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Private Clubs Newsletter

1099 Filing Season Is Upon Us: What Your ClubNeeds To Know

As the calendar turns to the New Year, many Clubs are getting ready to

close their 2011 accounts. An added task this time of year is the

preparation of 1099s for vendors, interest payments to members, and

payments to former members for the redemption of their stock certificates.

A couple of the common forms of 1099s that are filed by Clubs are

discussed in this article.

1099-MISC

The most common form of 1099 issued by a Club is the 1099-MISC which is

completed for vendors that have been paid $600 or more in rent or services

during 2011. Rent payments should be reported in Box 1 of the 1099-MISC.

Non-employee compensation should be reported in Box 7. A payment

should be reported as non-employee compensation if the following

conditions are met:

The Club made the payment to someone who is not its employee

The Club made the payment for services in the course of its trade

or business

The Club made the payment to an individual, partnership, estate

or, in some cases, a corporation; and

The Club made payments to the payee totaling at least $600 during

the year.

Some important reminders are that all payments to attorneys in the course

of the Clubs trade or business should be reported on a 1099-MISC even if

the law firm is incorporated. Generally, payments to corporations are not

reported on a 1099-MISC. Limited liability companies (LLCs) are subject to

receiving 1099s as they are not corporations.

Payments to employees under a non-accountable reimbursement plan

(e.g., $1,500 a year for dry cleaning where no receipts are required) is not

reportable on a 1099, but should be reported as W-2 compensation for

those individuals.

Contact:

New York, NY

(downtown)

212.867.8000

New York, NY

(midtown)

212.286.2600

Harrison, NY

914.381.8900

Stamford, CT

203.323.2400

Paramus, NJ

201.712.9800

New Windsor, NY

845.220.2400

Wethersfield, CT

860.257.1870

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In addition, if a Club offered credits to members for reduced dues or pro

shop credits because that member sponsored a new member to the Club,

the sponsoring member would be subject to a 1099-MISC if the credits

received were $600 or more. The amount would be reported in box 3

Other Income on the 1099-MISC.

1099-B

The new Form 1099-B requires the reporting of a members cost basis for

covered equities (membership certificate buybacks). A Club will now need

to provide a cost basis of membership certificates repurchased from

members due to resignation. The new form has several new boxes as well.

Box 1b Report date of acquisition

Box 3 Report cost or other basis

Box 6 Indicate for a "non-covered security" (note the differentverbiage on Copy B of the form)

Box 8 Report a description of the short or long-term gain

Failure to complete form 1099-B properly may subject the Club to

penalties.

All 1099s must be mailed to the recipients on or before January 31st

(with

the exception of the 1099-Bs which are due on or before February 15th

). A

copy of the 1099s and 1096s, Annual Summary and Transmittal of U.S.

Information Returns, must be submitted to the Internal Revenue Service(IRS) on or before February 29

th.

If the Club cannot show reasonable cause, failure to file a correct

information return by the due date may subject the Club to a penalty. The

penalty applies (1) if the Club fails to file timely; (2) if the Club fails to

include all required information; (3) if the Club fails to report a taxpayer

identification number; or (4) if the Club reports an incorrect taxpayer

identification number. The penalty is:

$30 per information return if the Club files correctly by March 31st

$60 per information return if the Club files correctly by August 1st

$100 per information return if the Club files after August 1st or

does not file required information returns

If any failure to file a return is due to intentional disregard of the filing, the

penalty is at least $250 per information return.

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Clubs that file more than 250 information returns must file them

electronically. In order to get approval to file information returns

electronically, Form 4419, Application for Filing Information Returns

Electronically, must be filed at least 30 days before the due date of the

returns. There is a penalty of $100 per return for failure to file

electronically unless the Club can establish reasonable cause.

The IRS has introduced a new program this year called Taxpayer

Identification Number (TIN) Matching which can be useful in the 1099

preparation process. TIN Matching allows a Club to verify the TIN and

name combinations received from vendors with IRS records before

submitting the 1099s to the IRS. TIN Matching can be done at the IRS

websitewww.irs.gov

Clubs that use TIN Matching are anticipated to receive fewer backup

withholding and penalty notices.

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pertinent facts relevant to your particular situation

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