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1099 Misc Reporting

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									Tax Update on 1099s

       Alan Gregerson

  Senior Stakeholder Liaison


         March 2011
          1099 Instructions
• File Form 1099-MISC only when payments
  are made in the course of your trade or
  business.

• You are in a „trade or business” if you
  operate for gain or profit.
         Rental Real Estate

• Persons receiving rental income from
  rental real estate generally are considered
  to be in the “trade or business” of renting
  property.
             Corporations
• Generally 1099-MISC for payments to a
  Corporation is not required

• Reportable payments to Corporation must
  be reported on 1099-MISC are medical
  and health care payment reported in box
  6, fish purchases for cash reporting in box
  7, attorney fees reported in box 7, and
  gross proceeds paid to an attorney
  reported in box 14.
        Form 1099-Misc Filing
            Requirement
• At least $10 in royalties or broker
  payments
• At least $600 in rents, services (including
  parts and materials) , prizes and awards,
  other income payments, medical
  payments, cash payments for fish, gross
  amounts paid to attorneys.
• Any back up withholding payments
Form 1099-Misc Filing Requirement

 • Report payments of $600 or more paid to
   non-employees each year


 • Provide required copies timely to:
   – non-employee by January 31
   – IRS by February 28
               Form W-9
• Request for Taxpayer Identification
  Number and Certification

• Use to obtain
  – Payee‟s Correct Name
  – Payee‟s Taxpayer Identification Number
       TIN Matching Program
• Match payee name with W-9
• Match TIN with IRS records
• Decrease backup withholding and penalty
  notices
• Reduce the error rate in TIN validation
• Requires registration in e-Services
  – Free
  – Available 24/7
          Potential Penalties
• Failure to provide TIN
  – $50 per occurrence
  – up to $250K each year
• Trust fund
  – imposed when taxes withheld are not sent to
    IRS
  – 100%
  – may make payer liable for backup withholding
        1099-K Reporting

• Banks and other payment settlement
  entities report
• There is no reporting requirement for
  individuals
• Cardholders‟ personal information will
  not be shared with the IRS
• Gross amount of reportable
  transactions reported
 Payment Settlement Entity

• Payment card transaction
  – Merchant acquiring entity


• Third party network transaction
  – Third party settlement organization
    General Requirements

• Entities making payments to
  participating payees must report for
  each calendar year:
  – The gross amount of the reportable
    transactions and
  – The name, address and TIN of the
    participating payee
            Exceptions

• De minimis payment rule for third-
  party payers
• No reporting requirement:
   < $20,000 total payment transactions
    and
   < 200 transactions
Questions?

								
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