Did you know that for each 1099 your market center sends out with an incorrect TIN (SSN/EIN in the US, SIN/BN in Canada), the IRS penalty fee starts at $250 per incorrect TIN? That’s a pretty expensive clerical error that could be avoided!
Each month, MCAs add, re-add, transfer in, and dual affiliate new Associates as part of recruiting. You may enter a new Company (Incorporated Associate) for an associate who has recently formed an LLC for themselves or their team or a new Outside Broker (Add Outside Broker) you’ve never sent a referral fee to before. And you may also have a market center vendor (Enter Vendor into AccountEdge) – like a cleaning person or painter or local gift supplier – who should be issued a 1099 for services or goods provided.
Each of these entities – SSN for associates and EINs for Companies and Outside Brokers – will get a 1099/T4A for commission income, and here’s how to make sure that you have the right SSN/EIN on that 1099/T4A: TIN Verification.
- Sovos subscribers – this is included for free in your annual subscription – just 4-5 corrections found a year covers the cost of the annual subscription
- IRS Taxpayer Identification Matching Tools – the IRS provides a free TIN Matching service online
The Year-End Associate 1099 Proof Report will display all of the TINs that should be verified for the current year's tax documents. When you choose to save this as a file (fourth option in the ad hoc print settings in the lower left), you can then open the file up in Excel and prepare a name and TIN file for Sovos and/or the IRS verification systems. Canadian market centers using Lonewolf should follow the Lonewolf instructions for TIN verification.
NOTE – this TIN verification is for
- Associate SSN/SINs,
- Associate’s Company EIN/BNs,
- Outside Broker EIN/BNs,
- Co-Broker EIN/BNs,
- Market Center Service vendors EIN/BNs - make sure these are set up correctly in AccountEdge/Lonewolf.
It’s important to start your monthly TIN verification now and add this to your monthly transmittal prep checklist so that it’s all done by the time you are running 1099s in January.
Taking this step monthly will begin to get you set up for a great End of Year experience around 1099/T4As.