement, especially one concerning employment, sales, or tenancy, that is intended to be enforceable by law.

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."

De Minimis: Too trivial or minor to merit consideration.

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)

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.

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 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 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-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 132: Internal Revenue Code Section 132(a) provides eight types of fringe benefits that are excluded from gross income

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 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.

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.

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.

Nonresident Alien (NRA): This income is taxed at a flat 30% rate, unless a tax treaty specifies a lower rate. Nonresident aliens must file and pay any tax due using Form 1040NR, U.S. Nonresident Alien Income Tax Return or Form 1040NR-EZ, U.S. Income Tax Return for Certain Nonresident Aliens with No Dependents.

Reasonable Cause : Reasonable cause is based on all the facts and circumstances in your situation. The IRS will consider any reason which establishes that you used all ordinary business care and prudence to meet your federal tax obligations but were nevertheless unable to do so.

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.

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 Cuts and Jobs Act: The Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018, Pub.L. 115–97, is a congressional revenue act of the United States originally introduced in Congress as the Tax Cuts and Jobs Act, that amended the Internal Revenue Code of 1986.

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

Transaction: In QuickBooks, a transaction type identifies what kind of transaction occurred, such as a customer transaction, bill payment or a bank transfer. When you submit a transaction, you type in a transaction code to represent it.

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.