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Article – Compliance

A Refresher What is a non-U.S. person? You need to know the answer to that in the context of payment reporting to the IRS. What income of a non-U.S. person do you have to report? These are just two of the many questions that arise when you gather tax IDs and classifications in preparation for 1099 and 1042-S reporting. Did you know the U.S. tax code does not explicitly define non-U.S. persons? Rather, the code defines them by exclusion. The code defines a U.S. person. If one is not a U.S. person, then by definition of exclusion, they are a non-U.S. person. Easy! We should point out here that “person” has a broad definition that includes entities as well as individuals. Entities are corporations, trusts, partnerships and estates, as well as individuals. Any entity formed under U.S. laws is considered a U.S. person, and for our purposes here, is subject to 1099 reporting. (Said persons should submit a W-9 to your organization.) Oh, and one more thing. Resident aliens are considered U.S. persons too. Those persons and entities that do not fall within those are non-U.S. persons. You report the payments you make to them on a 1042-S. They should submit their tax information and...

Ready, set … check your vendor tax IDs. We’re well into the 4th quarter. It's time to think about 1099 reporting. That means having correct tax IDs for your vendors. First, you need to be sure you have a tax ID for each vendor. Second, you will save trouble later if you take the time before you file 1099s to verify your vendor TINs through the IRS TIN Matching program. (It’s better to have done this at vendor onboarding!) And as you get set for 1099 reporting, be aware. This time around (as you read here a year ago) you have a new form 1099 to file. 1099-NEC To report non-employee compensation for 2020, you must file the newly revived form 1099-NEC (non-employee compensation). The change is an effort to sort out the confusion resulting from the shift in reporting deadlines enacted in the 2015 PATH Act. The Act required you to submit 1099-MISCs by January 31 if they included non-employee compensation reporting in box-7. “NEC” reporting now has its own form. Never fear, our old friend 1099-MISC is also still required. Use the 1099-MISC to report royalties, rents, health care payments, etc., as before. Those are due to recipients by January 31st and to...

Have you gotten yours? Not tricks or treats, nor a political surprise. The other October surprise: CP2100s! Twice a year, in spring and fall, the Internal Revenue Service (IRS) sends out forms CP2100 and CP2100A. They address missing or incorrect taxpayer-identification numbers (TINs) on 1099 payment reporting. Whether you get a form 2100 or 2100A depends on the number of bad TINs. If you are a recipient, you must act. Your response depends on the particulars of each notice. Here’s a quick refresher on what to do. Incorrect TINs First, check the vendor TIN in the IRS notice against the TIN in your records. Are they different? Then an error was apparently made in the 1099 filing. Correct your records as necessary. You do not have to send a B-notice to the vendor, but ensure you report the vendor’s correct TIN next time. However, if the TIN in the CP2100 matches what you have as the vendor’s TIN, the TIN is incorrect. In that case, you have 15 days to issue a “B Notice” (“B” for backup withholding) to the vendor. The B-notice explains that they need to send you a corrected TIN (stat!) or you will begin backup withholding. If you do not receive a...

It is that time of year. IRS Notices 972CG, proposed penalty notices, are out. The IRS typically starts mailing the notices in late July. The process continues through August. How do you “qualify” for a 972CG? Try filing 1099s late. Or fail to file at all! Penalties are also assessed for filing 1099s in the wrong format. Do you have more than 250 1099s to file? Then you must file electronically, not on paper. The other big way to get a penalty assessment is to file 1099s with incorrect or missing taxpayer ID numbers. (We told you to get and check those W-9s!) And you’ll get zinged for “any combination” of the above. See the penalty rates here. But—good news—you might not have to pay the full amount shown on the 972CG. The form is a proposed penalty, not a final assessment. It is possible to reduce the amount or persuade the IRS to waive the proposed penalty altogether. To avoid part or all of the penalty, though, you must act promptly. You have 45 days to respond to the Notice. If you look at the list of offenses and see that they’ve got you dead to rights, just return the acknowledgment, payment slip and your...

