John Sheeley

President Bush signed the “Unemployment Compensation Extension Act of 2008″ (H.R. 6867) into public law today. It gives seven more weeks of unemployment payments to workers who have exhausted their current jobless benefits. For those in states with the highest unemployment rates, an additional 20 weeks will be allowed

For each person whom your business paid $600 or more during the course of the calendar year, you must provide a form 1099-MISC by February 2, 2009.  The regulations further require you file copies of the 1099-MISC forms with the Internal Revenue Service by March 2, 2009 (March 31 if you file the 1099-MISC forms electronically).  The IRS can assess a maximum penalty of $50 per late filed or unfiled document (i.e. per 1099 form).

This requirement includes, but is not limited to, payments made for rents, services (including freelancers), prizes, and awards.  The regulations require reporting of payments to all non-corporate entities (individuals, partnerships, and Limited Liability Companies) and exclude the reporting of payments to most Corporations.  Notable exceptions to the exclusion include payments for medical and legal services, which you report on Form 1099-MISC regardless of the payee’s legal structure.

NOW is the perfect time to review your files and determine which of the people and companies you do business with need to receive a 1099-MISC for 2008.  Well ahead of the end of the year you should send IRS Form W-9 to the affected payees.  Form W-9 captures the legal name, address, and taxpayer identification number of the payee to whom you will issue the 1099-MISC.  [Having the signed W-9 on file protects you from any repercussions related to the payee proving inaccurate information.]

This entry merely touches the surface of the 1099-MISC filing requirements.  As always, consult with an Enrolled Agent or other qualified tax advisor for advice specific to your situation.  Feel free to call or email me for clarifications or questions of a general nature

Individuals who believe that they may be a victim of identity theft can call the IRS identity theft hotline at 1-800-908-4490 between the hours of 8:00AM and 8:00PM local time. The IRS website includes detailed information on what to do if you believe your Social Security Number has been fraudulently used to file a tax return or to secure employment.

Our complex legal and tax structure offers numerous choices of legal entity through which to operate a business. To complicate matters further, each of the 50 individual States may create Limited Liability Companies and corporations.

I recently met the bright, young artistic director of a small theatre company. The company promotes the theatrical works of a particular country here in New York. This artistic director stood to receive a substantial grant from a Foundation to fund his next production. He merely needed to form a new “not-for-profit company”.

He followed the advice of a friend, and using a website, formed his new company. The Foundation would not fund his project through that entity. Why? The Director formed the wrong entity type. He also formed the entity in a different state, since the other state offered lower formation costs than New York.

The story has a happy ending. At the conclusion of our meeting, I advised the artistic director on what he needed to do to receive the funding. The bad news though, is that he can’t use that company he set up online. The $500 he paid to the website is lost.

Always meet with your accountant or attorney BEFORE committing to the formation of a company. Make sure you form the right type of entity, in the correct jurisdiction. One size (or entity type) does not fit all

Please note that effective September 26, 2008, if you use a Private Delivery Service (UPS, DHL, FedEx) to deliver your New York State sales tax return, the JP Morgan Chase lock box in Brooklyn is no longer the correct address. The correct address appears below. I recommend that if you have this address saved inside your online account at DHL/FedEx/UPS that you change it immediately.

Remember, this change only applies to returns filed using a Private Delivery Service after September 26, 2008. Returns mailed through the United States Postal Service should continue to be sent to the address on the return you are filing.

Click here to view the updated New York State Publication 55, Designated Private Delivery Services.

As always, please call or email me with any concerns.

John

New address:

STATE PROCESSING CENTER
431C BROADWAY
ALBANY NY 12204-

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