Form 1099 & W9 Annual Update

Author: Miles Hutchinson

How can we best set up an independent contractor or bank customer in our payment system to ensure compliance with the IRS reporting rules?
For years the IRS has struggled with the independent contractor and tax collection. In assessing opportunities to close the tax gap (taxes due but not reported or paid), one of the greatest opportunities comes from expanding the information reporting on taxpayers by payers – the 1099. This time consuming reporting obligation can be streamlined in a number of ways.

What are the rules regarding paying and IRS reporting on Independent Contractors? How do we avoid the IRS CP-2100 (B-Notices)? What if our vendor/payee claims exemption; must we obtain a W-9 anyway? What are the best practices for handling our information reporting obligations? How can we minimize risk of improper exemption claims by our payees and vendors? Get the answers to these and related questions to reduce your risk of huge penalties from the IRS.

Publication Date: November 2019

Designed For
Bank Managers, Compliance Officers, Information Reporting Officers, Tax Managers, CFOs, Controllers, Accounting Managers, Auditors, IT Managers, Compliance Managers, Risk Managers.

Topics Covered

• IRS Tax Revenue Issues
• Basic guidelines for W‐9 Disclosures and 1099 Reporting
• Backup Withholding
• Review of Form 1099‐Misc
• P‐Cards
• Electronic Transmission to Payees
• Electronic Submission to IRS
• Avoiding Penalties

Learning Objectives

• Identify the rules requiring W-9 documentation and 1099 reporting for various types of Forms 1099
• Recognize how to establish the independent contractor relationship with the right documentation
• Recognize the rules and keep your company in compliance
• Describe how to ensure your records will stand the scrutiny of an IRS 3rd Party Documentation and Reporting audit
• Identify how to avoid the onerous penalties for noncompliance and build the best defense against the 972-CG Notice of Proposed Penalty Letter
• Describe which areas represents the largest contributor to the net tax gap
• Identify which penalty results in a $550 fine for 2019 and later
• Differentiate which types of taxpayer identification numbers begin with "98" if it relates to a foreign entity
• Describe which type of FDAP income is applicable to 1099s
• Recognize which category represents the smallest component contributing to the tax gap
• Identify a reason for backup withholding

Level
Update

Instructional Method
Self-Study

NASBA Field of Study
Taxes (2 hours)

Program Prerequisites
Basic knowledge of 1099 and W-9.

Advance Preparation
None