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WELCOME !

WELCOME !. 2012 NMASBO FALL CONFERENCE September 13, 2012 1099 FILING AND INCREASED CIVIL PENALTIES By Carl Chavez Internal Revenue Service. DISCLAIMER.

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WELCOME !

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  1. WELCOME ! • 2012 NMASBO FALL CONFERENCE • September 13, 2012 • 1099 FILING AND INCREASED CIVIL PENALTIES • By Carl Chavez • Internal Revenue Service

  2. DISCLAIMER • The information contained in this presentation is current as of the date it was presented. It should not be considered official guidance. • While every effort has been made to present accurate and timely general information, this presentation is not considered official guidance by the IRS and does not attempt to address a specific tax situation. Contact the IRS or your tax advisor for more specific help.

  3. TOPICS FOR TODAY Form 1099-MISC Form W-9 Backup Withholding Penalties IRS On-Line TIN Matching Program Filing Information Returns Electronically (FIRE)

  4. FORM 1099-MISCMISCELLANEOUS INCOME

  5. FORM W-9

  6. PURPOSE OF FORM W-9 Provide to every vendor who performs services for your entity Used to obtain an identifying number of a vendor Identifies type of business operation - i.e. Sole Proprietor, LLC, Corporation, Partnership

  7. FORM W-9 – TYPES OF ENTITIES Sole proprietor uses SSN Corporations, partnerships and estates – use EIN LLC – Name must match SSN or EIN Certifies TIN is correct Payee certifies he/she is not subject to backup withholding or is exempt

  8. May be a partnership or a corporation Secure a Form W-9 to determine its status Providing legal, medical and/or health services LLCS AND REPORTABLE PAYMENTS

  9. BACKUP WITHHOLDING • Internal Revenue Code section 3406 • Required to withhold if • Payee failure to furnish valid TIN requires immediate withholding • Received a CP2100 or CP 2100A notice from the IRS • Some exceptions

  10. INFORMATION RETURNS REQUIRING BACKUP WITHHOLDING 1099-MISC 1099-INT 1099-DIV 1099-B 1099-OID 1099-PATR 1099-K

  11. EXCEPTIONS • Tax-exempt organizations • Other government entities, including foreign governments • Most corporations (see exceptions) • Financial institutions • International organizations

  12. WHEN TO BEGIN BACKUP WITHHOLDING • Aggregate payments for the calendar year equal or exceed $600 • Immediately if in the preceding year you were required to • -issue a related information return, or • -impose backup withholding on such payments • Rate is 28% after May 28, 2003

  13. CP2100/2100A NOTICE

  14. FIRST “B” NOTICE

  15. SECOND “B” NOTICE

  16. NOTICE 972-CG

  17. WHEN TO STOPBACKUP WITHHOLDING • Failure to Furnish TIN - stop within 30 calendar days of payee furnishing correct TIN • Notice from IRS (incorrect TIN) - stop withholding within 30 calendar days after you receive a certified Form W-9

  18. REPORTINGBACKUP WITHHOLDING • Report withholding to payee and to IRS in Box 4 of Form 1099-MISC • Reporting required even if the amount of the payment is below the normal threshold for filing Form 1099 • Send copy A of all paper Forms 1099 to the IRS with Form 1096 • Total withheld reported on Form 945

  19. FORM 945

  20. FORM 945 Without Payment: Ogden, Utah 84201-0042 With Payment: PO Box 660443, Dallas, Texas 75266-0443

  21. BACKUP WITHHOLDING RESOURCES • Form W-9 • Instructions for the Requester of Form W-9 • Publication 1281 – Backup Withholding for Missing and Incorrect Name/TIN(s) • Instructions for Form 945

  22. COMMON ERRORS • Failure to obtain correct identifying information • Failure to aggregate payments • Assuming payee is a corporation

  23. INFORMATION RETURN DUE DATES • January 31 – most information returns due to recipient • February 15 – for Form 1099-MISC, if amounts reported in box 8 or box 14 • February 28 – paper returns due • March 31 – electronically filed returns due

  24. FAILURE TO FILE PENALTIES • Correctly file within 30 days after thedue date – $30 per return with $250,000 cap • On or before August 1 – $60 per return with $500,000 cap • No return filed or correctly file after August 1 – $100 per return with $1.5 million cap

  25. FAILURE TO FURNISH PAYEE STATEMENTS • $100 per statement, no matter when the correct statement is furnished • May be reduced for failures corrected: • Within 30 days after the due date: $30 per return • On or before August 1: $60 per return

  26. FURNISHING FORMS ELECTRONICALLY • Most information returns can be furnished to recipients electronically • Recipient must consent • Without consent, payer must send paper form • Specific procedures provided in Publication 1179.

