dlongawa

2 Unrelated Questions:
1. We occasionally receive requests from "customers" for a "1099" because we have paid them a commission check for an airline ticket they purchased from us at the wholesale level, using their customer's (the passenger's) credit card. There is absolutely no IC or Employee relationship involved. Ex: We sell airline tickets at wholesale price to retail travel agent for their customer/the passenger. If the travel agent pays us via check payment-- they simply pay us the wholesale price & charge their customer a marked up price; the profit is theirs. However, if their customer/the passenger wants to pay via their credit card-- then we will act as the credit card merchant and process the passenger's credit card for the full amount of the sale charged by the retailer. Then, we send the travel agent their profit/commission via a company check described as agent commission. I have always responded that a 1099 is unnecessary because they were our customer & never "for hire." We were in essence repaying their overpayment. Am I right or wrong?
2. Is there anything new in 2011 regarding W2's-- like healthcare expenses paid by the employer, etc?

Comments

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  • The situation you descriibe in #1 does qualify for a 1099 (non-employee compensation.) However, you only need to issue one if the annual total paid (commissions) is $600 or more. In addition, you should be including the 'commission' amount as revenue in your financial statements, with the amount you send to your customer considered as expense (offsetting each other). You would then report those transactions in your income taxes. (You might want to consider changing your policies to not allowing these kinds of transactions.)

    Changes to the requirements for 1099s were included in the health care reform bill. Right now there are few changes to the 2011 1099s. There are some though, so you might want to check out the publication. For instance, people who own rental property will have to issue a 1099 for both services and supplies to those who repair their properties in 2011.

    2012 is the big question mark. The way the law reads right now, every company is going to have to issue a 1099 to every vendor, including utilities and office supplies, to whom they pay $600 or more in the year (unless paid through a credit card). It looks more and more like this part of the health care reform law is going to be repealed. I'm keeping my fingers crossed. This is way too much paperwork for the average organization.
  • Thank you very much for your helpful response. It sounds like I need to advise our accounting dept that they need to start issuing a lot more 1099's.
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