Join CEO, Joe Flynn of Lavante in an “Ask the Expert” webinar as he interviews both Jeff Ulanoski, former Rite Aid Director of AP and Jeff Wiest, former AP Manager at Tyco Electronics on the state of Vendor Management.
Find out the benefits of using technology to:Collect and Validate W9s, Monitor and Screen OFAC Lists, Validate Supplier Insurance Certificates, Collect and Track Diversity Status, Manage / Automate Supplier Onboarding, Validate USPS Addresses, Manage changes your Vendor File, More….
Webinar Event: Wednesday, April 3, 2013 10:00 am
Pacific Daylight Time (San Francisco, GMT-07:00)
About the Speakers:
Jeff Wiest led the accounts payable function for the U.S. Financial Shared Services Center of Tyco Electronics since its formation over 10 years ago. During that time he oversaw the post-acquisition integration of more than 20 payables functions into the service center. He was instrumental in the implementation of electronic technology solutions that have resulted in significant efficiency improvements and cost savings. Prior to joining Tyco, Jeff served in various accounting roles for AMP Incorporated.
Jeff worked for over ten years with Rite Aid Corporation as Director of AP, during which time he led that company’s Transaction Tax and Accounts Payable organizations. During his tenure at Rite Aid, Jeff was a key player in the integration of the Brooks Eckerd AP process into Rite Aid. His experience included the introduction of technology-enabled solutions and Best-of-Class processes to improve corporate efficiency, reduce costs, increase cash flow and mitigate risk. Prior to Rite Aid, he spent five years at Foot Locker as Manager of Transaction Taxes.
See a Demo of the Lavante Product Suite where you can automatically set your corporate controls and let the application manage all communication for you
The IRS has numerous publications where they provide printable, downloadable instructions. This information is subject to change at any time by the IRS. As of the data of this publication 3.11.13 we recommend this page on the IRS website http://www.irs.gov/instructions/iw9/ar02.html
How Do I Know When To Use Form W-9?
Use Form W-9 to request the taxpayer identification number (TIN) of a U.S. person (including a resident alien) and to request certain certifications and claims for exemption. (See Purpose of Form on Form W-9.) Withholding agents may require signed Forms W-9 from U.S. exempt recipients to overcome any presumptions of foreign status. For federal purposes, a U.S. person includes but is not limited to:
An individual who is a U.S. citizen or U.S. resident alien,
A partnership, corporation, company, or association created or organized in the United States or under the laws of the United States,
Any estate (other than a foreign estate), or
A domestic trust (as defined in Regulations section 301.7701-7).
A partnership may require a signed Form W-9 from its U.S. partners to overcome any presumptions of foreign status and to avoid withholding on the partner’s allocable share of the partnership’s effectively connected income. For more information, see Regulations section 1.1446-1.
Advise foreign persons to use the appropriate
Form W-8. See Pub. 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, for more information and a list of the W-8 forms.
Also, a nonresident alien individual may, under certain circumstances, claim treaty benefits on scholarships and fellowship grant income. See Pub. 515 or Pub. 519, U.S. Tax Guide for Aliens, for more information.
Electronic Submission of Forms W-9
Requesters may establish a system for payees and payees’ agents to submit Forms W-9 electronically, including by fax. A requester is anyone required to file an information return. A payee is anyone required to provide a taxpayer identification number (TIN) to the requester.
Payee’s agent. A payee’s agent can be an investment advisor (corporation, partnership, or individual) or an introducing broker. An investment advisor must be registered with the Securities and Exchange Commission (SEC) under the Investment Advisers Act of 1940. The introducing broker is a broker-dealer that is regulated by the SEC and the National Association of Securities Dealers, Inc., and that is not a payer. Except for a broker who acts as a payee’s agent for “readily tradable instruments,” the advisor or broker must show in writing to the payer that the payee authorized the advisor or broker to transmit the Form W-9 to the payer.
Electronic system. Generally, the electronic system must:
Ensure the information received is the information sent, and document all occasions of user access that result in the submission;
Make reasonably certain that the person accessing the system and submitting the form is the person identified on Form W-9, the investment advisor, or the introducing broker;
Provide the same information as the paper Form W-9;
Be able to supply a hard copy of the electronic Form W-9 if the Internal Revenue Service requests it; and
Require as the final entry in the submission an electronic signature by the payee whose name is on
Form W-9 that authenticates and verifies the submission. The electronic signature must be under penalties of perjury and the perjury statement must contain the language of the paper Form W-9.
Managing supplier information is becoming an ever-more complex and involved process for organizations of every size and across all industries. Through our work at Lavante in automating recovery audit and supplier management processes, we are constantly learning from our customers, prospects, and industry analysts how organizations are dealing with this critical issue. We recently partnered with IOFM (Institute of Finance and Management) on a comprehensive market research survey where respondents answered a series of questions related to the key tasks and/or projects involved in managing supplier relationships. After spending time at several industry conferences talking extensively with a host of AP and Shared Services practitioners, and reviewing the results of this survey, several themes or issues have emerged which I wanted to share here.