  27. REQUIRED STATEMENT TO RECIPIENTS • Must have the following: • If consent is not provided, a paper copy will be provided • The scope and duration of the consent • How to obtain a paper copy after giving consent • How to withdraw the consent • Conditions under which electronic statement will no longer be furnished • Procedures to update recipient information • A description of required hardware and software

  28. ABATEMENT OF PENALTIES • Must be for reasonable cause; cannot be due to willful neglect • May make the request after penalty is assessed • Reasonable Causes • Significant mitigating factors • Failure was due to events beyond filer’s control

  29. IRS ONLINE TIN MATCHING PROGRAM • Available to payers who file information returns subject to backup withholding • Free for registered users • Quick verification of Name/TIN combinations

  30. TAXPAYER IDENTIFICATION NUMBERS (TINS) • Social security number (SSN) • Employer identification number (EIN) • Individual Taxpayer Identification Number (ITIN) • Adoption Taxpayer Identification Number (ATIN)

  31. ONLINE MATCHINGINFORMATION RETURNS • 1099-B, Proceeds from Broker and Barter Exchange Transactions • 1099-DIV, Dividends and Distributions • 1099-INT, Interest Income • 1099-K, Merchant Card and Third-Party Network Payments • 1099-MISC, Miscellaneous Income • 1099-OID, Original Issue Discount • 1099-PATR, Taxable Distributions Received From Cooperatives • SSNVS Handbook

  32. ELIGIBLE USERS • Payers or their authorized agents • Authorized Agent - employee or external vendor contracted to transmit information on behalf of the governmental entity • Authorized agent not required – you can register and use it yourself • Individual must be approved by the principal and registered • Service not to be used for any other purpose

  33. ADVANTAGES OF USING TIN MATCHING • Fast and reliable verification • Free • Individual records can be printed • Submissions may meet reasonable cause regarding penalty relief

  34. REQUIREMENTS TO PARTICIPATE • Filed an information return in the past two years • Comply with all terms of Revenue Procedure 2003-9 • Transmit only name/TIN combinations for which you will make payments • Transmit only combinations you have not previously requested • Maintain confidentiality of information • Provide IRS information necessary to monitor program

  35. METHODS TO SUBMIT REQUESTS • Interactive • Submit up to 25 name/TIN combinations on-line • Up to 999 combinations per day • Response in real time (normally about five seconds) • Bulk • Submit a text file with up to 100,000 name/number combinations per submission • Receive a response to a secure mailbox within 24 hours

  36. RESPONSE CODES • 0 – Match • 1 – Missing or incorrect TIN • 2 – TIN not currently issued • 3 – Does not match • 4 – Invalid request • 5 – Duplicate request • 6, 7, 8 – TIN type unknown, but matches SSN or EIN records, or both

  37. EFFECT ONBACKUP WITHHOLDING • Mismatch does not constitute a backup withholding notice (CP2100 or CP2100A) • Does not affect backup withholding already in effect for that payee • May establish reasonable cause for penalty abatement

  38. ABATEMENT REQUESTREQUIREMENTS • Provide a legible copy of original transaction • Penalty assessed after date of transaction • Request abatement in writing • Request abatement only of failure to file correct information return

  39. REGISTRATION • “Principal” for the organization must initiate registration • Each designated user receives a token at home address – must validate within 28 days of initial registration • When all users are confirmed, principal completes registration • To register: search for e-services on IRS.gov • See Publication 2108A or call 1-866-255-0654 (01-512-416-7750 for international callers)

  40. FIRE SYSTEM • Filing Information Returns Electronically (FIRE) • Available to all filers; use required for larger-volume payers • Benefits • Paperless • Secure • Easy to use • Efficient • Fast • Flexible

  41. WHO CAN USE THE FIRE SYSTEM? • Available to all filers of Information Returns • REQUIRED where filing 250 or more Information Returns • Status of filing available within 2 days • Due date of filing is later than paper filing for most returns

  42. FIRE FILING REQUIREMENTS • Software required to file in proper format • Submit Form 4419 • Create your FIRE Account • List of Approved IRS e-file for Business Providers available at www.irs.gov and Publication 1582

  43. Form 1042-S Forms 1097 and 1098 Form 1099 Forms 3921 and 3922 Form 5498 Form 8027 Form 8935 Form 8955-SSA Form W-2G ELECTRONICALLY FILED INFORMATION RETURNS

  44. ELECTRONIC FILING REQUIREMENT • 250 + applies to each type of form • Applies separately to original & corrected returns • Complete online Form 8809 to request an extension for filing information returns via FIRE

  45. FIRE SYSTEM RESOURCES • Publication 3609 • Publication 1220 • Publication 1187 • Publication 1287 • FIRE web page on www.irs.gov • Customer Service: 866-455-7438 • Monday-Friday 8:30-4:30 ET

  46. THANK YOU! • Send comments or questions to • tege.fslg.feedback@irs.gov • FSLG website: www.irs.gov/govt/fslg

  47. Encore Presentation • If you are interested, or if you know someone who could not attend today’s presentation and would like to attend a Free Webinar (encore presentation), it will be airing next Thursday, September 20, 2012 at 12:00 MST. You may e-mail me your request, or give me your business card with your e-mail address, and I will send you an invitation tomorrow. It will give you all the information to register. You basically received a preview today of what will be airing across the nation next week.

  48. Contact Information • Carl M. Chavez • 5338 Montgomery Boulevard NE • Mail Stop 4505-ALB • Albuquerque, NM 87109 • (505) 837-5610 • carl.m.chavez@irs.gov

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