Article – Compliance

There are minor changes on accounts payable's favorite payment reporting forms for the tax year 2022. But what could become more critical for some organizations than those minor form changes are regulations authorized in 2019. E-File Threshold The Taxpayer First Act of 2019 authorized a reduction in the threshold for electronic filing of 1099s. The threshold has been 250 forms. So, for example, if you have 250 or more 1099-NEC forms to file, you must file them electronically. But the Act authorized lowering that threshold to 100 in 2021 and 10 in 2022. Further, whereas in the past, the 250-form threshold applied to one type of form, under the new authorization, the threshold is an aggregate of all forms: 1042, 1094, 1095, 1098, 1099, 5498, 8027 and W-2. However, the IRS has yet to release regulations for the change, so no reduction has taken effect. But there is time left in 2022 for that to happen. If it does, smaller organizations that are impacted will have to establish an e-Services account with the IRS and obtain a transmitter control code (TCC). Form Changes Meanwhile, there are minor changes to payment reporting forms, but they are not substantive. Specifically, on the 1099-MISC, the FATCA filing box...

The IRS has increased the standard business mileage rate--used to deduct eligible business trips in a vehicle on tax returns--for the second half of 2022. The mid-year move is rare. Since 2000, the IRS has adjusted the rates in the middle of the year just twice before, in 2008 and 2011. The IRS typically updates the business mileage rate yearly, effective January 1. However, the sizable jump in fuel prices in 2022 has led the IRS to make the mid-year increase. While gasoline prices have eased the last few weeks, they remain nearly 50 percent higher than a year ago. The new business deduction rate is $0.625 per mile (62.5 cents), a four-cent increase over the 2022 rate effective in January. That $0.585 per mile was a two-and-a-half-cent increase over 2021. It is effective from July 1 through the end of 2022. The new rate is not the largest increase at one time. That was the mid-year jump in 2011 of 4.5 cents from $0.51 to $0.555. And the mileage rate sometimes has decreased. For example, it dropped in 2016 and 2017. IRS Commissioner Chuck Rettig says, “The IRS is adjusting the standard mileage rates to better reflect the recent increase in fuel...

Failure to Follow Controls It happened again. This time, a county government in New Mexico electronically paid $447,372 in nine different disbursements to a criminal. The alleged fraudster may be a Kenyan, but he wasn’t posing as a prince trying to get a fortune out of the country. Instead, he was a resident of Rochester, NY, who very convincingly took on the identity of one of the NM county’s approved vendors. The fatal flaw for the county was a failure to follow controls. The perpetrator emailed the county, presenting himself as the county’s IT equipment, supplies and software vendor, and requested a change in payment method from check to ACH. What happened next was a textbook violation of internal controls, and it is happening often enough to reward the time and effort put in by criminals. An accounts payable staffer, receiving the change-of-payment-method request via email, thought she was doing the right thing. She verified the request through the vendor contact. The problem was that she contacted the vendor representative listed in the email rather than going to the vendor master file to find the authorized vendor contact. That one failure of discipline led to the re-routed payments. And while the FBI recovered...

Vendor Onboarding Fraud Risk Survey What is the biggest weakness in your vendor registration and onboarding process? Lack of visibility? Lack of internal controls? Manual processes? Lack of sufficient personnel? Threats to Vendor Payments Are Non-stop in 2022 IT security teams are working overtime to protect enterprise systems against relentless attackers. Accounts payable teams must be always vigilant. Security and compliance loom large for procure-to-pay and a fraudster’s entry point might be through a legitimate vendor. Financial Operations Networks is conducting a new benchmark survey on Fraud Risk in Vendor onboarding. Please take two minutes to answer a few questions: Vendor Onboarding Fraud Risk Survey Participants will receive the survey results when complete; results will also be posted here. ...

OFAC Sanctions Russians and Others The Department of Treasury's Office of Foreign Assets Control (OFAC) list of sanctioned persons and entities has grown since Russia invaded Ukraine. But along with Russian oligarchs and entities, OFAC has also designated others, most notably two key Hizballah financiers operating out of Guinea in West Africa, in compliance with Executive Order (E.O.) 13224, prohibiting transactions with terrorists. OFAC never rests. It adds and sometimes removes persons, entities and countries to sanction lists as necessary per U.S. laws, as in the case of new OFAC sanctions on Russia and others. What does that mean for accounts payable? Simply that you have to keep up. The addition of Ali Saade and Ibrahim Taher of Guinea to the list might slip by unnoticed while the addition of Putin affiliates Alisher Usmanov, Nikolay Tokarev, Yevgeny Prigozhin and others has been in the headlines. However, OFAC's list changes. And while it does so "regularly," it is not on a schedule, and it’s not limited to “headlines!” Companies must regularly check their vendor (and customer) lists against the sanction lists to comply with U.S. law. And that check has to go two ways. First, of course, a company must run new vendors against the...

