Selling Tax Forms? Here's What You Need to Know
In a time when people are grasping for control, Benjamin Franklin’s infamous commentary on death and taxes carries a whole new meaning. But, don’t forget that life’s inevitabilities also extend to constant and complex tax law changes.
New for the upcoming tax reporting year is the 1099-NEC form. What is it? In a nutshell, this form was introduced to be used by people who rely on the 1099-MISC form to report non-employee compensation (see Box 7 of the 1099-MISC).
“This means that if a business reports payments to contractors and has reported this in Box 7 of the 1099-MISC, [it] must now use the 1099-NEC,” said Kyle Janssens, senior brand manager for Broker Forms, Grand Rapids, Mich. “The IRS estimates this impacts over 70 percent of all 1099-MISC forms.”
Why is that good news? Chances are, most filers of the 1099-MISC will need to replace their forms with a new 1099-NEC, and distributors can help. Experts, like Broker Forms, are ready and able to educate resellers on these tax form updates, ensuring they secure the order.
Here, Janssens expands on the thought process behind his company’s latest contributions to the tax sector.
How is Broker Forms helping distributors navigate changes regarding the 1099-NEC form?
Kyle Janssens: Broker Forms is helping distributors understand this change and the impact it has on businesses. We do this through a full suite of compliance information and tools we provide, along with a full listing of all 1099-NEC forms and how a business that has filed a 1099-MISC will need to make that switch. This includes a listing of all changes to regulations and forms on an annual basis, information on new forms, a complete list of deadlines and number of parts of forms required by state.
How is this profitable for your distributor client(s)?
KJ: This can give the distributor the opportunity to educate their customers on this change, which can increase the amount of forms needed this next filing season if their customers now need both a 1099-MISC and NEC form. They can also secure new business by making businesses aware of this new form filing requirement.
Are you or your distributor clients encountering any challenges with this particular promotion? If so, how do you plan to overcome them?
KJ: Many businesses might not know about this new form for 2020 and they will just go ahead with repeating their orders from previous years. This could cause a problem if businesses order their traditional 1099-MISC forms, but actually need the new 1099-NEC forms instead. Distributors need to get in front of their customers and explain this new requirement to prevent customers from ordering the wrong forms and having to do reships later in the year. Also, customer frustration could be high if they feel they were not told about this new requirement. This is why Broker Forms is providing all of our distributors the tools and resources they need to effectively communicate this to their customer base.
Do you have any advice for distributors interested in selling to the tax market?
KJ: Do not try and take on compliance and regulatory issues yourself. There are a lot of changes every year, and they can distract your goal of selling products if you have to learn all the regulations, compliance changes and form changes year-over-year. [Therefore,] it is crucial to make sure your supplier has the expertise and resources to support you in selling these products.
Is there anything you would like to add?
KJ: [We have] employees who are on government advisory panels and members of key industry organizations. We provide the latest information that we have from the IRS, SSA and state agencies directly to our customers. This ensures that these distributors can pass this information along to their customers and become that valuable resource that those businesses need regarding tax reporting.