Get Ahead of 1099-K Reporting
The IRS has introduced changes to Form 1099-K reporting to improve accuracy and tax transparency. States are seeking revenue by changing the thresholds for form 1099-K. Recipients of this form are often small businesses or self-employed individuals operating pass-through entities like sole proprietors, single-member LLCs, limited partnerships, etc. Get ahead of the issues before 1099s are filed so you business can minimize the risks for receiving notices and penalties from the IRS and states.
On October 14, Wendy Walker, Solution Principle of Tax Information at Sovos will lead a webinar to help you prepare for 2021 Form 1099-K Reporting. We asked Wendy to provide readers with sneak peak of what you will learn:
What is a common concern SOVOS sees with payments companies when it comes to filling out Form 1099-K? Are there any common errors?
One of the most common errors made on a Form 1099-K is reporting erroneous name and taxpayer identification numbers (TINs) for the Recipient. Recipients of this form are often small businesses or self-employed individuals operating pass-through entities like sole proprietors, single-member LLCs, limited partnerships, etc. This means that the name and TIN that are reported on a 1099 for tax purposes are different from the name and TIN that the business might be operating under during the year.
Many of our clients file Forms 1099-K and then receive subsequent ‘B’ notices (backup withholding notices) or penalties (i.e., 972CG Notice of Proposed Penalties) for reporting Forms 1099-K with these erroneous combinations. I will discuss these issues in detail in the upcoming webinar. We’ll propose solutions for getting ahead of the issue before 1099s are filed with erroneous information, so that businesses can minimize the risk of receiving those notices and penalties from the IRS and states.
Are there any large changes that have been made to the form this year?
No major changes have been made to the 1099-K form itself this year. We would, however, like to highlight several changes made this year, including the American Rescue Plan Act (ARPA) changes passed earlier this year, Form 1099-K reporting threshold changes for the 2022 season, and backup withholding and TIN collection procedure changes effective January 1, 2022;
We will also highlight state reporting changes, including the recent Delaware legislation that will likely require Form 1099-K reporting.
What can attendees expect to learn from this webinar?
Attendees can expect to learn:
- Reminders and tips for the 2021 reporting season.
- Best practices for organizational reporting of Form 1099-K information to the IRS and the states.
- Updates as a result of ARPA changes to the 1099-K filing requirements for 2022 returns.