First is that the complexities and scale of tracking and managing suppliers is overwhelming for most companies. This is in part due to the many different tasks that have to be performed – on-boarding, validating tax ID’s, gathering insurance documents, W9s, W8s, maintaining regional differences, etc. – which are often treated as disparate tasks or projects. And although there are usually processes built around performing these functions, they are seldom combined into one seamless process that can be automated, and thus streamlined. This means that every change requires a lot of extra work to accomplish. Take for example the potential change to the W9 collection process in 2010, where organizations would have been required to collect W9s for new categories of suppliers. We talked to hundreds of companies that were under considerable stress with the prospect of:
gathering together W9s from their current suppliers;
identifying which vendors were missing W9s, and and then determining if they needed one to comply with the new legislation;
contacting the supplier to request the document;
finding the correct information if existing data was incorrect, and reaching out to them again.
If you only have a handful of suppliers, this wouldn’t be such a daunting task. But even mid-size organizations we talked to had thousands of suppliers, with larger global enterprises looking at verifying tens of thousands of contacts. Given these numbers, this task becomes a monumental project with the risk of heavy penalties if not conducted in a timely, accurate manner. While this legislation was eventually overturned, it left many finance professionals with the firm belief that it can and will happen again, and that being reactive wasn’t a good way to approach the issue.
It struck me that this one project of collecting W9s was intricately related to so many other tasks involved with supplier management. And linking these seemingly disparate tasks together into one seamless process, powered by technology, results in a continuous, on-going process which can scale to handle an unlimited number of suppliers. With an ability to collect, track and manage any type of required document, and allow total control over this process, it would dramatically simplify the complexities involved in the supplier management process. An automated process would also allow finance professionals to instantly comply with new regulations and internal processes.
Next week, I’ll share some other thoughts related to this continuous process, and how simple it really can be. As usual, please let me know your thoughts about this important topic.
On Thursday, February 16, we were happy to co-host the first of a our Future of AP: Five Top Changes Coming to AP lunch & learn series in Houston, Texas. We had a record turnout, with a great cross section of companies represented – across industries and size of organization. As usual, the session offered time to network with colleagues in AP and Shared Services while enjoying a good lunch.
We presented this agenda in 2011 in seven cities, and this session in Houston saw the topic continuing to spark interesting discussions. Several areas prompted a great deal of discussion and questions – first, around on the subject of vendor on-boarding and the collection and management of tax information, i.e. W-9s. The concerns about expanding 1099 reporting due to the health care laws that were raised last year are clearly still in the minds of AP professionals. The discussion really centered on how a vendor portal can help establish an easy, repeatable process to collect and manage information from every vendor – from current contact info to compliance data. We were able to shed some light on this topic with a discussion about Lavante’s Supplier Information Management and Recovery solutions, where technology is used to automate this processes.
The question of technology and automation then to the eInvoicing, as Dean Baxter, Account Manager, Basware, presented some compelling research that clearly demonstrated the ROI involved in adopting technology and process best practices that move a company from a “Laggard” to “Best-In-Class”, which decreased the costs of processing a single invoice from $38.77/invoice to $3.09/invoice.
I was happy to see the article by Diane Sears in the latest issue of Financial Operations Matters, Is 1099 Issue Dead or just Resting? which focused on the continuing 1009 reporting dilemma. Although the heated debate over this issue has died down after the repeal of the reporting requirements tied to the health care legislation, Diane brings up critical issues that every enterprise should keep in mind about this continuing challenge. She notes in the article: “Industry watchers say financial operations professionals can expect to see expanded 1099 reporting requirements pop up in other bills designed to raise federal tax revenue – and soon.”
One of those industry watcher’s advice comes from a Lavante’s partners, Convey Compliance Systems, a firm that provides tax reporting software and services. Their spokesperson, Troy Thibodeau, noted that the entire 1099 reporting process had largely been overlooked by many organizations, leading to low adoption of the automation that would deliver added efficiencies and cost reductions. This attention deficit all changed when the healthcare reform act shined a very bright light on the operational and process problems that organizations face in the 1099 reporting area.
My colleague at Lavante, Sherry DePew added her expertise to the article, noting: “The majority of the people we talk to say this has given them time to get prepared. Everyone pretty much knows this is coming.”
The article expressed complete agreement that the expansion of 1099 reporting is inevitable. To best prepare to meet future requirements, companies should look to automate the process and to implement repeatable processes, both as a way to effectively manage the entire 1099 reporting process now and in the future.
For more information, click here read the entire article by Diane Sears. And, let us know what your thoughts are about this issue and how you are planning to prepare for possible changes.
The law repeals the expanded 1099 reporting requirements that were included in the funding provision of the 2010 health care law, which required all for-profit corporations issue 1099 forms to vendors from whom they purchased over $600 of goods or services in a tax year and was scheduled to go into effect for all payments made after December 31, 2011.
The repeal comes after months of debate about the impact of the reporting requirement on small businesses and how to cover the cost for the 1099 repeal, which is estimated at nearly $22B over the next 10 years.
