Attend a free  webinar to help you understand the effects that the new 1099 laws will have on your company and department. The presentation will be hosted by Sherry DePew the former head of Boise Cascade’s global  Shared Services Group and Mindy Harada a renown tax consultant with Armenino McKenna LLP. 

The webinar is scheduled for Friday, Sept 17, 2010 at 11AM PDT

REGISTER HERE

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I’d like to use this format to repeat a few of the Lavante SIM features called out by Sears in her article.

1. It drives compliance from suppliers. It automates the process of gathering information that would cost your company money, time, and resources if it were missing. Perhaps most importantly this year, with the 1099 tussle, Lavante SIM performs an automating taxpayer identification number (TIN) match to ensure quality data. In addition, it automates the process of collecting data and documents by pinging suppliers when their expiration dates are approaching. Lavante SIM also offers an out-of-the-box solution for new supplier set-up and data collection, taking note of details such as the supplier’s status as woman- or minority-owned.

2. It’s affordable.Lavante SIM is a software-as-a-service (SaaS), so organizations don’t have to invest their IT time in setting it up in-house. Also, organizations can start with one or two components and add others as they go. Known for its high-yielding audits in the profit recovery space, Lavante offers a unique solution for keeping the cost of its vendor portal product low. Lavante’s recovery services can pay for the project.

3. It‘s scalable. Charges are based on the application’s ability to get suppliers to comply with data requests. It’s a subscription model based on the number of suppliers per month per tier.

Check back for more links to media coverage of Lavante SIM.

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The biggest challenge to maintaining the quality of your supplier data is its near immediate decay after being recorded.  Suppliers constantly undergo mergers, purges, acquisitions and employee churn that challenge the integrity of their data.  Dun & Bradstreet (D&B) reports its database of businesses experiences annual changes of 20% for addresses, 17% for business names, and 18% for phone numbers underscoring how quickly and frequently supplier data decays.  ERP systems perform some data quality measures at the time a supplier is set up, but they do little to preserve the integrity of the data over time.  ERP systems are reliant on quality data, but they do not ensure it.

Allowing your supplier data to decay over time is very costly to your enterprise. Inaccurate data delays implementation of ERP systems and other automated solutions and can prevent those solutions from achieving their optimal ROI, effectiveness or their value over time.  Failure to identify overlaps or relationships within your supplier population can lead to missed volume discounts or rebates as well as an increase of duplicate payments by up to 300%.  Poor supplier data quality is also very costly in terms of lost efficiency and time.  Bad addresses alone can lead to miss-sent shipments and checks.  Quality supplier data is also vital to stay in compliance with various external regulations and internal controls.  Failure to achieve this compliance can be both disruptive and very costly while causing great exposure and risk.

Collection and management of supplier data is more important now than ever.  New 1099 tax legislation included in the funding provisions of the Patient Protection & Affordable Care Act (March 2010) requires companies to collect valid Tax Identification Numbers (TINs) on a much larger scale than pre-legislation levels.  Today most companies are expected to perform 1099 reporting for less than 10% of their supplier population. When the new law takes effect, companies can expect reporting levels to rise above 90%.  Companies will need to implement new policies and potentially even new systems to manage supplier information more accurately in pursuit of staying in compliance.

The question arises: How are you going to ensure the ongoing quality of supplier information to achieve optimal project ROI and on-going efficiency while maintaining compliance with controls and regulations?

Check back for part two.

Download the “New 1099 Tax Laws” Webinar for free!

We are still celebrating a huge success surrounding last Friday’s webinar.  With very limited outreach efforts, we overbooked the capacity of our web cast provider and we retained all attendees for the entire event.  Anyone well rehearsed in presenting webinars will acknowledge bth of these data points as huge feats!

Sherry DePew conducted and expert walk-thru of the new 1o99 laws which will dictate the future of 1099 reporting for companies (of all sizes) for the next several years.  The new laws will increase workloads, staffing requirements and exposure to significant non-compliance fines.  Sherry outlined a very realistic plan for getting all the facts and for getting prepared.

We are scheduling many more webinar events about similar and related topics soon.  Please notify us at info@lavante.com to get on our distribution list.