[vc_row css_animation="" row_type="row" use_row_as_full_screen_section="no" type="full_width" angled_section="no" text_align="left" background_image_as_pattern="without_pattern"][vc_column][vc_column_text] It’s finally out. On December 31st the IRS released the 2020 mileage rates used to calculate deductible costs of using a personal car for business, charitable, medical or moving expenses. Once upon a time the IRS put the rates out in early-to-mid-December. Maybe they were trying to stay abreast of the rapid 21st century news cycle. Never mind that it’s a quixotic quest — two days later came news that would immediately cause a spike in oil prices, though not on the order of 2008. [unordered_list style="circle"] The new rate for business miles is 57.5 cents per mile. That’s a decrease from the 2019 rate of 58 cents. The rate for miles driven for medical or moving expenses is 17 cents, down three cents from 2019. The rate for miles driven on behalf of charitable organizations is 14 cents, unchanged from 2019. [/unordered_list] Here’s a chart of the past 10-year history of IRS mileage rates for business use of a personal vehicle: Year Business Rate (cents per mile) 2020 57.5 2019 58.0 2018 54.5 2017 53.5 2016 54.0 2015 57.5 2014 56.0 2013 56.5 2012 55.5 2011 July-December 55.5 2011 January-June 50.5 2010 50.0 A complete history of the other rates (charitable, medical, moving) can be found here: Also the end of this month marks the filing deadline for the new form 1099-NEC non-employee...

[vc_row css_animation="" row_type="row" use_row_as_full_screen_section="no" type="full_width" angled_section="no" text_align="left" background_image_as_pattern="without_pattern"][vc_column][vc_column_text] It may be the season of giving, but we’re guessing a "gift" to the U.S. Department of Treasury is not on your list. Whatever the season, though, beware. OFAC happens! Most recently it has happened to Apple. On November 25th, the technology giant entered an agreement with the Treasury Department to pay a civil penalty of $466,912. The fine is to settle Apple’s violations of the Foreign Narcotics Kingpin Sanctions involving interactions with a Slovenian company SIS and its owner Savo Stjepanovic, both on the SDN list. (We’re not making this OFAC stuff up.) According to Compliance Week, the Office of Foreign Assets Control (OFAC) called Apple’s violation a “reckless disregard for U.S. sanctions requirements,” though the publication points out that the settlement was not too hefty. Another account, by financial news site Benzinga, relates that the violation was due to a failure of Apples’ compliance screening tool. Apple had done business with SIS d.o.o. (“d.o.o. is a standard corporate suffix equivalent to “LLC”) starting in 2008. In 2015 SIS and its owner were added to the SDN list. But Apple continued to do business with SIS for two years. It did not catch that SIS...

[vc_row css_animation="" row_type="row" use_row_as_full_screen_section="no" type="full_width" angled_section="no" text_align="left" background_image_as_pattern="without_pattern"][vc_column][vc_column_text] The General Electric Company, e.l.f. Cosmetics, Expedia, Atradius Trade Credit Insurance and Stanley Black and Decker are in a special club. All of these organizations have paid civil penalties in 2019 for sanctions violations. Individual settlements ranged from $325,000 to $2.7 million are all part of $1.28 billion in civil penalties levied by OFAC so far this year. So no. You do not want to join that club. (And you don’t even want to know about the club of criminal violators.) How do you avoid the club? Well, for help, in June of 2019 the Department of the Treasury issued guidance on how to create a framework for an effective sanctions compliance program. (See InvoiceInfo’s OFAC Publishes Guidance for Sanctions Compliance Framework.) Now attorney and compliance expert Thomas Fox has written a series of articles providing additional guidance in setting up a good compliance program. Fox, who is a “compliance evangelist,” has published The OFAC Compliance Framework in three parts (plus an introduction that includes a tribute to legendary drummer Ginger Baker — check it out!) through JD Supra. The three parts, or elements, are: [unordered_list style="circle"] The OFAC Compliance Framework: Element 1 – Management Commitment The OFAC...

[vc_row css_animation="" row_type="row" use_row_as_full_screen_section="no" type="full_width" angled_section="no" text_align="left" background_image_as_pattern="without_pattern"][vc_column][vc_column_text] New U.S. sanctions have come steadily this year. It can be hard to keep up. Persons and organizations from Venezuela to Iran, Russia to the Congo, and elsewhere, have been added to prohibition lists, which continue to change. Sanctions are complex. OFAC regularly enforces them, levying fines on companies it thinks has violated them. And, according to Attorney Michael Volkov, CEO of The Volkov Law Group, “OFAC regularly pushes the limits of its jurisdiction. They’re not afraid to test the boundaries ...

