Blog

IRS Promises Clarity on Crypto Tax Regulations This Month

For the second time in the last month, the IRS has alluded to forthcoming guidance related to cryptocurrency and digital asset transactions.  IRS Commissioner Charles Rettig said in late May that clarification on crypto tax regulations might arrive by the end of June and gave further hints as to what might be included in the […]

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What the Sovos Acquisition of ETM Will Mean for Insurers, Financial Institutions

It’s been quite a week at Sovos. Hours after announcing Sovos’ intent to acquire Foriba, expanding our geographic footprint into Turkey and bringing together the pioneers of e-invoicing compliance, we shared our plan to expand into new and existing markets in the U.S. with the acquisition of Eagle Technology Management (ETM). Eagle Technology Management (ETM) […]

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TIGTA Audit Highlights Gaps in IRS Withholding Controls

The Treasury Inspector General for Tax Administration (TIGTA) reported results of a recent audit of the IRS internal controls in place to ensure that the withholding reported on information returns (i.e., Forms 1099) is accurately reflected on Form 945, Annual Return of Withheld Federal Income Tax, and that those amounts were paid to the IRS. […]

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Cryptocurrency Taxes: IRS Responds to Pressure from Congress

After four separate letters from members of Congress urging the agency to release clarification on cryptocurrency taxes, IRS Commissioner Charles Rettig finally responded to Representative Tom Emmer, R-Minn., on May 16, with confirmation that clarification is forthcoming. While Rettig’s letter did provide some specifics on what the guidance would cover, it did not include a […]

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How to Prepare for 1099 Reporting Changes to Come in the Gig Economy

There has been a lot of attention paid to “gig” economy workers lately, and that includes some scrutiny by state and federal tax authorities. The growing impact to tax revenue as a result of under-reporting of income and minimal payments of self-employment taxes from this ‘new’ sector of American workers has not gone unnoticed. Academic […]

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Best Practices for Coping with the IRS Crackdown on 1099 Backup Withholding

Background Generally, under Internal Revenue Code 3406(a)(1)(A), when a payer of US source income fails to collect a US tax identification number (TIN) in the manner required for the type of payment being made, 24 percent backup withholding is applicable at time of payment. Filers are required to remit those amounts to the IRS and […]

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Congress Puts Pressure on IRS to Clarify Cryptocurrency Tax Policy

For the second time in less than a year, members of Congress have sent a letter to the IRS imploring the agency to provide guidance on its policy for cryptocurrency taxation and related tax information reporting. This time, there is a deadline for the IRS to respond. Led by Minnesota Republican Tom Emmer, 21 members […]

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Social Security Administration W-2 Correction Letters Could Serve as Warnings

Some organizations might have been surprised recently to receive a correction letter from the Social Security Administration (SSA) requesting corrected information on Form W-2 due to a name-social security number (SSN) mismatch. Although there is no penalty associated with the SSA letter, it could serve as a warning to help organizations stave off penalty notices […]

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Form 1099 Reporting Corrections: Best Practices to Maintain Compliance

Tax Year 2018 brought important and likely unwelcome changes for organizations filing Forms 1099. At the same time the IRS eliminated the 30-day extension of time (EOT) for filing Forms W-2 and 1099-MISC reporting non-employee compensation, the agency also increased penalty amounts for late or incorrect filings. As a result, the number of incorrect or […]

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New IRS Program Increases Focus on Backup Withholding

In a recent presentation at the American Payroll Association’s Capital Summit in Washington D.C., IRS Director of Examination Operations and Specialty Tax Daniel Lauer announced upcoming changes to the way the IRS monitors and manages backup withholding in relation to Forms 1099. After reviewing feedback and anecdotal evidence from its income tax agents and tax […]

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How to Respond to the Growing Challenges of 1099-R Reporting

The demographics don’t lie: Reporting for form 1099-R is only going to grow more difficult as baby boomers retire. The form used to report distributions from IRA, pensions, annuities and other similar retirement accounts is poised to explode in volume. As such, financial institutions (FIs) and insurance companies can’t afford to mishandle 1099-R reporting. The […]

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As Legal Sports Gambling Grows, So Does Growth in W-2G Reporting

With the NCAA basketball tournament approaching, the US is gearing up for its biggest gambling weeks of the year. And while most “March Madness” pools might technically be illegal, legitimate sports betting is sweeping the US following last year’s landmark Supreme Court decision allowing states to legalize sports gambling in casinos.   As legal sports […]

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IRS Notice Is a Reminder that ACA Is Still in Place

The IRS recently published a notice reminding filers that, despite the repeal of the individual mandate of the Affordable Care Act (ACA) in last year’s tax reform bill, individuals must still indicate on their returns whether they had health coverage. The ACA remains the law of the land for Tax Year 2018, with individuals still required to […]

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TIGTA Report Could Trigger IRS Action on 1099-K Threshold

The Treasury Inspector General for Tax Administration (TIGTA) recently released a report making some significant recommendations to the IRS to improve taxpayer compliance in the gig economy. While the scope of the audit was intended to focus on compliance with self-employment taxes, the TIGTA quickly realized that the threshold and transaction limits for form 1099-K […]

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Government Shutdown, New Tax Law to Blame for Weak IRS Processing Numbers

It shouldn’t come as a surprise that the volume of returns received and processed by the IRS is down this filing season compared to last year. The question is why, and the answer likely has more to do with the government shutdown and new tax law than with filers missing deadlines. Although it is early […]

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IRS Forms 1099-MISC vs. 1099-K: States Close Tax Reporting Gap

The rise of the so-called “gig economy” in the US has exploded in the last few years – last year, the Bureau of Labor & Statistics reported that 55 million people in the US are “gig workers” which represents about 35 percent of the US workforce — and it is supposed to rise to an […]

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3 Reasons Why Financial Institutions Struggle with Use Tax Management

It is the “other” tax, the one that doesn’t generally get the attention that income tax gets. But use tax can be full of nasty surprises for financial institutions (FIs) that don’t have it under control. With jurisdictions cracking down with audits, developing processes to handle use tax is becoming a significant concern for financial […]

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3 Major Challenges Insurers Face with 1099 Reporting

Note: Sovos attended a series of Insurance Accounting and Systems Association (IASA) events in 2018. What follows are some observations from speaking with attendees at those events. Like any other type of company, insurers are not immune to the complexities of 1099 reporting. The cumbersome chore, which most insurance companies tend to take on primarily […]

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Make Tax Compliance the Core of Your Financial Management Suite

As global enterprises further their digital transformation initiatives to move financial applications to the cloud, many are at a crossroads with how they choose a deployment strategy that consolidates disparate financial and other departmental solutions and processes. Many organizations that consolidated under the auspice of a single enterprise resource planning (ERP) solution to combine administrative […]

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IRS Uses Unprecedented Methods to Enforce ACA Reporting Penalties

With recent enforcement measures, the IRS has offered definitive proof that the Affordable Care Act (ACA) is still alive and that the agency plans to strictly enforce ACA reporting. Last spring, the agency issued Letter 226J to Applicable Large Employers (ALEs) that failed to cover 95 percent of employees. ALEs are companies with 50 or […]

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