IRS Update

FORMS 1099-MISC
James Driver
Federal, State, and Local
Government Specialist
[email protected]
859-244-2449
1
What is a 1099-MISC
information return?
¾ Form
•
•
required to report payments for:
Services or,
A combination of services and
products
2
What payments must be
reported?
¾ Payments
of $600 or more for the year
¾ Paid
in the course of your trade or
business
¾ Certain
payments to corporations
¾ Deceased
employee’s wages paid to
estate or beneficiary (box 3)
3
Examples of Payments
Non-employee
compensation
z Commissions
z Fees
z All forms of
remuneration for
services rendered
z
Prizes & Awards
z Royalties ($10 or
more)
z Rents
z Medical and
health care
payments
z
1099 instructions, page MISC-5
4
Report Non-employee Compensation
in Box 7
¾
Reportable
Payments of $600
or more to:
z
z
z
¾
individuals
partnerships
some corporations
Paid for services of a person
who is not your employee
¾ Payments made in the course
of your trade or business
¾
Reportable
payments include:
¾
commissions,
fees for services
¾
¾
¾
¾
(may
include parts or materials in some
instances),
fee splits between
professionals,
referral fees,
director fees, etc.
5
PAYEE’S NAME
CORPORATION
¾ Corporations
are a separate entity from
the owner(s)
¾ Payments made to John Brown
(individual) require a 1099
¾ Payments made to John Brown Inc. do not
require a 1099 (with certain exceptions)
¾ Verify corporate status using form W-9
6
LLC’s and Reportable payments
¾ Payments
MAY be reportable to an LLC
¾ An
LLC may be taxed as either a sole
proprietorship, partnership, or corporation
¾ Report payments to sole proprietors,
partnerships and possible corporations
¾ Obtain a W-9 to determine their status
7
Payments to Attorneys
¾ Section
1031 of the House Bill and
Proposed Regulation 1.6041-3 codify
the requirement to report payments to
attorneys (individuals and corporations)
z gross proceeds, and
z payments for services of attorneys
¾ Effective 1998 and later years
8
Reporting Gross Proceeds
¾ If
you can determine the amount of
attorney fees included in the gross
proceeds:
z report the fee in Box 7
z report nothing in Box 14
¾ Otherwise, report total gross proceeds
in box 14
9
Medical and Healthcare
Payments
¾ Report
payments of $600 or more in
Box 6
¾ Report payments to all individuals,
partnerships, and corporations
¾ Medical payments include doctor fees,
drug testing, lab fees, physical therapy,
etc.
¾ * Do not report payments to pharmacies
or tax exempt hospitals
10
Payments that
should not be reported
on Form 1099-MISC
¾ payments
to employees; such as fringe
benefits or travel reimbursements
¾ (note: if not paid as part of an accountable
plan, travel reimbursements and auto
expenses should be included in wages and
reported on W-2)
¾ generally,
payments to corporations
11
General Exemptions to Filing
Form 1099-MISC
•
Payments for only merchandise
• Examples:
• Office Supplies
• Cleaning Supplies
12
General Exemptions to Filing
Form 1099-MISC
•
Payments to a corporation
•
Exceptions:
• Payments to medical and health
care providers
• Payments to Attorneys for legal
services
13
Form 1099 Check
Sheet
Yes / No
1. Are the payments $600 or more to any one
party for the calendar year?
[ ][ ]
2. Did you make the payments in the course of
your trade or business?
[ ][ ]
Form 1099 Check Sheet
3. Is the recipient any one of the following:
medical corporation, health care provider,
legal services corporation, individual, sole
proprietorship, partnership, profit or non-profit
organization, or joint venture?
[
¾
][
]
“NO” to any of the above 3 indicates a 1099MISC is not required.
15
Form 1099 Check Sheet
¾ REMINDER:
The following DO NOT
require a 1099-MISC:
z Payments for merchandise only
z Business travel allowances paid to
employees (unaccountable allowance
report on form W-2)
16
When to file
Forms 1099-MISC
¾
Report payments on calendar year basis
¾
Provide copy of Form 1099 MISC to recipient
by Jan. 31 of the following year
¾
¾
File with IRS by March 1, if filing by paper or
magnetic media or
by March 31, if filing electronically
¾
Use Form 1096 transmittal form
17
Filing on Magnetic Media
¾ Required
for 250 or more information
returns
¾ 250 requirement applies separately to
each type of form (i.e., 1099-MISC, 1098,
etc)
¾ May file electronically instead
¾ Magnetic Media or Electronic filing
permitted with less than 250 returns
11/19/2010
form 1099 instructions, pg. GEN-5
18
Common Errors that prevent issuance of
“correct" or “required” information returns
¾ Duplicate
filing by paper and Magnetic
Media/Electronically
¾ Failure to aggregate payments from all
expense categories (use vendor files)
¾ Assuming payee is a corporation:
z
z
because name is “Company or Associates”
because an EIN is furnished
19
Common Errors (continued)
¾ Remember
- some corporate payments
require 1099’s (medical & attorney)
¾ Where materials and services are
provided, ensure proper allocation or
inclusion of materials - see Treasury
Regulation 1.6041A-1(a)(2)
20
IRC Section 6721 Penalty
Failure to File by Due Date
Penalty cause by Failure to:
¾ Correctly
file by March 30 $15/return
¾ Correctly file after March 30 but before
August 1 $30/return
¾ Correctly file August 1 or later
$50/return
21
IRC Section 6722 Penalty
Failure to Furnish to Payee
¾ $50
per Information Return
¾ No
matter when the correct statement
is furnished after January 31
22
COMMON QUESTIONS
¾
Can I file an extension to file Forms 1099?
z Yes! 30 day extension
z Send Form 8809 by the due date of the
return
z An additional 30 day extension may be
granted with written explanation
¾
What if I file the information returns late?
z Unless reasonable cause applies, be
prepared to pay the 6721 and 6722
penalties.
