@Stratburst wrote:
Based on the groups input it's clear form 8919 does not apply to my situation. I have taken a closer look into my situation and provided additional details and clarifications below. Also note this is for tax year 2019. I apologize for failing to mention this as it appears to be significant in my case.
- Tax year: 2019
- The hotel is a franchise
- The franchise owner contracted with management company to operate the hotel
- The franchise owner and the management company are separate entities
- I am employed by the management company as a sales director, my W-2 is from the management company
- The "incentive" bonus was paid by the franchise owner, not the management company
- The 1099-MISC provided by the franchise owner reports the bonus in box 7 as nonemployee compensation. No other boxes are completed.
Based on this information does it appear that a SPIFF applies to my situation employed as a salesperson for a hotel or will I have to handle this as self employed income? Frustrating because the bonus was only $1k, not worth the time I've spent trying to discover how to properly report it especially if I'm on the hook for self employment taxes on it. I appreciate everyone's input!
I'm starting to get unclear again, because you are talking about a franchise owner and a management company but not a franchisee.
Now, you have big name hotel chain (let's say, "SingleTree."). That's the franchisor.
Then you have someone who pays SingleTree a licensing fee to operate a hotel, it might be a person or a company, but that company is the franchisee, we'll call them "LocalHotelOperator LLC". LHO might hire their own staff who are employees of LHO.
Or, LocalHotelOperator might contract with a hospitality management company to actually staff the hotel, especially if LHO doesn't have much experience. There's a big national firm I'm thinking of that does hospitality contracting all over the country if you know what to look for, and the house staff of the hotel are employees of the hospitality company, and not LHO. And in fact, I know of one particular location where there are 4 different hotel brands on the same property, all owned by the same local operator, and operated buy the same contractors, but they are franchises of 4 different national brands.
Now here's my confusion:
If you are an employee of LHO, and the national chain SingleTree pays you a separate bonus, that's probably a spiff, since you are not an employee of SingleTree and don't have any direct obligations to them. Likewise if you are an employee of the hospitality contractor, and SingleTree pays you a bonus, that's probably a spiff.
But if you are an employee of the hospitality contractor, and the Local Hotel Operator (the franchisee) pays you, I don't know what that is, since it is not the same kind of hands-off relationship, and you are more or less under contact to LHO, although it is indirect. Although I may be overthinking it.
Finally, the fact that it was reported in box 7 means that the IRS will automatically consider it to be self-employment income, and if you report it as a spiff (as "other income" not subject to self-employment tax) you will get a letter from the IRS demanding payment or a good explanation. You might have a good explanation here, but it does at least mean that the hassle won't end when you file your return.
