For years the IRS has struggled with the independent contractor, the non-resident alien worker, US citizens with foreign financial accounts and tax collection. They have placed the burden on businesses, non-profits and not-for-profits as well as state and local government to report information about taxable payments they make to their account holders, vendors and customers. In assessing opportunities to close the tax gap (taxes due but not reported or paid), one of the greatest opportunities comes from expanding information reporting on taxpayers by payers – the 1099 and the 1042-S. These time consuming reporting obligations can be streamlined in a number of ways.
In order to more accurately match our information reporting to taxpayer’s tax returns the IRS introduced an “e-services” portal to help us ensure the names and tax identification numbers provided to us by our payees match their records. It is known as the TIN Matching System. When used properly, this system can reduce the risk of IRS warning letters (CP-2100s/B-Notices) and penalty notices (972-CGs). Every year the IRS sends out millions of CP2100 Notices identifying incorrect names/TINS on 1099’s. And these letters have a very short deadline for responding.
Why Should you attend?
How do you determine whether you can accept a W-9 from someone or you must request a W-8 instead? What if you send them a 1099 when you should have sent them a form 1042-S.? How will you deal with an IRS demand for the backup withholding you failed to deduct from the Nonresident Alien’s (NRA’s) payments? The IRS is working hard to reduce the delinquent tax burden. They know we are becoming relatively compliant with our 1099 reporting, but they also know we are far less sure of ourselves when it comes to identifying and performing backup withholding on our NRA’s. Collecting the tax due from NRAs working in the U.S. is a Tier 1 audit issue. This tax burden is minimized when companies making payments to NRAs for dependent and independent personal services properly withhold on these payments.
The average cost of a Notice of Proposed Penalty is estimated at US $150,000 including the penalty itself and the added costs for consultants, personnel, remediation of legacy records, etc.
Compliance is far less expensive than the alternative. Are you in compliance with the regulations surrounding data collection, backup withholding and information reporting? In this two day workshop conference you will learn how to identify independent contractors and non-resident aliens. We will analyze case studies to help ensure you fully understand the most efficient process and how best to communicate with the payee to obtain correct and properly executed Form W-8 or W-9 from the payee, determine whether and how much must be subjected to backup withholding, how to confirm the name and tax ID of the payee match the IRS databases, exactly how to expedite the handling of your B-Notices, and how to fight a notice of proposed penalty. In addition, you will learn the best method to process your 1099 and 1042-S reporting to both your payees and the IRS using best practices.
Due to the enactment of the Foreign Accounts Tax Compliance Act (FATCA), the course will address the issues related to the use of Forms W-9 and W-8 to comply with both Chapters 3 and 4 of the internal revenue code.
Through case study analysis we will examine best practices to provide thoughts and ideas to maximize the performance of your current system. Additionally, case studies will explore how your management practices can be improved to help ensure full regulatory compliance.
Upon completing this course participants should:
DAY 1 : 9:00 AM
Information Reporting Process Overview
Best practices procedure to set up payees in your system to ensure compliance with the IRS reporting rules
Form W-9 Information Gathering
Form 1099 Reporting
Using TIN Matching to Reduce Errors and Build Your Due Diligence Case
DAY 2: 9:00am
Responding to Penalty Notices
Non-Resident Alien Reporting
FATCA – The Foreign Accounts Tax Compliance Act