WELCOME! [saas.convey.com]saas.convey.com/rs/sovos/images/2013.08.20-b-p-notice-webinar.pdf · Form Types Include: 1099-B 1099-Div 1099-Int 1099-Misc 1099-OID W-2G 1099-K CP2100 or

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WELCOME!

WELCOME! Christina Vekich Marketing Communications

Comply + Connect (C2) Summit 2013

October 20-22, 2013 – Orlando, FL Omni ChampionsGate Resort

Register Now! BOGO ½ Off! c2summit.convey.com 1-888-303-1099 [email protected]

CPE Credit Eligible

This webinar is eligible for 1 CPE credit for participating Must attend entire webinar Must answer all CPE polls

You will receive your certificate via

email within 3 weeks

CPE Poll # 1

Would you like to receive a CPE certificate? Yes No

ELIMINATE “B” NOTICES AND OTHER PENALTY NOTICES

Jeff Cronin Vice President of Product Strategy

Agenda

“B” Notice Process Overview Penalty Notice (P Notice) Process Overview Eliminating Notices

Proactive Validation Solicitation Packets

B & P Notice Best Practices Abatement Best Practices Additional Resources

Non-CPE Poll # 1

Approximately, how many forms do you currently file each year? 0-1,000 1,001-25,000 25,001-100,000 100,000+ I don't know

Proactive vs. Reactive

Proactive Reactive

Data Clean-up Real-Time TIN/OFAC/DM

F

TIN Matching

General Solicitation

Delivery

Response Gathering- Validating- Importing

Timeline

January •Print and Mail 1099s

April •Transmit Records to IRS

October •Receive CP2100(A) •Send Solicitations

November •Collect Responses •Updating Records •Start/Stop Backup

Withholding

August •Receive 972CG •Send Solicitations •Respond to Penalty

Notice

What is a “B” Notice?

Backup Withholding Notice due to Missing or Incorrect Name/TINs

Form Types Include: 1099-B 1099-Div 1099-Int 1099-Misc 1099-OID W-2G

1099-K

CP2100 or CP2100A Based on Prior Year Transmittal(s)

What Do I Have to Do?

Search for any accounts that have the same name/TIN combination

For Matches

For Non Matches No Solicitation Required

15 business days to send “B” Notice solicitation

15 business days to respond

If you fail to gather correct information, you must begin back-up withholding! You should withhold immediately for missing TINs

First or Second “B” Notice?

IRS Does Not Track This For You! “Two-in-three year” rule First “B” Notice if: An account identified on one “B” Notice An account identified on two “B” Notices outside

of three calendar years

Second “B” Notice if: An account identified on two “B” Notices within

three calendar year

What To Send

Cover letter From W9 (or substitute) Optional Reply Envelope Do Not File a Corrected Return

First B Notice

Second B Notice Cover letter

SSA Printout

Optional Reply Envelope

Do Not File a Corrected Return Form W-9 Does NOT satisfy a Second “B” Notice

Now What? 1st “B” Notice Did you receive a W9 within 30 days?

Yes Update records with certified name/TIN

No Begin backup withholding within (by) 30 business days.

2nd “B” Notice Did you receive a SSN Printout or 147C(Business

Equivalent) within 30 days? Yes

Update records with certified name/TIN No

Begin backup withholding within (by) 30 business days.

CPE Poll Question #2:

Who is responsible for tracking 1st and 2nd “B” Notices?

a. The IRS b. The Payor c. The Recipient d. Don’t need to track

Notice of Proposed Penalty

What is Penalized? Records file with a missing/incorrect TIN Late returns Bad format (wrong media)

Penalties: Time of Filing Penalty Maximum

30 days or less $30 $250,000

Before August 1st $60 $500,000

After August 1st $100 $1,500,000

Intentional Disregard $250 No Limitation

Response to 972CG The notice should be answered within 45

days. Request an Extension within the 45 day window

Payer can abate the penalty by establishing reasonable cause: Perform required actions for “B” Notices

Perform annual solicitations for missing TINs

Perform annual solicitations for incorrect name/TINs

Penalty not imposed if:

1

2

3

One-half of one percent of total returns

972CG Solicitations

Solicitation Process Similar to B Notices Do not need to send if a B Notice was

sent for the same year. 1099-R Form

30 days to send solicitation

45 days to respond

Can include W-4P

CPE Poll Question #3

How many business days do you have to send out your W-9 solicitation after receiving the first “B” Notice? 7 15 30 45

ELIMINATING NOTICES Best Practices

Most Of Us Follow A Basic Process

File 1099s

Receive B Notices

Send W9s Receive 972CG

Write Abatement

That Process Is Reactive

Tax Identity Management

B&P Notice Processing

W-9 Solicitation

Delivery

Response Gathering, Validating, Importing

Backup Withholding Reporting

Old Versus New

1

2

3

Manual Paper (W9s) Reactive

Automated Real Time Proactive

Today Tomorrow

Non-CPE Poll # 2

Approximately, how many B-Notices do you receive each year? 0-100 101-5,000 5,000-25,000 25,000+ I don't know

