1099 Best Practices for the AP Professional

A Quarter-by-Quarter Review

About Your PresentersClark Sells is a Senior Product Manager with Sovos Compliance. He is experienced implementing, building, and maintaining tax software for filers of 10 series forms. Over the last 8 years Clark has served as liaison to state and federal governments specializing in emerging compliance items. Early in his career he worked in various treasury roles within Bank of America and Ameriprise Financial.

Stacy Nagassar is the Director of Compliance Services and oversees our Tax Information Managed Services, Withholding Management Service, Print Services and Implementation Services at Sovos Compliance. Stacy has been with Sovos Compliance for four years and has worked in tax related fields for 14+ years. Stacy has her Master of Art’s degree from Saint Mary’s University and her Bachelor of Art degree from the College of Saint Benedict.

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About Your PresenterJudy Bicking is a 27 year veteran of Johnson & Johnson. Her career has been focused on Procure-2-Pay, Order-2-Cash, and developing Shared Service Centers in the U.S. and Europe; earning high recognition for process improvement and major cost savings. She led the first department to earn IOFM AP Departmental Certification designation.

Today she is a Public Speaker, does consulting in O2C and P2P and participated as co-founder and played a major role in writing and conducting certification training in these fields.

She also owns and operates a retail department store along with her passion in doing mission work at home and abroad.

TAX INFORMATION REPORTING

Agenda

• Introductions• Seasonal Challenges• TY2017• Best Practices

3 Things1. Who and what Sovos Compliance is

2. An understanding of current and future challenges facing this industry

3. Ideas on how you can improve your own reporting process

Who is Sovos

Our Clients

How we Serve them

450 Million 17.5% 10.7 Million

1042-S 1099-C 1099-PATR 5498 480.6A T4

1098 1099-CAP 1099-Q 5498-ESA 480.6B T4A

1098-E 1099-DIV 1099-R 5498-SA 480.6C T4ANR

1098-Q 1099-INT 1099-S W2/W2C 480.7 T5

1098-T 1099-K 1099-SA W2G 480.7A T5008

1099-A 1099-MISC 3921 W4-P 480.7C RL-3

1099-B 1099-OID 3922 W-9 499R2 RL-18

Tax Year 2016 Season in Review

Expedited due dates = less time

2017 What’s to Come

Increased penalties

Penalty Tiers

$50 per form Within 30 days of original due date

$100 per form 31 days after to August 1st

$260 per form After August 1st

5 REPORTING RECOMMENDATIONS

Just when you thought 1099 was complete for the year...

• Traditionally AP waits until October or November to begin the thought process for 1099 & 1042 processing. – Some start January, after the year-end push

• In reality to avoid penalties and accurately comply with regulations, you should have tasks that are performed through the year.

1. Year-Round Process

Paper vs. “e” Statements

• It is a fact that anytime you can eliminate paper it reduces cost and errors.

• What is the process and benefit to submit E-statements?

2. E-statements

• Reduced Costs• Decrease in call volume• Increased Customer

Service Levels• 24x7 Delivery

Federal Form Requirements

• Is there any other way to reduce cost and penalties?

3. Apply Federal Limits

• Reduce Forms Sent• Reduce Penalties• Reduce Corrections

Forms

1098

1099B

1099C

1099CAP

1099DIV

1099G

1099INT

1099K

1099MISC

1099R

More…

Supporting Documentation

• Are there any best practices to include a note or message to the recipient directly on the form instead of sending a cover letter?

4. Print Notes/Correspondence

• Examples:

• This is important tax information and is being furnished to the IRS by ABC Company. If you are required to file use this information as your official tax document. For questions about this form contact at 1-800-XXX-XXXX

• This statement is being provided as a result of the royalty payment you received from XYZ Property management. The tax information will be filed with the IRS on 3/31/2017 please contact us with any amendments to this information prior to that date

How to Avoid Withholding

• The IRS law says that if a supplier doesn’t supply their tax ID number, you must withhold the tax.

• This was a major issue:– Time, accuracy and cost to withhold and

submit the taxes• Control at VM file level: No tax id, No Pay

– Company Policy, not IRS regulation

B-Notices• Rather than being reactionary, which usually

requires rework, it is much better to put into place procedures that eliminate errors and rework

5. TIN/Name Matching

• Before B-Notices• Upon Receipt of a W9• Before issuing a form

Best Practices• To avoid penalties and most importantly to serve

as a business partner to your company:– Now is the time (March) to analyze:

• What went right• What went wrong (missing tax ID’s, amounts in

proper block, missed deadlines)• Work with an expert to implement a process that

will ensure compliance with all current regulations

In Summary1. Who and what Sovos Compliance is

2. An understanding of current and future challenges facing this industry

3. Ideas on how you can improve your own reporting process

Thank You!

Questions after the event? E-mail webinars@iofm.com

We hope to see you at a future AP & P2P Network event! For upcoming events please visit www.app2p.com.