1099 Reporting Payments for Middlemen, Agents, Liens, and Garnishments
Webinar Details $219
- Rated:
- Webinar Length: 100 Minutes
- Guest Speaker: Steven Mercatante
- Topic: Taxation and Accounting
- Credit: CPE 2.0, ATATX 1.5
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With constant revisions to Forms 1099 and related rule changes, it is crucial to remain up-to- date with the current information reporting laws to avoid those dreaded penalties and interest not to mention the time consumed to make corrections. Whether you are new or seeking an update this course will provide CPA’s, Accounts Payable, Payroll, and Tax with plain English guidance to help minimize 1099 filing mistakes while breaking down the tough 1099 payee and payment reporting situations like those involving middlemen, agents, liens, and garnishments.
In this course, industry expert and corporate tax attorney Steven D. Mercatante Esq. takes a look some of the more common problems experienced by CPA’s, accounts payable, and tax departments related to documenting, validating, and reporting payee information on IRS Forms 1099. He identifies key issues and best-practices for addressing them.
Agenda:
• Determine which 1099 to use and watch out for key trouble spots on the most commonly filed Forms 1099
• Identify W-9 document validation best practices with a focus on situations when multiple names are provided, handling undocumented payees, exempt payees, and best practices for handling reporting when multiple parties are involved in the transaction
• Target categories of payees and payments that can lead to 1099 reporting when the reporting does not necessarily follow the check
• Receive tips on recent 1099 changes
• Learn about tricky situations involving identification of the beneficial owner of the income for 1099 reporting purposes
• Get help determining when a garnishment or lien payment made to a court or an attorney is reportable and to whom
This class is right for you if:
• You sometimes face difficult payment situations involving multiple parties and struggle to identify to whom you should report the payment
• Your 1099 validation and reporting procedures are not set up properly to help in identifying the beneficial owner of the income and to whom you should report
• You are a CPA or work in Accounts Payable and need to understand these complicated topics
- Introduction
- 1099 Overview 00:01:33
- What’s New –1099 E-Filing Changes 00:04:12
- 1099-NEC 00:18:48
- 1099-MISC 00:24:02
- 1099-MISC Attorney/Settlement “Middleman” Issues 00:38:47
- 1099-MISC Attorney/Settlement “Middleman” Issues - Example 00:41:37
- 1099-MISC Attorney/Settlement “Middleman” Issues - Garnishments and Levies 00:45:49
- Form 1099-NEC/1099-MISC Middleman Issues - Your Action Steps 00:50:22
- Middleman Basics - “The Middleman” 00:55:44
- Middleman Basics - Questions 01:01:31
- Middleman Basics - Key Issues: Management or Oversight 01:08:42
- Middleman Basics - Key Issues: Significant Economic Interest 01:14:44
- Middleman Basics - Knowing Who The Beneficial Owner Is 01:17:13
- Middleman Basics – Outsourced Payments 01:19:59
- Middleman Basics – Charitable Donations 01:21:42
- Middleman Basics – Agent Payments 01:25:12
- Protect Yourself 01:31:29
- Presentation Closing 01:40:22
- Accountable Plan 00:21:53
- Audit 01:06:02
- Backup Withholding 00:21:19, 00:58:32
- B-Notice 00:09:38
- Due Diligence 00:26:33
- Exempt 00:33:25, 00:42:24
- FATCA 00:25:04
- Federal Insurance Contributions Act (FICA) 00:34:48
- Federal Unemployment Tax Act (FUTA) 00:34:49
- FIRE - File Information Returns Electronically 00:07:18, 00:13:16
- Form 1042 00:05:45, 00:06:42
- Form 1042-S 00:02:07
- Form 1099-INT 00:06:39
- Form 1099-MISC 00:06:37, 00:19:00, 00:24:04, 00:25:13, 00:37:05, 00:42:32
- Form 1099-NEC 00:06:36, 00:18:58, 00:19:57, 00:25:18
- Form 1099-S 00:06:39
- Form W-2 00:37:02
- Form W-9 00:02:14, 00:20:05, 00:47:43
- Fringe Benefits 00:22:01
- Garnishment 00:45:56, 00:47:53, 01:17:56
- Information Returns Intake System (IRIS) 00:13:33, 00:14:39
- IRC Sec. 3406(a) 00:01:33
- IRC Sec. 6041(a) 00:01:33, 00:43:45
- IRC Sec. 6109(a)(2) 00:01:33
- IRC Section 6045 00:43:51
- Levy 00:46:09, 00:47:53, 01:17:56
- Nonprofit Corporation 00:20:34
- Nonresident Alien (NRA) 00:01:59
- TIN 00:56:30, 00:59:29
- Transmitter Control Code (TCC) 00:07:37, 00:11:58, 00:16:02., 00:17:50
- Vendor 00:16:16, 00:25:07, 01:02:10, 01:20:06
- W-8EXP 00:01:49
- Wage 00:34:54, 00:37:01, 00:46:15
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.
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)
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.
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
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.
Federal Insurance Contributions Act (FICA): The Federal Insurance Contributions Act is a United States federal payroll contribution directed towards both employees and employers to fund Social Security and Medicare—federal programs that provide benefits for retirees, people with disabilities, and children of deceased workers.
Federal Unemployment Tax Act (FUTA): The Federal Unemployment Tax Act (FUTA) is a federal law that imposes an unemployment tax on employers. The FUTA tax funds the federal government's oversight of each state's unemployment program. Only employers pay FUTA tax. You must deposit the tax quarterly and file an annual form.
Form 1042: 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 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 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-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-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 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.
Garnishment: A legal summons or warning concerning the attachment of property to satisfy a debt
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.
Levy: A tax levy, under United States Federal law, is an administrative action by the Internal Revenue Service under statutory authority, generally without going to court, to seize property to satisfy a tax liability. The levy "includes the power of distraint and seizure by any means".
Nonprofit Corporation: A nonprofit organization, also known as a non-business entity, not-for-profit organization, or nonprofit institution, is an organization dedicated to furthering a particular social cause or advocating for a shared point of view.
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.
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.
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.
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
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.
W-8EXP: A foreign government must provide Form W-8EXP to establish eligibility for exemption from withholding for payments exempt from tax under section 892 or for purposes of establishing its status as an exempt beneficial owner.
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.