23
COMMON QUESTIONS
¾
How long do I keep copies of information
returns?
z Three years from the due date, unless
backup withholding applies (4 years)
¾
What if I can’t get a Form W-9 or the Form
W-9 information from the recipient?
z Backup withholding applies
24
NO W-9 INFORMATION
¾ If
no TIN provided:
z Backup Withhold 28%
z File Form 945
z Don’t issue the check
¾ Get
the W-9 information
before job is awarded
25
Are you required to do Backup
Withholding (BUW)?
¾ If
you make reportable payments to
persons (or corporations) who have not
furnished their valid TIN
¾ BUW applies to many payments
reported on Form 1099-MISC
z
examples:
• box 7 = NEC
• box 14 = gross proceeds paid to an attorney
1099 instructions, page GEN-3
and 4
26
How to report Backup
Withholding
¾ Box
4 of Form 1099-MISC
¾ Form 945
z This is an annual return, due January 31
z ordinary deposit rules apply
z make Form 945 deposits separate from
Form 941 deposits
27
TIN Matching Program Description
¾ Online
TIN Matching allows authorized
designees to submit TIN/Name
combination to match against IRS records
¾ Matching
completed prior to filing
information returns
28
Registration/Application
¾ The
application includes mandatory online Terms of Agreement that restricts use
of match information and must be
accepted to participate
¾ Every user must register to use e-services
z
z
Get PIN and password
Register at WWW.IRS.GOV
29
Questions??
John Darr (419) 526-2886
[email protected]
Wendy Speelman (419) 526-2607
[email protected]
Trudee Billo (419) 522-2359
[email protected]
30
John Darr (419) 526-2886
¾
¾
¾
¾
¾
¾
¾
¾
¾
¾
Ashland
Athens
Belmont
Carroll
Columbiana
Coshocton
Fairfield
Franklin
Gallia
Guernsey
¾
¾
¾
¾
¾
¾
¾
¾
¾
¾
Harrison
Hocking
Holmes
Jefferson
Knox
Lawrence
Licking
Mahoning
Meigs
Monroe
¾
¾
¾
¾
¾
¾
¾
¾
¾
¾
Morgan
Muskingum
Noble
Perry
Portage
Stark
Summit
Tuscarawas
Washington
Wayne
31
Wendy Speelman (419) 526-2607
¾
¾
¾
¾
¾
¾
¾
¾
¾
¾
Allen
Ashtabula
Auglaize
Crawford
Cuyahoga
Darke
Defiance
Erie
Fulton
Geauga
¾
¾
¾
¾
¾
¾
¾
¾
¾
¾
Hancock
Hardin
Henry
Huron
Lake
Lorain
Lucas
Medina
Mercer
Ottawa
¾
¾
¾
¾
¾
¾
¾
¾
¾
Paulding
Putnam
Sandusky
Seneca
Trumbull
Van Wert
Williams
Wood
Wyandot
32
Trudee Billo (419) 522-2359
¾
¾
¾
¾
¾
¾
¾
¾
¾
Adams
Brown
Butler
Champaign
Clark
Clermont
Clinton
Delaware
Fayette
¾
¾
¾
¾
¾
¾
¾
¾
¾
¾
Greene
Hamilton
Highland
Jackson
Logan
Madison
Marion
Miami
Montgomery
Morrow
¾
¾
¾
¾
¾
¾
¾
¾
¾
¾
Pickaway
Pike
Preble
Richland
Ross
Scioto
Shelby
Union
Vinton
Warren
33
List of Resources
¾ The
semi-annual “Federal, State and
Local Governments Newsletter” is
available on the IRS Web site at
www.irs.gov/govts.
¾ Also on web site is The Taxable Fringe
Benefit Guide which provides basic
information for determining the taxability,
withholding, and reporting requirements
regarding employee fringe benefits.
34
List of Resources
¾
e-Help Desk Toll Free Number 866-255-0654
Supports e-file, Electronic Federal Tax Payments
System, and future e-Services customers. Operational
hours of the e-Help Desk can be found at
www.irs.gov/efile
¾
Social Security Administration electronic filing of wage
reports (Forms W-2/W-3) through SSA’s Online Wage
Reporting Service (OWRS). Register for Internet filing
at www.ssa.gov/employer/ then click on Employer
Services Online. You will receive a PIN assigned by
SSA. Within two weeks of your registration, you will
receive in the mail from SSA, a Password.
35
List of Resources
¾
IRS e-News for tax Professionals - Ohio
To subscribe to this mailing list, please send a
blank e-mail to mailto:
[email protected] to subscribe.
¾
e-Services, including TIN Matching www.irs.gov
link to Tax Professionals; scroll to bottom of
page and link to e-services-New Products. Must
register to access products.
36
List of Resources
¾
Questions relating to information returns (forms
1099) contact Martinsburg Computing Center
[email protected] or call 866-455-7238
¾
Fire System www.irs.gov/efile or Reporting Program
Customer Service at 866-455-7438 or email at
[email protected]. Electronic submission of
information returns (forms 1099) use FIRE system
(Filing Information Returns Electronically)
¾
IRS Government Call Site 1-877-829-5500
¾
EFTPS www.eftps.gov
37