I have a client who is a third party administrator for a company. That company wants the TPA to issue the 1099-MISC and LTC under the TPA's EIN...

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Q. (cont.) The TPA said the money comes out of the company's account, not their account, so they are not technically paying them. Is it proper for the TPA to submit 1099-MISC and LTC under their EIN to the IRS and the recipients?             

A. Essentially the TPA is functioning as the company’s AP, paying the company’s vendors for it? 

The question of 1099 responsibility centers first on who has management or oversight of the payment – principal control over the conditions under which the payment is made; second, who involved in the transaction has significant economic interest in seeing that the payment is made. 

While you do not include all the details in your question, it would appear that the company and not the TPA would be the party with principal control, as well as the economic interest in these transactions. (We assume the payees are vendors providing services to the company, not vendors of the TPA; and LTC payments are obligations of the company, not the TPA.)

As such, responsibility for 1099 reporting belongs to the company. The TPA may actually “administer” (issue) the 1099s, but the TINs involved should be those of the company and its vendors and payees. The TPA is just a “middleman” with no real control, operating under the direction of the company.

See 1099: Assignment of Income and Middleman Regulations – The Middleman Regulation.

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