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Will You Labor this Labor Day?
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With a long holiday weekend coming up, many of you are undoubtedly already planning how to spend that free time. Perhaps you'll have a picnic, spend a quiet day at home, or decide whether that legal settlement your company recently paid is 1099 reportable.
Although many of you will actually not be thinking about reporting legal settlements during your break, it is something that deserves your attention. This issue features some important information to help you get started. |
| Patrick Harbin – Editor
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Demystifying Legal Settlements |
Legal settlements are a tricky issue because the IRS requires organizations to report some settlements but not others. In addition, a single settlement payment may be reportable to several individuals.
Be sure to register for The Accounts Payable Network's upcoming audio conference, Demystify Form 1099 Payments for Legal Settlements, featuring Denise Johnson, Esq., General Counsel and Tax Compliance Manager, Balance Consulting LLC.
Legal settlements paid to attorneys are reportable in boxes 7 and 14 on Form 1099-MISC. Payments to claimants may be reportable in box 3. Questions to ask when determining reporting obligations include:
- Is the payment for your company's or the claimant's attorney fees? Is it a damage award?
- Are there any charges of interest included in the payment? Is it payment for back wages?
- Is the payment considered income to the claimant? If so, it is taxable and must be reported.
The answers to these questions are the key to determining whether a legal settlement payment is reportable to the claimant, the claimant's attorney, your attorney, or a combination of the three.
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| Is Sarbanes-Oxley Unconstitutional? |
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Many businesses believe that complying with Sarbanes-Oxley is expensive and time consuming. However, one accounting firm is out to convince the courts that the law is unconstitutional. Go to Patrick's Blog
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Just for Fun! |
Countless people began their day today with a delicious bowl of their favorite cereal and milk. While cereal is enjoyed in kitchens around the world, would you ever order it a trendy bistro?
The entrepreneur who opened a chain of upscale cereal restaurants hopes so. See In a Real Crunch for the story of Cereality and its battle to fight off an army of copycats.
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