1099 Reporting for the Transportation Industry

Internal Revenue Service|Tax|Transportation & Logistics

By Jim Gilboy

Every January here at Schneider Downs, we receive many questions from our clients related to the requirement to send or receive the Form 1099-MISC. In general, any payment for services by a non-employee that is $600 or more should be reported on a Form 1099-MISC. Generally, the form is not required if the payments are made to a corporation (or a LLC that has elected to be treated as a S or C corporation) unless the payments are made to attorneys.

There are certain exceptions to the general rule, and one of the exceptions is very important to the transportation industry. Section 1.6041-3 ( c ) of the Income Tax Regulations exempt freight payments from 1099 information reporting. This exception applies to reporting of payments for truck, rail, ship and air freight services.

The follow-up question that we receive is how the Form W-9 should be completed since no Form 1099 reporting is required. The instructions to the Form W-9 do not address this situation. The exemptions that can be listed on the form apply solely to back-up withholding and FATCA (Foreign Account Tax Compliance Act) reporting. One option would be to complete the Form W-9, but to add the following statement to the top of the form: Exempt from Form 1099 Information Reporting by Reg. 1.6041-3 ( c ).

If you have questions on this or any other tax matters please contact us.

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2018 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.