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Contains verified 1099 decision trees (NEC vs MISC classification, corrected filing Type 1/Type 2 procedures), B-notice response protocols, and sales/use tax nexus thresholds that produce more precise answers than reasoning from general training alone. W-9 reportability, backup withholding, e-file mandate, economic nexus, exemption certificates, use tax self-assessment, marketplace facilitator rules. Consult when asked "does this vendor need a 1099", resolving B-notices, preparing corrected filings, evaluating sales tax nexus, or determining filing thresholds by tax year.
How this skill is triggered — by the user, by Claude, or both
Slash command
/bookkeeping:compliance-reportingThe summary Claude sees in its skill listing — used to decide when to auto-load this skill
Operational procedures for recurring bookkeeping-driven compliance obligations:
Operational procedures for recurring bookkeeping-driven compliance obligations: information return filing (1099 series) and sales/use tax reporting. Content is synthesized from firm reference materials and tracks law-indexed effective dates.
1099-NEC — nonemployee compensation: contractor and freelancer payments, attorney service fees. Box 1 reports aggregate payments at or above the threshold; Box 4 reports backup withholding.
1099-MISC — everything that is not services: Box 1 rent, Box 2 royalties ($10+), Box 3 other income, Box 6 medical/health care payments, Box 10 gross proceeds to attorneys (distinct from attorney service fees, which go on NEC).
The dividing line: services = NEC; rent/royalties/other = MISC. A single payee can receive both forms in the same tax year for different payment types.
1099-INT and 1099-DIV — interest and dividend payments. Less common in standard bookkeeping but may arise for C-corps with intercompany notes or investment income distributions.
Track thresholds per tax year — a payment stream that was reportable last year may fall below the new threshold.
For vendor setup procedures and payment method tracking, invoke bookkeeping:transaction-processing.
Rate: 24%. Triggers: vendor fails to furnish TIN, IRS issues B-notice for incorrect TIN, or IRS notifies vendor is subject to withholding. Report withheld amounts in Box 4 of the applicable 1099. Deposit via Form 945 (annual) by January 31.
First B-Notice (CP2100): send solicitation letter within 15 business days. Payee has 30 days to respond with corrected W-9. Begin backup withholding if no response.
Second B-Notice (within 3 years of first): payee must provide TIN validation directly from SSA or IRS — a new W-9 alone is insufficient.
Proactive defense: use the IRS TIN Matching Program before filing to catch mismatches early.
Effective TY 2024: filers issuing 10 or more information returns (all types combined — NEC, MISC, INT, W-2, etc.) must e-file. Prior threshold was 250. File via IRS IRIS (free) or third-party services.
Type 1 correction (wrong amount or code): file corrected form with the "CORRECTED" box checked, showing correct amounts.
Type 2 correction (wrong TIN, name, or form type): two-step process — file a corrected form with zeroes to void the original, then file a new form with correct information (not marked as corrected).
tax-prep:tax-planning for guidance)tax-prep:tax-planning for employee vs. contractor analysisPhysical presence nexus: office, warehouse, store, employees (including remote workers), inventory stored in-state (including Amazon FBA), equipment, or sales representatives.
Economic nexus (post-Wayfair 2018): states can require collection based on economic activity alone. Typical threshold: $100K in sales OR 200 transactions in the current or prior calendar year. Some states are sales-only (e.g., Texas at $500K). Once exceeded, registration is mandatory even with no physical presence.
For entity-level details that affect nexus (registered states, physical locations, entity
type), invoke accounting-foundation:entity-profile.
When a business purchases taxable items and the seller does not charge sales tax, the buyer owes use tax at the same rate as the home-state sales tax. Common triggers: out-of-state online purchases, trade show equipment, supplies from non-collecting sellers.
Booking: record liability when purchased; remit on the regular sales tax return (separate line). Review expense transactions monthly for untaxed purchases of taxable goods.
All 45 sales-tax states plus DC have marketplace facilitator laws. Amazon, eBay, Etsy, and Walmart Marketplace collect and remit on behalf of third-party sellers. Direct sales (own website, phone orders, in-person) remain the seller's collection responsibility. Track marketplace vs. direct sales separately.
State-specific rules vary. Key items to verify per state:
Common state forms include DR-15 (Florida), ST-3 (New Jersey), ST-100 (New York), and ST-1 (Illinois). Consult the relevant state department of revenue for current forms and instructions.
For GL account structure, invoke accounting-foundation:chart-of-accounts.
Maintain at all times: exemption certificate file organized by customer, copies of all filed returns with payment proof, nexus analysis documentation, taxability research memos, and monthly reconciliation of sales per books to sales per returns. Common audit triggers: consistently late filings, large refund claims, industry-targeted audits, nexus questionnaire responses.
For platform-specific 1099 and sales tax workflows, invoke qbo-integration:qbo-bookkeeping.
Read these for deeper detail on specific topics:
references/1099-compliance.md — Complete 1099 procedures: NEC vs. MISC classification, W-9 collection protocol, backup withholding mechanics, B-notice response workflow, e-file mandate details, and corrected filing procedures. Read when handling B-notice responses, researching corrected filing procedures, or verifying threshold changes by tax year.references/sales-use-tax.md — Sales and use tax compliance: nexus analysis (physical and economic), exemption certificate management, state-specific rule templates, marketplace facilitator laws, filing/remittance procedures, and audit preparation. Read when evaluating nexus for a new state, managing exemption certificates, or preparing for a sales tax audit.For related knowledge outside this skill:
accounting-foundation:chart-of-accounts for GL account structure — particularly liability accounts (2xxx) for sales tax payable and expense accounts mapped to 1099 boxesaccounting-foundation:entity-profile for entity details affecting compliance: registered states, entity type (determines 1099 exemptions), physical locations (nexus triggers)tax-prep:tax-planning for worker classification analysis (employee vs. contractor), foreign vendor reporting (1042-S), and state tax compliance beyond sales taxbookkeeping:transaction-processing for vendor payment tracking, payment method classification, and expense categorization that feeds 1099 and sales tax reportingnpx claudepluginhub aeyeops/aeo-basis-plugin-marketplace --plugin bookkeepingAnalyzes revenue and transactions by US state to determine economic nexus for sales tax collection obligations using Wilson tools.
Guides tax preparation client communications with federal deadlines, entity-specific requirements (Sole Prop, S-Corp, Partnership, C-Corp), deduction guidance, and estimated payment rules.
Guides users through federal tax return preparation using the opentax CLI, handling W-2s, 1099s, schedules, and credits.