Agenda - Council - 03/11/2014 - Laserfiche WebLink

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QUICK REFERENCE GUIDE FOR PUBLIC EMPLOYERS Information Reporting Customer Service Site The IRS operates a centralized customer service site to answer questions about reporting on Forms W-2, W-3, 1099, and other information returns. If you have questions about reporting on these forms, call 1-866-455-7438 (toll -free), Monday through Friday, 8:30 a.m. to 4:30 p.m., Eastern time. 9. BACKUP WITHHOLDING Government entities are subject to rules that require payers to withhold income tax of 28% from certain payments if the payee is not exempt from backup withholding and fails to furnish correct taxpayer identification number (TIN). The IRS may also notify a payer to begin backup withholding because of payee underreporting. Failure to follow the backup withholding rules can result in penalties to the payer for filing incorrect information returns. The payer may also become liable for any uncollected amounts. Payments subject to backup withholding include rents, nonemployee compensation for services, royalties, and reportable gross proceeds paid to attorneys, and other fixed or determinable gains, profits, or income payments that are reportable on Form 1099-MISC, Miscellaneous Income. The total backup withholding is shown in Form 1099-MISC, box 4. For all payees, you must make an initial solicitation for a TIN when the payee opens an account or when the transaction occurs. Use Form W-9, Request for Taxpayer Identification Number, to request the taxpayer identification number. Note: Authorized payers can register for electronic taxpayer identification matching, which provides the opportunity to match 1099 payee information against IRS records prior to filing information returns. For more information, see Publication 2108A. Backup withholding may be required immediately if the payee fails to furnish a TIN. In other cases, the payer is instructed to begin backup withholding through notification by the IRS. In general, in the case of any reportable payment, if the payee fails to furnish his taxpayer identification number to the payer in the manner required, then the payer must deduct and withhold tax equal to 28% of the payment. The tax collected from backup withholding is reported on Form 945, Annual Return of Withheld Income Tax, and is subject to deposit requirements. The deposit rules for backup withholding and other nonpayroll withholding are the same as the rules for depositing employment taxes; however, they are accrued and paid separately. The payer is liable for the payment of the tax required to be deducted and withheld under the backup withholding rules. If the payer fails to deduct and withhold tax at a rate of 28% from a reportable payment, and the payee fails to furnish the TIN, the payer is then liable for the payment of the tax. 19