INFORMATION RETURN REPORTING

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INFORMATION RETURN REPORTING

Form 1099
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FORM 1099

• All persons engaged in a trade or business must
  file an information return if payments
  aggregating 600 or more in a calendar year are
  made in the course of the trade or business.

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Payee Information
The name and address of the recipient or payee is
to be furnished on demand to the person paying
the income.
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Payee Information

• Form W-9, Request for Taxpayer Identification
  Number and Certification, may be used by the
  payor to obtain this information from the payee.

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Business related service expenses aggregating
600 or more of payments to a person are required
to be reported by the payor.
Payor
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Payor

• This includes parts and materials used
• to render the services.

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Information Returns

• The Internal Revenue Service will not accept
  photocopies of Forms 1099.
• Official forms may be obtained at Internal
  Revenue Service district offices or requested by
  calling our toll free number 1-800-829-3676.

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Information Returns

• Payors that file 250 or more Forms 1099 must file
  on magnetic media.

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Form 1096

• Form 1096 is the transmittal form used to
  transmit paper and magnetic media forms in the
  1099 series.

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Record Retention

• Payors should keep copies of Forms 1099 filed for
  at least 3 years from the due date of the
  returns.
• If backup withholding is imposed, copies of such
  Forms 1099 should be retained for at least 4
  years.

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Penalties

• Failure to File Correct Information Returns.
• Failure to Furnish Correct Payee Statements
• Failure to Comply with Other Information
  Reporting Requirements

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Penalties

• Payor must file correct Forms 1099 to payees by
  1/31 of the year following payment.
• Payor must file correct Forms 1099 to the
  Internal Revenue Service on or before 2/28 of the
  year following payment.

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BACK UP WITHHOLDING

• WHEN YOU
• SHOULD WITHHOLD ? SHOULD WITHHOLD

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What is Backup Withholding?

• It is a backup system to obtain the income tax.
• It kicks in when the payee does not provide a
  tax identification number
• Or, when the IRS notifies you, the payor of an
  invalid number

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Reportable Payments

• Back Up Withholding applies to reportable
  payments
• Rents and commissions, fees or other forms of
  compensation for services, and other fixed or
  determinable gains, profits, or income payments
  reportable on Form 1099-MISC, Miscellaneous
  Income.

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Getting an TIN/EIN

• For all payees you must make the initial
  solicitation when the payee opens the account or
  when the transaction occurs. If the payee does
  not provide a TIN when you initially ask for it,
  you must begin backup withholding.

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Start B/W Immediately If

• You receive no TIN/EIN and payment is a
  reportable payment
• Or you receive a CP2100 or CP2100A Notice
• Payee refuses to provide a TIN/EIN

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Back Up Withholding Rate

• 28

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Example
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Reporting Back Up W/H

• Use Form 945 (annual return due Jan 31 of
  following year)
• deposit of amounts withheld follow regular
  deposit rules
• separate deposits are required for non-payroll
  income tax withholding

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Additional Assistance

• www.irs.gov
• Pubs 1281 1679
• ID FSLG Specialist Chris Casteel
• Information Reporting Hotline
• Form 945 Instructions
• Form 1099 Instructions