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Effective January 1, 2001, any business
that is required to file a federal Form 1099-MISC for services received
from an independent contractor is required to report specific information
about itself and the independent contractor to the Employment Development
Department ("EDD"). According to the EDD, this information
will be used to locate parents who are delinquent in their child
support obligations.
What Information Must You Report?
You, the reporting agent and service-recipient, must report the
following three items:
1. Your:
- Business name, address and telephone
number;
- Federal Employer Identification
Number ;
- California employer account
number; and
- Social security number
2. The Independent Contractor's
(Service-Provider's):
- First name, middle initial,
and last name
- Social security number
- Address; and
3. Whether its an Ongoing
Contract (check box if applicable) OR the start date of contract,
amount of contract (including cents) and the contract expiration
date.
When Must You Report?
You are not required to report independent contractors that are
corporations, general partnerships, limited liability partnerships,
and limited liability companies. You are required to report only
if you hire an independent contractor AND:
1. You are required to
file a 1099-MISC form for the services performed by that independent
contractor, AND
2. You pay the independent contractor $600 or more or
enter into a contract for $600 or more, AND
3. The independent contractor is an individual or sole
proprietorship.
If all three of the above statements
apply, you must report the independent contractor to EDD within
twenty (20) days of EITHER making payments totaling $600 or more
OR entering into a contract for $600 or more with an independent
contractor in any calendar year, whichever is earlier.
How to Report
Fill Out the Report of Independent Contractors form (FORM DE 542)
and mail or fax it to
Employment Development Department
PO Box 997350 MIC 99
Sacramento CA 95899-7350
Fax: (916) 255-3211
To obtain forms and/or information,
call the EDD at: (916) 657-0529 or visit: http://www.edd.ca.gov/taxrep/de542.pdf
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DISCLAIMER:
This article has been prepared by Melissa C. Marsh for the
benefit of clients and friends. Although prepared by a professional,
this article should not be used as a substitute for legal
advice because your specific factual circumstances may differ,
the laws of your jurisdiction may differ, your specific
situation may require different advice, or the laws may
have changed. Readers should not act upon the information
contained in this article without first seeking the advice
of a local licensed and practicing attorney.
If you have questions
relating to this article, please call (323) 655-1002 or
email: mmarsh@yourlegalcorner.com.
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