We would love to hear any comments or questions whether you were able to attend of not and we are offering a free video replay of the webinar by clicking on the tile below.

Section 6041 of the Internal Revenue Code outlines 1099 reporting requirements.  The Patient Protection and Affordable Care Act includes an Amendment to Section 6041 which now requires 1099 reporting for any payments aggregating $600 to a supplier per year

The new amendment will now create requirements for reporting for:

• All for-profit corporations (excluding tax-exempt corporations)
• Payments made for Property (goods, merchandise, supplies, raw materials, equipment, etc.)

Companies will be required to submit accurate TIN information or face monetary penalties

The provision in the health care law is aimed to reduce the gap between income that individuals and businesses make and the federal taxes they pay, which the Government Accountability Office estimates is $345 billion

The Wall Street Journal says Congress hopes the new 1099 provision will collect $17 billion more in federal taxes and fees.

What has been changed?

• Before: Most payments to corporations were exempt from Form 1099 reporting requirements. These exemptions include: Providers of Goods, Corporations, Tax Exempt Organizations, Internal Organizations, and Retirement Plans. 1099’s are only required for a small subset of the suppliers where payments were made. This was typically well less than 10% of supplier payments.
• After: Companies will be required to submit 1099’s on all for-profit companies who receive payments greater than $600. This will typically be 95+% of supplier payments.
• The big change: Corporations have been added to the entities that require 1099 reporting this will account for the biggest increase.

What are some details surrounding the timing of the new change?

• New law becomes effective for all payments made after December 31, 2011.
• Companies should plan to start collecting and validating W-9’s & TIN’s for each supplier they will spend more than $600 with for the 2012 year.
• Companies will need to issue and submit 1099’s to suppliers and IRS early in 2013 for the year 2012.

Having closely monitored this impending law for years Lavante can help significantly to help companies automate the collection of W9’s as well as the require IRS TIN-match. At the very least this huge work load can be eliminated. We encourage people to learn more at HERE.

How will this effect AP and other financial personnel at corporations?

The new Legislation poses a significant burden to corporation that must ramp up their reporting efforts.

• Information reporting requirements bring with them the responsibility of obtaining appropriate taxpayer identification numbers (TINs) from suppliers that were not previously subject to Form 1099–MISC reporting.
• If the corporation fails to produce a TIN, or fails to properly perform their 1099 reporting, then backup withholding is required on payments 1099-application suppliers.

The new Legislation also poses a considerable increase to the amount of reporting that takes place within a business’s accounts payable system and department.

• Employers will need to implement the appropriate record keeping and data collection processes to meet the reporting requirements, including, where necessary, processes to effectively communicate the required information to third parties providing payroll administration or managing other reporting obligations.

The monetary risk is expected to increases significantly.  Where companies were experiencing b notice fines at the following levels:

• $50 per each supplier that is not properly reported
• $250,000 maximum potential risk per company

The new legislature increases the levels to:

• $250 per each supplier that is not properly reported
• $1.5M maximum potential risk per company, although some sources have indicated that this number could be higher

Due to the steep increases that the new amendment poses, it is widely believed that the many aspects of the new legislation will go through an appeals process.

Gail K. from UCSF (who is now one of my favorite AP networking buddies) led an informal discussion about filing 1099′s.  She used a narrative approach and talked about evey step in the process including vendor setup, how P-cards payed into the scenario/headache, the process she inherited, and her constant negotiations with IT.  She was stopped several times along the way with very thoughtful questions.  The group would scrum on the topic and then Gail would pick back up where she left off.  With a strong “project management” background Gail made really good points throughout about learning from mistakes, training her staff the “right way” and about empowering her people on a go-forward basis.

The group was small, but represented a number of big companies and unfortunately I do not believe today’s meeting attendees will be traveling to Dallas for tha annual IAPP conference.  This saddens me, because I can clearly see that there is a huge need for more networking. 

This is a very difficult landscape for Accounts Payable and I think the need to connect with with peers has grown in parallel with constantly expanding job duties.  In my opinion it is more necessary now to force the time into your schedule to attend chapter meetings or webinars or even to log on and follow a LinkedIn conversation.  You will not only benefit from the information that is circulating, you will be suprised by how much other people need to hear what you have to say.