[vc_row css_animation="" row_type="row" use_row_as_full_screen_section="no" type="full_width" angled_section="no" text_align="left" background_image_as_pattern="without_pattern"][vc_column][vc_column_text] Non-Compliance Risk in 1099 Reporting Are you a gambler? Do you look forward to a conference in Las Vegas so you can get in a little action? How about when it comes to IRS compliance? No doubt it would be a thrill not to hear from the IRS if you veer widely outside of the lanes of IRS compliance. But what are your chances? VendorInfo has answers in its newly published survey report 2019 Vendor Onboarding Management & Compliance Survey. The report looks at three potential consequences of compliance failure: B-notices, 972CG Notice of Proposed Penalty, and audit for review of compliance with respect to accurately documenting and validating payees. In the first case, B-notices, a failure to include a vendor’s tax ID number (TIN) on a 1099 or a mismatch between vendor name and TIN on the 1099 will result in receiving a “B-notice.” The “B” is for backup withholding, which is required when you lack a correct TIN for a vendor. What you actually receive is a notice CP2100 or CP2100A from the IRS. Upon receipt, you have to take certain steps right away in order to either correct the problem or begin backup...

It’s January and we’re taking a break from our usual topics to ask: Have you reset your mileage rates? In case you missed it, the IRS announced a change for 2019. The deductible rate for mileage has increased as of January 1. The new rate for business mileage (for cars, vans, pickups or panel trucks) is 58 cents, an increase of three-and-a-half cents over the 2018 rate. Rates for medical or moving purposes increased two cents to 20 cents per mile, while the rate for charitable organizations remained unchanged at 14 cents. Businesses may reimburse employees for business miles at whatever rate they wish, whether at, less or more than the IRS-set rate. However, any reimbursement greater than the IRS rate of 58 cents per mile must be reported as income to the employee. Most organizations polled reimburse at the IRS rate, while a few reimburse under the IRS cap. Despite the current lower gasoline prices, the new rate is the second highest in the last 20 years, a half-cent less than the rate for the period of July – December 2008. That year saw a precipitous rise to record heights in the price of oil (more than double the start of...

Stop Calls and Emails, Enhance
Service and Increase Profit!

InvoiceInfo saves labor hours and cost by helping suppliers and internal staff easily and instantly get answers online to their invoice-payment questions.

If you are like many finance leaders today, you are being challenged to reduce costs more quickly. InvoiceInfo delivers real bottom-line results almost immediately, allowing you to deploy your customer service staff to focus on more productive, bottom-line oriented tasks.

Let us show you how InvoiceInfo's vendor self-service portal can help your organization eliminate invoice inquiry emails and calls while enhancing service to your accounts payable customers.


Get Up and Running Quickly and Seamlessly

InvoiceInfo and VendorInfo are standalone applications that can be up and running in as little as two weeks, with little or no IT resources required.

The faster your online portal is up and running, the sooner you will start reaping the benefits. InvoiceInfo and VendorInfo are dedicated solely to helping AP and procurement departments slash the time and expense of servicing vendors, while improving customer service for their suppliers.

InvoiceInfo and VendorInfo are simple solutions with big results. They are easy to implement and easy to use. Here’s how one customer described the process: “You give vendors a URL, provide instructions about what they need to know and tell them to go use it.” It really is that easy.


Improve Productivity with a Self-Service Solution

For most organizations, deploying a technology solution is a significant investment, and like most investments, the decision point ultimately comes down to the expected return on that investment.

According to a recent benchmark study by The Accounts Payable Network, 60% of AP customer service calls are from vendors while 40% are from internal customers. Vendor issues actually make up even more of the AP call volume than the 60% identified. Many times when a vendor has an issue, the vendor contacts their buyer or purchasing representative, who in turn contacts AP. Even though the call comes from an internal customer, the question originated with the vendor.

Vendor calls affect productivity in your organization exponentially. When vendors call the requisitioner, they are affecting that person’s productivity. Your internal customer’s productivity shrinks when fielding the vendor’s call and again when making the follow up call to AP and getting back to the vendor. Finally, AP’s productivity suffers as a result of the internal customer’s call, the payment status research and the follow-up communication.

With a minimal investment of IT time and talent, you can start reducing customer service calls and expense in a matter of weeks. In addition, you improve vendor relations since you are giving your vendors what they want — answers to their questions immediately — a win-win for everyone involved!


Easy and Economical Solution to Serve Vendors Around the World

InvoiceInfo can help you provide best-in-class customer service to your vendors around the world at a fraction of the cost.

Many organizations today have offices and operations throughout the world and are dealing with many time zones, different languages, and in some cases multiple ERP systems. InvoiceInfo currently supports different languages and can easily work with multiple ERP systems in different locations.

