Hold on to your hat. If IRS gets its way, a whirlwind of changes could be coming to 1099s, TINs and year-end.
The Service’s Electronic Tax Administration Advisory Committee just released its latest report to Congress, and it’s filled with suggestions that could impact Finance staff big-time.
The good news
Two of the proposals would make your life easier. They are:
1. Add an indicator on 1099s to reduce “B” Notices. The suggestion: Include a box on 1099s so you can flag payments headed to presumed U.S. citizens – undocumented individuals – subject to backup withholding.
At the moment, many of these payments trigger unnecessary “B” Notices for you to deal with.
2. Make IRS’s TIN matching tool easier to use. With the way IRS’s TIN matching platform is set up, it requires someone at your company to enter tons of his or her own personal information– and often takes days to finish setting up.
The proposal: a new authentication process that will make the tool easier to use.
The bad news
Other proposals may require more work, like:
1. Lower the threshold for filing 1099s electronically. Currently, if you have fewer than 250 1099s to send to IRS, you can do so on paper.
The committee’s recommendation: Lower the threshold to 20 in order to make the data easier to process and to thwart fraud.
2. Require A/P to get a TIN for every payment subject to 1099-MISC. The Service is going to want you to put extra pressure on vendors to get their TINs. It’s also pushing to require certified TINs in writing on W-9s – not orally or on an invoice.
3. Require proof of TIN matching. If there’s a name-TIN mismatch (or a TIN missing) on a 1099, IRS wants to send you an automatic penalty and require proof that A/P matched the TIN on its TIN matching platform.
