Does a general partnership issue 1099's? Can't find info on this ANYWHERE!

[JohnatRR]

Hi all,

I'd like to know if general partnerships should issue 1099's. Our newly formed record label used the services of one company (for over $600) and one foreign (Berlin, Germany) sole proprietor (also over $600). Does the partnership need to issue 1099's or any other paperwork for either of these?

Thanks in adv,
John

[ReneeM7122]

It depends.  Foreign independent contractors, corporations and businesses do not receive form 1099. They receive form 1042-S if the payment is reportable.  You should have collected form W-8BEN-E or W-8BEN and have them claim a tax treaty for a reduced or 0% withholding rate.  It doesn't matter if the payment is coming from a general partnership, LLC, Corporation, or sole proprietorship; the reportability has to do with the recipient.

If the US company that you paid was a corporation, it does not receive a 1099, unless the payments were reportable as follows:

The following payments made to corporations generally must be reported on Form 1099-MISC.

• Medical and health care payments reported in box 6
• Gross proceeds paid to an attorney reported in box 10.
• Substitute payments in lieu of dividends or tax-exempt interest reported in box 8.

[JohnatRR]

Thank you @ReneeM7122!

Regarding the foreign sole proprietor, can you expand upon "if the payment is reportable" please? Is our general partnership responsible for them completing form 1042-S and W-8BEN? Do we submit these forms, or do they? Which of these forms, if any, must be submitted by us with our filing of form 1065, or at any other time?

Thanks again.

[ThomasM125]

You would have to review the Amounts Subject to Reporting on Form 1042-S in the following publication by the IRS to see if you need to withhold taxes:

https://www.irs.gov/instructions/i1042s#idm140156604938576

The withholding requirement includes a situation wherein you are paying compensation for independent personal services performed in the United States. That may be the stipulation that is most applicable to your situation.

[JohnatRR]

Thanks @ThomasM125, IRS deals in jargon and the grammar is hard to decipher reliably in the first sentence:

"Generally, an amount subject to chapter 3 withholding is an amount from sources within the United States that is fixed or determinable annual or periodical (FDAP) income. FDAP income is all income included in gross income, including interest (as well as OID), dividends, rents, royalties, and compensation."

My question concerns a one-time payment of around $625 to a producer who remixed a song. Given it's not annual or periodical I'm guessing that I do not need to file the aforementioned forms for this payment.

Feel free to correct me if I've misunderstood!

[ThomasM125]

@JohnatRR I would agree! Since the payment was a one-time thing, the withholding would seem to not apply. Also, it is too late to withhold taxes if you already paid the invoice!

[JohnatRR]

Thanks again @ThomasM125