What rights do you have to request a W9 when the payment is not reportable?
What rights do you have to request a W9 when the payment is not reportable? For instance, if the amount being paid to a first time (and supposedly one time) vendor is less than $600 or the payment is for a non-repotable settlement. I ask because I would still like to document the payee (foreign vs USA citizen, etc).
In short, you have every right, all the time. The following represents two reasons why a close reading of the law indicates that you have every right - from both a domestic and "foreign" or Non-Resident Alien perspective to ask your payee to fill out a Form W-9.
Are Vendors Reportable Who are Set Up With a Card Issuer as an Alternative Payee?
Cardholders have been relieved of 1099 reporting for card payment effective 1/1/11, does this include vendors set up with the card issuer (bank) as an alternative payee? We have created an on-line catalog ordering system. Transactions are entered into our accounting system for each supplier, and each supplier (vendor) points to an alternative payee which is the bank. When the payment is created the alternative payee is paid.
Disregarded Entities and Form 1099 Reporting
We have had a couple of situations recently where groups insist they must bill/submit claims under the name and TIN of the disregarded entity (DE), but they then want us to report the payments under the name/TIN of the owner. Problem is our systems are not set up to handle multile TINs like this - if they bill using the DE TIN, the system will send the 1099 to that TIN and the name we have set up under that TIN. So, we offer up the following solution.
We tell them we can set them up to pay the DE name, but they have to bill using the TIN of the owner. In doing this we can set them up so the payment goes to the DE name, but the 1099 goes to the owner's name and TIN. However, to make that happen they need to bill using the owner's TIN.
We have gotten some push back on this where some groups say they cannot do this - that this would be out of IRS compliance for them to submit under the owner's TIN.
They also say it is out of compliance for us to report under the DE name and EIN, even though that is how the payments are being issued. Like I say, since our system cannot pay to one TIN and report to another, the 1099 will go to the DE name and TIN if they insist on billing under the DE TIN.
I disagree with both these arguments. First, I do not know how the IRS would ever say it is wrong to report payments as they are made. I also do not believe they would say it is wrong to have them bill using the TIN of the owner, even if we are paying the DE name.
I do understand that a DE does not file a Tax return, and therefore their income is captured by the owner. I am just looking for confirmation that handling as we propose to these groups does not cause a compliance issue between us and the IRS.
I hope this all makes sense.
Paying Golf Memberships Through AP for Our Marketing Department: How to Report?
I need clarification on paying golf memberships for our marketing department. Our policy is to pay the membership directly through A/P which takes away any tax burden on the employee. If the employee pays the membership up front and submits on their expense report they should have that amount put on their W-2 and the company loses the deduction if it is not put on their W-2. Is this correct and is there more we need to know?
When it comes to fringe benefits provided to an employee the law is clear:
Vendor Passed Away and Invoices to be Paid: How to Report?
We have a vendor who passed away and have some invoices that have yet to be paid. We have received paperwork supporting that these dollars should be paid to his estate. Question is – should we just change the name on the existing vendor to reflect his estate or should we set up a new vendor for the estate? Just wondering if previous taxable dollars paid would need to remain on a 1099 made only out to him or would they fall to his estate?
The issue revolves around both timing and whether the payee is an independent contractor instead of an employee.
Let's take a look at both as follows:
Reportability of Freight and Sales Tax Regarding Prizes and Awards for Non-Employees?
Regarding prizes and awards for non-employees, in determining "Fair Market Value" of a prize (example: ipad), are items such as freight and sales tax included when determining whether it is reportable on Form 1099-MISC in Box 3 under the $600 threshold?
First let's look at the freight issue as it applies to the determination of "Fair Market Value".
Which Bankruptcy Chapters Are Exempt from Settlement Payments Related to Real Estate?
My title insurance company pays settlements for bankruptcy matters, specifically related to real estate. I understand that certain types of Bankruptcy attornies are exempt from 1099MISC reporting. Please detail which bankruptcy "chapters" (Chapter 7, 11, 13, etc) are exempt or is it all of them? Does this reporting exemption extend to bankruptcy trustees? How about to bankruptcy trusts or estates?
Independent Contractor vs. Employee vs. Temp?
We have a Branch Office that was using an employee to prepare the daily recordings and take them to the Recorders office. In order to give her additional time at work for her usual duties, they hired someone else to prepare the recordings and provide a courier service. This person has two other customers. Would they qualify as an independent contractor? Or Would they have to pay him through payroll/temp agency?
You state that they hired "someone else to prepare the recordings and provide a courier service." Then you state that the same person has two more customers. There are a number of issues this situation raises.
Payment Made in Exchange for Releasing Lien on Property: How Do I Report?
A couple gets divorced and the husband gets the house. He is trying to sell his property, but his ex-wife has put a lein on it. We settlement and pay the ex-wife $20K+ in exchange for the release of her interest in the property. A 1099MISC is issued for 2011 to the ex-wife with the amount shown in Box 3.
This evening, the ex-wife's accountant called and explained that the ex-husband owed child support and that the lien was a court order for this money that was due to the ex-wife. They are willing to send the court order as proof.
1) If this had been made clear at the beginning, would the settlement still be reportable on the 1099MISC?
2) Currently, I have not filed with the IRS yet. Assuming the answer to #1 above is non-reportable, would it be wise to take the documentation offered after the fact and update the 1099MISC (basically cancel it)?
Settlement payments are always tricking as is the associated reporting. We will answer your questions using the numerated convention you have provided and as follows:
How Do We Report Income Paid to a Surviving Spouse in the Year Following Decedent's Death?
As relates to income in respect of a decedent (deceased in a prior tax year) which is paid to the surviving spouse in a later year, our understanding is that it should be reported to the surviving spouse as Other Income in Box 3 on Form 1099-MISC. Although we are not required to withhold federal income tax on this payment, the surviving spouse has requested that we do so. If we withhold federal income tax on the payment, would that amount be reported in Box 4 on Form 1099-MISC although the instructions for Box 4 indicated that "Box 4 shows backup withholding or withholding on Indian gaming profits", although this withholding is neither?