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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.

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Presentation on theme: "1 WELCOME ! 2012 NMASBO FALL CONFERENCE September 13, 2012 1099 FILING AND INCREASED CIVIL PENALTIES By Carl Chavez Internal Revenue Service."— Presentation transcript:

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

2 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 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 4 FORM 1099-MISC MISCELLANEOUS INCOME

5 5 FORM W-9

6 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 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 8 LLCS AND REPORTABLE PAYMENTS May be a partnership or a corporation Secure a Form W-9 to determine its status Providing legal, medical and/or health services

9 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 10 INFORMATION RETURNS REQUIRING BACKUP WITHHOLDING 1099-MISC 1099-INT 1099-DIV 1099-B 1099-OID 1099-PATR 1099-K

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

12 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 13 CP2100/2100A NOTICE

14 14 FIRST “B” NOTICE

15 15 SECOND “B” NOTICE

16 16 NOTICE 972-CG

17 17 WHEN TO STOP BACKUP 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 18 REPORTING BACKUP 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 19 FORM 945

20 20 FORM 945 Without Payment: Ogden, Utah With Payment: PO Box , Dallas, Texas

21 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 22 COMMON ERRORS Failure to obtain correct identifying information Failure to aggregate payments Assuming payee is a corporation

23 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 24 FAILURE TO FILE PENALTIES Correctly file within 30 days after the due 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 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 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.Publication 1179

27 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 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 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 30 TAXPAYER IDENTIFICATION NUMBERS (TINS) Social security number (SSN) Employer identification number (EIN) Individual Taxpayer Identification Number (ITIN) Adoption Taxpayer Identification Number (ATIN)

31 31 ONLINE MATCHING INFORMATION 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 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 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 34 REQUIREMENTS TO PARTICIPATE Filed an information return in the past two years Comply with all terms of Revenue Procedure 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 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 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 37 EFFECT ON BACKUP 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 38 ABATEMENT REQUEST REQUIREMENTS 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 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 ( for international callers)

40 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 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 42 FIRE FILING REQUIREMENTS Software required to file in proper format Submit Form 4419Form 4419 Create your FIRE Account List of Approved IRS e-file for Business Providers available at and Publication 1582Publication 1582

43 43 ELECTRONICALLY FILED INFORMATION RETURNS 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

44 44 ELECTRONIC FILING REQUIREMENT 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 45 FIRE SYSTEM RESOURCES Publication 3609 Publication 1220 Publication 1187 Publication 1287 FIRE web page on web page Customer Service: Monday-Friday 8:30-4:30 ET

46 46 THANK YOU! Send comments or questions to FSLG website:

47 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 me your request, or give me your business card with your 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 48 Contact Information Carl M. Chavez 5338 Montgomery Boulevard NE Mail Stop 4505-ALB Albuquerque, NM (505)


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