Live Webinar

1099 Reporting of Settlements and Payments to Attorneys

Webinar Details $219

  • Webinar Date: March 19, 2024
  • Webinar Time: 2:00pm - 3:40pm EDT   live
  • Webinar Length: 100 Minutes
  • Guest Speaker:   Steven Mercatante
  • Topic:   Taxation and Accounting
  • Credit:   CPE 2.0, IRS 2.0, ATATX 1.5
All Access Membership

The IRS is paying close attention to third-party payers, including small and mid-size businesses, and how they report payments made to subcontractors, attorneys, architects and other service providers on Form 1099-MISC. 

During this must-attend session our expert speaker will explore:

  • How to comply with IRS rules when reporting attorney fees and other third-party payments 
  • Documentation requirements and instructions for forms 1099-MISC 

Plus, you will learn what your organization needs to be doing now to be meet reporting deadlines and ensure compliance including:

  • How Form 1099-MISC reporting requirements have expanded 
  • How to report punitive legal damage awards and gross proceeds paid to attorneys
  • Handling of multiple 1099s
  • Which payments are taxable and reportable and which are considered exceptions
  • Handling 1099 reporting for settlement agreements
  • Whether attorney fees are reported in box one of the 1099-NEC or box ten of the 1099-MISC
  • Learn when an LLC is not reportable as a corporation and when it is as a company
  • Discover how to report multi-member LLC's with corporate owners 
  • Address reporting issues cropping up with incorporated legal service providers

Learning Objectives:

  • How to report punitive legal damage awards and gross proceeds paid to attorneys
  • Which payments are taxable and reportable and which are considered exceptions
  • Learn when an LLC is not reportable as a corporation and when it is as a company

Level: Intermediate
Format: Recorded webcast
Instructional Method: QAS Self Study
NASBA Field of Study: Taxes
Program Prerequisites: None
Advance Preparation: None

  1. Introduction
  2. What’s New 00:01:13
  3. What’s New: 1099 E Filing Changes 00:04:41
  4. The Form 1099-NEC and Attorney Reporting - Reportable Payments 00:09:09
  5. The Form 1099 MISC and Claimant/Attorney Reporting - Reportable Payments Cont’d 00:11:00
  6. The W-9 00:31:03
  7. Attorney and Settlement Payees and The W-9 - When is Form W-9 Perjury Certification Required? 00:33:17
  8. Attorney and Settlement Payees and The W-9 - Why Use a W-9 to Solicit TIN for 1099 Reporting? 00:34:53
  9. Attorney Payees Causing Problems - Attorney Payee Refuses to Provide a TIN 00:36:14
  10. Attorney and Settlement Payees Starting Point - Payments Reportable on Forms 1099 00:40:07
  11. Attorney/Settlement Payees: A Note on Payee Identification - Identifying Your Payee: How to Know Who’s Who 00:40:58
  12. Attorney and Settlement Payees Starting Point 00:41:36
  13. Attorney and Settlement Payees - Corporations 00:48:11
  14. Attorney and Settlement Payees - The LLC 00:48:32
  15. Attorney and Settlement Payees - The LLC as the Disregarded Entity 00:48:51
  16. Attorney and Settlement Issues: The Middleman 00:49:06
  17. Attorney and Settlement Issues: Reporting 00:55:10
  18. Reporting - What’s Not Reportable on Form 1099-MISC 00:56:06
  19. Form 1099-MISC and Attorney and Settlement Reporting - Form 1099-MISC Box 3 00:57:38
  20. Form 1099-MISC and Attorney and Settlement Reporting - Watch Out For That Non-Fixed and Determinable Exception 01:05:58
  21. Form 1099-MISC and Attorney and Settlement Reporting - Punitive Damages and Back Pay 01:06:31
  22. Attorney and Settlement Reporting 01:14:14
  23. Attorney and Settlement Reporting - Special Rules on Delivery 01:18:09
  24. Attorney and Settlement Reporting  - Example of Tying Together Concepts 01:21:50
  25. Reporting - Form 1099 Backup Withholding 01:23:01
  26. Reporting - Form 1099-MISC Box 6 01:23:40
  27. Attorney and Settlement Reporting  - Form 1099-MISC Box 10 01:24:23
  28. Attorney and Settlement Reporting  - Form 1099-MISC Box 10 Exceptions 01:24:36
  29. Protect Yourself 01:26:19
  30. Attendee Questions 01:32:34
  31. Presentation Closing 01:39:19
  • Audit 00:01:45, 00:41:17
  • Backup Withholding 00:02:59, 00:38:19, 01:15:55, 01:23:05
  • B-Notice 00:03:01
  • Compensatory Damages 00:42:22, 00:58:11, 01:11:42
  • DBA -Doing Business As 00:32:43
  • Disregarded Entity 00:32:10
  • EIN 00:33:02, 00:35:36
  • Federal Insurance Contributions Act (FICA) 01:12:35
  • Federal Unemployment Tax Act (FUTA) 01:12:37
  • FIRE - File Information Returns Electronically 00:05:37
  • Form 1042-S  00:06:27
  • Form 1099 00:26:36
  • Form 1099-INT 00:07:14
  • Form 1099-MISC 00:01:55, 00:07:12, 00:09:23, 00:11:04, 00:21:53, 00:50:01
  • Form 1099-NEC 00:01:55, 00:07:10, 00:09:23, 01:14:27, 01:23:27
  • Form W-2 01:13:20
  • Form W-9 00:31:06, 00:32:40, 00:41:06
  • Garnishments 00:49:39
  • Gross Proceeds Payment 00:03:27, 00:46:57
  • Inflation Reduction Act Of 2022 00:01:59
  • Information Returns Intake System (IRIS) 00:08:08
  • IRC Section 3406(a) 00:02:57, 00:37:58
  • IRC Section 6041(a) 00:02:45, 00:55:14
  • IRC Section 6045 00:03:42, 00:33:14, 00:37:30, 00:46:54, 00:55:15, 01:24:34
  • IRC Section 6109(a)(2) 00:02:50, 01:24:33
  • IRC Section 6721 00:38:26
  • IRC Section 6722 00:38:27
  • IRC Section 6724 00:38:27
  • Levy 00:49:39
  • Limited Liability Company (LLC) 00:32:24, 00:48:36
  • Punitive Damages 00:42:23, 00:58:07, 01:06:32
  • Reasonable Cause 00:34:53
  • Sole Proprietor 00:32:33, 00:48:30
  • Tax Gap 00:01:13
  • TIN 00:32:39, 00:36:42, 01:23:22, 01:24:31
  • Transmitter Control Code (TCC) 00:05:53