Four Steps to Correct Your Data

Identify Bad Name/TIN

Solicit Corrections

Collect Responses

Update source systems

Step One… Know What You Don’t Know

Identify Bad Name/TIN

• Wait for B-Notice

• Real-time TIN match

• IRS Bulk TIN Match

Solicit Corrections

Collect Responses

Update source systems

Real-Time TIN Verification

One-time payments When payment is immediate/COD Very difficult to correct after the fact

TIN Matching

IRS E-Services Interactive TIN Matching Bulk TIN Matching Publication 2108A Backup Withholding Forms

Signing up takes time, requires SSN, AGI, Officer of Company

Account Initiation

Initial Information or W-9 is wrong! Leads to a “B” Notice next year

There is a better way! IRS Interactive

TIN Matching Guarantee correct

information Integrated with

source system

Step Two…Reach Out and Touch Someone

Identify Bad Name/TIN

• Wait for B-Notice

• Real-time TIN match

• IRS Bulk TIN Match

Solicit Corrections

• Mail • Phone call • eMail • In person

Collect Responses

Update source systems

Solicitation Packets

Mail a W9 (or substitute)

Email

Letter or Self Mailer

Telephone/Customer Service

Portal on Website

Step Three… Get Your Answers

Identify Bad Name/TIN

• Wait for B-Notice

• Real-time TIN match

• IRS Bulk TIN Match

Solicit Corrections

• Mail • Phone call • eMail • In person

Collect Responses

• Web • In person • Phone • Mail • Fax

Update source systems

Not a ‘One and Done’ Process

Step Four… Straighten Out Your Systems

Identify Bad Name/TIN

• Wait for B-Notice

• Real-time TIN match

• IRS Bulk TIN Match

Solicit Corrections

• Mail • Phone call • eMail • In person

Collect Responses

• Web • In person • Phone • Mail • Fax

Update source systems

• Manual keying

• Spreadsheet management

• Automated imports

The Complete Package…

Identify Bad Name/TIN

• Wait for B-Notice

• Real-time TIN match

• IRS Bulk TIN Match

Solicit Corrections

• Mail • Phone call • eMail • In person

Collect Responses

• Web • In person • Phone • Mail • Fax

Update source systems

• Manual keying

• Spreadsheet management

• Automated imports

A comprehensive solution involves implementing business processes to manage each piece of the tax identity management continuum !

Evolution of ID Management

Tax Identity Management

Real-Time

TIN/OFAC/DMF

TIN Matching

General Solicitation

Delivery

B&P Notice

Processing W-9 Solicitation

Delivery

Response Gathering, Validating, Importing

Backup Withholding Reporting

Proactive Reactive

Proactive Process

Identify Incorrect Information No Rules on How to Solicit

or Collect Data Multipronged Approach

Solicit Collect

Responses Update Data TIN Match

The IRS has strict phishing rules. A violation leads to a 96 hour lockout!

So What If You Still Have Errors?

B & P Notice Best Practices

Load/Input/Mail notices ASAP Match against current data Timer starts at notice date OR date

you received from the IRS.

Apply “2 in 3 year rule” 1 mailing per year (supplemental) “B” Notice mailing satisfies

penalty notice

First B Notice

Matching Data Against Prior Data Will Lead to More Notices!

B & P Notice Best Practices

Your cover letter should be clear and easy to understand

Include phone number, website, or FAQ information for questions

Generally don’t file corrections based on W9s

Source system updates Automate the process

Second B Notice

Abatement Best Practices

Documentation is Key!

Process and Procedures

Year over Year Progress

Metrics

Mailed

Responses

No Responses

W9 & Other Documentation

Sample Abatement Letter

Reasonable Cause

History of filing with correct TINs/Names

Payee provided incorrect information

Payee didn’t respond

Must Respond Within 45 Days

CPE Poll Question #4:

What is one way you can proactively reduce “B” and Penalty Notices?

a. Complete Form 5457 b. File your returns early to the IRS c. Use the IRS TIN Matching program d. Mail Form W-4P to all recipients

Key Takeaways

The best way to deal with “B” Notices is to eliminate them. Take advantage of the IRS TIN Matching program. Document everything. Utilize tools and automation to minimize manual work and reduce or eliminate notices.

1

2

3

4

CPE Poll Q Review

Who is responsible for tracking 1st and 2nd “B” Notices?

- The Payor

How many business days do you have to send out your W-9 solicitation after receiving the first “B” Notice?

- 15

What is one way you can proactively reduce “B” and Penalty Notices?

- Use the IRS TIN Matching program

Taxport Compass

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Non CPE Poll # 3

Would you be interested in a product like Taxport Compass? Yes No

Q & A

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