“Today, I was pleased to take another step to relieve unnecessary burdens on small businesses by signing H.R. 4 into law,” reads the president’s signing statement. “Small business owners are the engine of our economy and because Democrats and Republicans worked together, we can ensure they spend their time and resources creating jobs and growing their business, not filling out more paperwork. I look forward to continuing to work with Congress to improve the tax credit policy in this legislation and I am eager to work with anyone with ideas about how we can make health care better or more affordable.”
So what does this mean for companies and their 1099 reporting? Was expanded 1099 reporting a passing fad? Actually, discussions around expansion of 1099 reporting requirements date back to the Bush administration and are aimed at better tracking business expenditures, earnings, and tax liability. In order to ensure your company is ready to meet current 1099 reporting requirements, as well as future changes, the safest bet is to make sure you have the policies, processes, and systems to ensure up-to-date supplier tax information.
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Today, the U.S. Senate passed the House’s 1099 repeal bill, H.R. 4, in an 87-12 vote. The bill will go directly to the White House where President Barack Obama will have the opportunity to sign or veto the bill.
The 1099 reporting requirements is part of funding provision of the 2010 health care law. It required all for-profit corporations to issue 1099 forms to vendors from which they purchased over $600 of goods or services in a tax year, and is scheduled to go into effect for all payments made after December 31, 2011.
The Senate vote comes after months of debate about the impact of the reporting requirement on small businesses and how to cover the cost for the 1099 repeal, which is estimated at nearly $22B over the next 10 years.
Sign up for the Lavante blog today to stay on top of the 1099 repeal or check out our 1099 reporting center.
In February, Lavante hosted a regional roundtable dinner discussion in the greater Dallas area. Joining the conversation were financial minds from Alcon, Flowserve, Trinity Industries, AutoNation, the BNSF railway, Occidental Petroleum, Lehigh and Genband, who gathered together to discuss critical issues facing their company and departments. A lively discussion was held over dessert about “What pain is your department feeling at present?” On the top of everyone’s mind was, “how will 1099 legislation included in the new health care bill ultimately take shape?”
Participants had varying degrees of uncertainty about how the legislation would affect their companies in the coming months. Even with knowledge of the ongoing repeal actions, there was an overall consensus that the issue of 1099 reporting changes has been evolving for over 15 years, and that some form of change is inevitable. An AP manager from a F1000 company expressed that if the original law were enacted, their company would experience an increase from 2,500 1099 applicable vendors to over 20,000 applicable vendors. She stated her approach as, “I am going to move forward assuming that the law will pass in some form. I can’t afford not to be prepared!” This was the collective opinion of the room.
We will continue to monitor the changes to the 1099 laws, so check back to The Hub or subscribe to receive automatic updates.
Lavante hosts an ongoing series of regional finance professionals discussion session. Please contact us directly if you would like to find out more.
The cost for the 1099 repeal is currently estimated at nearly $22B over the next 10 years. The funding remains the biggest debate around the 1099 repeal across the House, the Senate and the White House.
There was significant controversy in the House around the funding of the H.R. 4 bill, with Democrats calling it a tax hike on middle-class Americans. The bill increases the amount of health insurance subsidies that could be recaptured in cases where a family’s income exceeds certain thresholds. Read more.
The Senate passed their own 1099 repeal back in February as an amendment attached to the FAA funding bill. The funding for the Senate repeal gives the Office of Management and Budget the ability to take away nearly $44 billion of discretionary budget authority—except from the Departments of Defense, Veterans Affairs and Social Security.
The House bill will end up in the Senate next. The issue that still remains is – how to make up the funding for the health care law.
Sign up for the Lavante blog today to stay on top of the 1099 reporting changes or check out our 1099 reporting center.
President Obama released his proposed fiscal year 2012 budget this week. The budget contains a portion of the 1099 provisions from the 2010 Patient Protection Affordable Care Act (aka, the health care law).
As a refresher, the funding provision of the health care law requires all for-profit corporations to issue 1099 forms to vendors from whom they purchased over $600 of goods or services in a tax year. These changes are scheduled to go into effect for all payments made after December 31, 2011. The biggest changes from current 1099 reporting requirements are:
1099 reporting for payments to corporations (except tax-exempt corporations), most payments to corporations are currently exempt
1099 reporting for purchase of property (goods, merchandise, supplies, raw materials, equipment, etc.), currently only payments for services require a 1099
Now, back to the budget. The 2012 budget includes the requirement for 1099 reporting for payments to corporations beginning in 2012, but would repeal the requirement relating to payments for property. The proposal is expected to raise about $10 billion over 10 years (vs the nearly $20 billion expected from the 1099 provisions in the health care law).
Meanwhile, the House is moving forward with its bill to repeal the 1099 requirements. The bill was passed by the Ways and Means Committee on February 17 and is expected to go to the House floor this spring. This follows the 1099 repeal amendment attached to the FAA funding bill which passed in the senate earlier this month. If the 1099 repeal bill passes in the House, it will end up in a conference committee to reconcile the differences with the Senate version. The issue that still remains is – how to make up the funding for the health care law.
Sign up for the Lavante blog today to stay on top of the 1099 reporting changes or check out our 1099 reporting center.