Get ready for 1099 s Presenter Chris Hadden

Get ready for 1099 s Presenter: Chris Hadden, CPP Year-End 2018 1

1099 Challenges What are common 1099 challenges? 2

TIN Solicitation TIN Verification Vendor Name and DBA Check Name mismatch Multiple Vendors with matching TIN 3

1099 Errors Most common 1099 errors that cause IRS penalties 4

Failure to file on-time Failure to e -file when required Incorrect name/TIN Failure to withhold backup withholding 5

Incorrect Name/TIN • The vendor name must be entered into Name Line 1 on the 1099 exactly as it is registered with the IRS. • D. B. A. or aka names can be entered into Name Line 2 • Sole proprietors must use their full name as their legal business name (Name Line 1) regardless of their D. B. A. • TIN and SSN are both 9 digits and contain no letters, are not consecutive numbers, and should be formatted properly TIN XX-XXXXXXX • SSN XXX-XX-XXXX •

Back-up Withholding • Back-up withholding is required when a vendor has not provided a valid TIN • Back-up withholding rate is 24% (was 28% previously) • Reported in box 4 of the 1099 -MISC form and is included on form 945

I Received a No-Match Letter • A CP 2100 or CP 2100 A notice indicates that a payer may need to start back-up withholding. • Triggered to IRS after business files 1099 s • It includes a list of missing, incorrect, or not issued TINs and the names that were associated. • Compare records the TIN/name with your

Missing TIN • If missing TIN, immediately begin backup withholding and request correct TIN information from payee (form W-9). Begin withholding within 30 days of receipt of CP 2100/CP 2100 A Suspend back-up withholding within 30 days of receiving TIN information • W-9 form has changed for 2019 • • • You must complete three requests for TIN in order to prevent penalty for incorrect TIN. • • • Initial request – at the time of initial contract/transaction 1 st annual – by December 31 of initial year 2 nd annual – by Dec of second year

Incorrect TIN • You must send a “B” notice to payee within 15 business days of receiving CP 2100/CP 2100 A notice

TIN Matching • TIN Matching is a free service available to authorized payers • An application must be completed by a principal of the company after registration • TIN verification through Greenshades Software Year-End Forms is available during year-end • An authorized payer is one who has filed forms 1099 -B, 1099 -DIV, 1099 -INT, 1099 -K, 1099 MISC, 1099 -OID or 1099 -PATR with the IRS in at least one of the two past tax years. Legal name (verified with IRS & SSA records) Social Security Number (verified with SSA records) Date of birth (verified with SSA records) Telephone number E-mail address Adjusted Gross Income (AGI) from either your current year or prior year filed tax return (verified from IRS records) • Home mailing address (verified from IRS records) • • •

TIN Matching • There are two methods of TIN Matching Up to 25 records can be matched in real time through the Interactive TIN Matching service • Bulk TIN Matching is available for submission of up to 100, 000 records. Results are available within 24 hours of submission. • • Account lock-out • If the same TIN is submitted with various names OR the same name is submitted with various TINs, your account will be suspended for a period of 96 hours.

Best Practices Best practices for managing 1099 s 13

Dynamics GP • 1099 s in Microsoft Dynamics GP • Microsoft Dynamics GP Year-End Update 2018: Payables Management • Year-end 1099 reporting General • Combined Federal/State Filing Program (pg. 20) • Missing and Incorrect Name/TIN Regulations • General Instructions for Certain Information Returns 14

Important Deadlines & Penalties to be aware of 15

Penalties are charged for late or incorrectly filed returns (both recipient and government copies) and are based on when the CORRECT return is received. • $50 per return filed within 30 days of due date • $100 per return if filed by August 1 • $270 per return filed after August 1

Important deadlines • January 31, 2019 – 1099 recipient copies must be distributed • 1099 MISC reporting compensation in Box 7, must be reported to recipient and IRS by January 31 • Something new for TY 2018 – next slide • February 28, 2019 – 1096 and 1099 paper copies due to the IRS • April 1, 2019 (3/31 is a weekend) – electronic file(s) due to the IRS • Reference: • Page 24: https: //www. irs. gov/pub/irs-pdf/i 1099 gi. pdf

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Electronic Filing Who needs to e-file 19

Organizations filing 250 or more returns of a same type must file electronically Requirement is per EIN This requirement is per type of 1099 When correcting returns, 250 or more corrected returns must be filed electronically Federal E-file must comply with IRS publication 1220 20

Greenshades Software How can Greenshades help? 21

Greenshades 1099 Reporting Options Electronically file to the IRS Arc hiv e. S erv nd da fica ice TIN s nt Pri s 99 Ed 10 it I a nlo ow D ri Ve nd ivid ua n tio l 1 09 9 s Mailing 1099 services 22

Multiple Form Types Which tax forms does Greenshades support? 23

1099 MISC -- Miscellaneous Income 1042 S -- Foreign Person's Income Withholding 1098 (M) -- Mortgage Interest Statement 1099 B -- Proceeds From Broker and Barter Exchange Transactions 1099 C -- Cancellation of Debt - Debt Forgiveness Cancelled $600+ debt owed 1099 DIV -- Dividends and Distributions 1099 INT -- Interest Income ($10 paid in Interest) 1099 K -- Payment Card & Third Party Network Transactions 24

1098 T -- Student Tuition Statement 1099 PATR -- Taxable Distributions Received From Cooperatives 1099 S -- Proceeds from Real Estate Transactions 1099 R -- Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. 1099 OID -- Original Discount Issue 1098 C -- Contributions of Motor Vehicles, Boats, and Airplanes W 2 G -- Certain Gambling Winnings 25

Import Options How does Greenshades extract data from GP? 26

Form Import Options • Tax Filing Center • Data Entry • Microsoft Excel 27

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