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)

Compensatory Damages: A sum of money awarded in a civil action by a court to indemnify a person for the particular loss, detriment, or injury suffered as a result of the unlawful conduct of another. Compensatory damages provide a plaintiff with the monetary amount necessary to replace what was lost, and nothing more.

D-Notice: If you received an LT16 A/D notice, it's because he IRS is trying to collect unpaid taxes from you and/or their files show they're missing tax returns from you. It is essential that you take action in order to avoid potential enforcement action, which can include seizing your assets or wages. Enforcement action could also include the filing of a notice of federal tax lien, which could affect your credit score and ability to borrow.

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.

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-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: Form 1099 is one of several IRS tax forms used in the United States to prepare and file an information return to report various types of income other than wages, salaries, and tips (for which Form W-2 is used instead). - Wikipedia (https://en.wikipedia.org/)

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 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/)

Garnishment: A legal summons or warning concerning the attachment of property to satisfy a debt

Gross Proceeds Payment: When a business sells an asset, whether tangible or intangible, it receives a payment, which is the gross proceeds. The amount includes the costs of production and other costs and expenses related to the transaction.

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 6721: If an employer fails to file a correct Information, return by the due date, and cannot show reasonable cause, the employer may be subject to a penalty as provided under IRC Section 6721.

IRC Section 6722: IRC Sec. 6722 authorizes a civil penalty for failing to provide payees with correct copies of statements furnished to the IRS.

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.

Inflation Reduction Act Of 2022: The Inflation Reduction Act will protect Medicare recipients from catastrophic drug costs by phasing in a cap for out-of-pocket costs and establishing a$35 cap for a month's supply of insulin. And, as an historic win, Medicare will be able to negotiate prices for high-cost drugs for the first time ever.

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.

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".

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.

Punitive Damages: Punitive damages, or exemplary damages, are damages assessed in order to punish the defendant for outrageous conduct and/or to reform or deter the defendant and others from engaging in conduct similar to that which formed the basis of the lawsuit.

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.

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.

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


Guest Speaker

  • Steven Mercatante