The key to good customer service is to provide the information that the customer wants when they want it. Whether your customer is a vendor waiting for a payment or a colleague that needs information on payment status, they want their information right away. If your organization has vendors and offices in other countries, they can be challenging and expensive to serve. But, with InvoiceInfo, your international vendors and internal customers can access the information they need when they need it.

With InvoiceInfo, you won’t have to staff your customer service team with 24-hour coverage in multiple languages to provide high-quality customer service around the world.


Enhance AP’s Role As a Strategic Partner

Learn how InvoiceInfo can help AP do more with less while continuously improving productivity and bottom-line results.

Many automation technologies such as scanning, workflow, e-invoicing, ACH, and electronic invoicing require significant investments of money, time and talent, making it difficult to get buy-in from upper management. Not InvoiceInfo!

If your goal for your AP department is to reduce costs quickly, call or email us today to learn more about how InvoiceInfo can help you achieve this goal through a quick, inexpensive and easy implementation of a vendor self-service portal.


Enhance Vendor Relationships

InvoiceInfo helps suppliers’ AR departments with simple and convenient access to invoice payment status online at a cost savings for all involved.

It may seem that the organization paying the vendor should hold all the cards in the relationship. But sometimes the opposite is true. Past-due payments and customer service perceptions can harm supplier relationships and disrupt the supply chain.

Your vendors and vendor relationship managers are living in a dynamic, fast-paced environment, so when invoice information is required, it is needed quickly and expected to be of high quality. With InvoiceInfo, your suppliers get answers to invoice inquiries real time, 24/7 with no need to leave messages and wait for responses. Studies show that confidence in data increases when suppliers access invoice and payment information themselves.


Give Procurement and Buyers the Tool They
Need to Respond to Vendors Quickly

Not only can InvoiceInfo be used by suppliers to learn the status of invoice payments, it can also be used internally within your organization.

In addition to reducing calls from vendors regarding invoice status, you can also reduce internal emails and calls from co-workers wanting to learn the status of invoice payment, and save time and effort and boost efficiency and productivity across the organization. Studies show that 40% of AP customer service calls are from internal customers. Many of these are from requisitioners who have received calls or emails from the supplier checking on payment status. These calls are often more expensive for the company because the internal staff member has taken the call or received an email from the supplier, contacted AP for the payment status and had to return the call or email the supplier.

By providing the vendor with a convenient and credible online option to get the answers it needs regarding payment status, you can eliminate multiple calls/emails between the vendor and the requisitioner saving time and money.


Eliminate Difficult Vendor Calls and See
Productivity and Staff Morale Soar

Reduce invoice payment inquiries and “promote” your vendor service team to more satisfying and profit-producing tasks.

By sharply reducing inbound calls and emails regarding receipt and payment status that your AP staff must handle individually, your staff can focus their efforts on more productive, cost-saving activities, learn new tasks, feel more confident and boost their careers.

According to a recent American Express survey on customer service, more than one-third of consumers have lost their temper with a customer service professional in the past year. Of those who lost their temper, three in ten “hung up the phone.” Your staff will no longer have to deal with difficult collectors who can be upsetting and disruptive. Your staff will feel that their time and talents are being put to better use and will feel better about themselves, their jobs and their organization. Reducing these calls can be a real productivity and morale booster for your AP department!


Simplify and Streamline Vendor Onboarding

According to Price Waterhouse Coopers, the average organization spends about $20 in labor to file each paper document, approximately $120 in labor searching for each misfiled document and $220 in re-creation of a document.

Wouldn’t it be great to have all your W-9’s, W-8’s and other registration documents completed online and instantly filed online for easy access when needed? With Vendor Self-Service Onboarding Module, VendorInfo, you can onboard your new vendors in one convenient location and eliminate paperwork and hassles.


Verify the Accuracy of Vendor Information and Stay in Compliance with IRS and Treasury Department Regulations

Government regulators are increasing the complexity of regulations and penalties associated with vendor-related non-compliance.

Penalties for incorrect 1099’s have more than doubled in recent years. Over the last several years, OFAC has levied more than $1 billion in fines against American companies or subsidiaries that did business with restricted businesses, organizations and individuals on its SDN list. In addition to fining these companies, the Treasury Department posts the names of infringing organizations along with fines paid.

VendorInfo Onboarding Module verifies the accuracy of vendor information and helps protect your organization by avoiding embarrassing penalties and fines.

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