Compared to IRS Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, completing and filing IRS Forms 1099-MISC and 1099-NEC is easy! But now Form 1042-S filers have help. The IRS has announced the launch of a new online tool that enables “withholding agents” (that would be accounts payable departments, among others) to run a data quality review before filing their 1042-S forms to the IRS. The tool does not replace filing 1042-S forms—you must still submit the forms to the IRS by the March 15 deadline. But this new tool, offering a quality review of your 1042-S data, can help you identify and correct data errors as you prepare your forms for filing. Use of the tool is voluntary, but the IRS notes that it will consider its use by a filer when the IRS is "making enforcement and penalty determinations." So, consider running your 1042-S data through the tool. The tool is designed to accept Form 1042-S data in standard file formats that most back-office systems can generate. After uploading the data, the user will receive a report indicating errors and potential errors. The IRS also notes, “Even though the tool identifies data errors, the withholding agent remains responsible for making...

As companies chase down vendors' missing taxpayer identification numbers (TINs), it is helpful for the master file or AP staff to know what they are looking for.  If the TIN is wrong, it might not be immediately apparent. But if the TIN is "obviously incorrect," as the IRS calls it, the IRS treats it the same as if there is no TIN. That redounds to your company. The IRS treatment of "obviously incorrect" TINs and missing TINs is the same. And the IRS treats you to the same penalty for submitting them! Now you cannot necessarily tell if a vendor has given you an incorrect TIN that is in the correct format, but you can tell if a vendor gives you a TIN that is what the IRS refers to as “obviously incorrect.” How? By knowing the structure of the various kinds of TINs. Here is what you need to know. TIN Types There are several types of TINs, but there are three relating to vendors. The first is the social security number (SSN), used by individuals, single-owner LLCs and sole proprietors. Second, the employer identification number or EIN is used by partnerships, corporations, many LLCs and may also be used by a sole...

In the fourth quarter, accounts payable personnel must start planning for annual payment information reporting responsibilities, also known as 1099s. If you follow this newsletter regularly, you know what that entails. However, if you are new to 1099s or accounts payable (AP), here is essential information. Organizations, including not-for-profits as well as businesses, must report certain payments made to individuals and entities. There are many details on just what you must report. (A place to start is the Instructions for Forms 1099-MISC and 1099-NEC.) But our focus today is on obtaining the information you will need from your payees to comply with the reporting requirements, and the best way to do that is IRS Form W-9. What is Form W-9? Form W-9 is an IRS form for requesting and documenting tax-related information from vendors, specifically a vendor's legal name, tax identification number (TIN), and tax classification. Tax classification means what type of entity the vendor is, for example, a sole proprietor, partnership or corporation. That information is vital in determining whether your payments to it are reportable to the IRS. Now, if you follow best practices recommended by VendorInfo, you are gathering W-9s (and W-8s for non-resident aliens/foreign payees) at the start of the vendor...

It’s late September and time to plan for 1099 reporting for 2021. That means checking your vendor master for missing taxpayer-identification numbers and classifications and formulating a plan to collect and verify them by the end of the year. It also means preparing for this year's form changes. Last year saw changes to the 1099-MISC along with the re-introduction of form 1099-NEC to report non-employee compensation. This year's changes may be minor by comparison. Nevertheless, it's possible to get confused by the changes, and you need to get them right. So here they are. Form 1099-NEC Remember, now non-employee compensation payments are reported on the 1099-NEC. But last year payments made under section 6050R of the tax code, which addresses payments for fish to an individual “in the trade of catching fish,” were reported on the 1099-NEC Box 1. This year, you won't report those payments on the 1099-NEC but the 1099-MISC in Box 11. Box 1 of the 1099-NEC is for reporting non-employee compensation, excluding 6050R payments. Also, if you made sales valued at $5,000 or more for resale to a person you can report it on the 1099-NEC. Mark an "X" in Box 2 on the 1099-NEC. The sales here refer to...

The arm of the law is not only long but patient and painstaking. This month, the U.S. Department of Justice charged a former account manager for Swedish telecom giant Ericsson with conspiracy to violate the Foreign Corrupt Practices Act (FCPA). The one-time Ericsson employee facilitated the payment of $2 million to two high-ranking officials in Djibouti between 2010 and 2014. The charges come 21 months after a subsidiary of LM Ericsson pleaded guilty on a charge of conspiracy to violate the anti-bribery provisions of the FCPA, and Ericsson itself paid more than $1 billion for this and other violations. So what exactly is the FCPA, and what does it have to do with accounts payable? The Foreign Corrupt Practices Act of 1977 (FCPA) is a federal law against bribery and false accounting. And bribes, like every other payment outside of payroll, exit the organization through accounts payable (AP). It is illegal for U.S. citizens and companies to offer a foreign official anything of value to gain an unfair advantage or influence business decisions. And FCPA’s accounting provisions make it a criminal offense to falsify books and records and fail to maintain internal controls. False Contract and Invoices In the Djibouti case, an Ericsson account manager participated in...

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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.

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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.

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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!

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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.

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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.

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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.

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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.

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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!

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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.

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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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