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  1. #1
    Full Member Lanny's Avatar
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    Question I.R.S. Form 1099-MISC for 2012 tax year
    Early today, I sent an email to LinkShare Publisher/Affiliate Support, requesting that they send me my I.R.S. Form 1099-MISC for the 2012 tax year, as a . pdf attachment, in an email, because the paper version they are required (as I understand it) to mail to me by January 31, 2013 did not arrive.

    This morning, in my email to them, I attached .png files, showing the commissions LinkShare had paid to me, during 2012. In previous years, LinkShare has sent the I.R.S. Form 1099-MISC to me.

    Below is the reply I received, from someone in LinkShare Publisher/Affiliate Support. The commissions LinkShare paid to me were well below the $20K amount mentioned in the reply from LinkShare. However, the commissions I received are above what I believe is the I.R.S. threshold for a payor that requires the payor to send the I.R.S. Form 1099-MISC to someone they have paid.

    Question: Is this LinkShare employee correct and I do not understand the I.R.S. regulations on this, or, does LinkShare not understand the I.R.S. regulations on this?

    "Thank you for your email!

    We apologize for the inconvenience caused to you. Please note that LinkShare does not send 1099-MISC forms to publishers. The IRS requires that LinkShare send 1099-K forms to publishers that are so eligible. If LinkShare paid you $20,000 or more, based on 200 or more transactions (referred sales) from your account, you will receive a 1099-K; this holds for all legal entity types including Inc.ís, Corp.ís, Ltd.ís, LLCís, etc.

    If you have any questions regarding whether or not you have to include your LinkShare earnings in your tax filing with the IRS, please seek the guidance of a certified tax advisor."

  2. #2
    ...and a Pirate's heart. Convergence's Avatar
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    Quote Originally Posted by Lanny View Post

    "Thank you for your email!

    We apologize for the inconvenience caused to you. Please note that LinkShare does not send 1099-MISC forms to publishers. The IRS requires that LinkShare send 1099-K forms to publishers that are so eligible. If LinkShare paid you $20,000 or more, based on 200 or more transactions (referred sales) from your account, you will receive a 1099-K; this holds for all legal entity types including Inc.ís, Corp.ís, Ltd.ís, LLCís, etc.

    If you have any questions regarding whether or not you have to include your LinkShare earnings in your tax filing with the IRS, please seek the guidance of a certified tax advisor."
    Never heard of a 1099-K from a network. That's usually reserved for 3rd party payment processors such as PayPal (and is actually a tad redundant). So, if you receive commissions or sales processed through PayPal that is $20,000/more AND 200/more transactions, then PayPal will send you a 1099-K. However, any network paying you should also be sending you the 1099-MISC.
    Salty kisses, Sandy toes, and a Pirate's heart...

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  4. #3
    Full Member Lanny's Avatar
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    LinkShare has sent the Form 1099-MISC to me in past years
    Quote Originally Posted by Convergence View Post
    Never heard of a 1099-K from a network. That's usually reserved for 3rd party payment processors such as PayPal (and is actually a tad redundant). So, if you receive commissions or sales processed through PayPal that is $20,000/more AND 200/more transactions, then PayPal will send you a 1099-K. However, any network paying you should also be sending you the 1099-MISC.
    Thank you. In past years, LinkShare has sent the I.R.S. Form 1099-MISC to me, so, as I wrote to the LinkShare employee who sent that to me today, I am astonished by this.

    The last part of what was written had to do with getting tax advice, about whether or not I need to report this income on my Schedule C. I believe LinkShare is required to report the money they paid to me to the I.R.S.; so I certainly plan to report that income to the I.R.S., on my tax return for 2012.

  5. #4
    ...and a Pirate's heart. Convergence's Avatar
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    The 1099-K was implemented because of people receiving money through PayPal, etc. for selling on eBay, etc. and not reporting their sales income. Would think that Amazon and the Google Checkout would also send them. I know for the 2011 tax year PayPal was sending out requests for Social Security numbers and EINs to those who did not have one on file...
    Salty kisses, Sandy toes, and a Pirate's heart...

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  7. #5
    Full Member Lanny's Avatar
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    Commissions paid were via Direct Deposit to U.S. bank account
    All of the money LinkShare paid to me for commissions, during 2012, was paid via Direct Deposits, to my bank account, in a U.S. bank. That is how they paid me in previous years and for those years, they sent me the I.R.S. Form 1099-MISC so I do not understand this......

    I believe LinkShare is wrong about this, however, I am not positive that LinkShare is wrong about this.

    I would like to have the Form 1099-MISC to use, when I do my Form 1040 for the 2012 tax year. Whether or not I have the Form 1099-MISC, the earnings will be reported on my Schedule C.
    Last edited by Lanny; February 15th, 2013 at 03:07 PM. Reason: corrected one word

  8. #6
    ABW Ambassador LinkShare Moderator's Avatar
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    Lanny,

    Rakuten LinkShare will not be sending 1099-MISC to publishers. The helpcenter article below has the information the agent provided you but also shows how you can calculate how much you have been paid in 2012.

    LinkShare Publisher Help Center :: When will LinkShare send me a Form 1099?

    We do advise that you speak with your tax consultant on the best way to report this to the US government.

    --Ranae

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  10. #7
    ...and a Pirate's heart. Convergence's Avatar
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    Guess Linkshare considers themselves "Third Party Network" payers...

    Quote Originally Posted by IRS.gov
    Form 1099-K.

    Payment settlement entities may have to report merchant card payments and third party network payments on Form 1099-K instead of Form 1099-MISC. See the separate Instructions for Form 1099-K.
    Instructions for *Form 1099-MISC (2012)
    Salty kisses, Sandy toes, and a Pirate's heart...

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  12. #8
    Full Member Lanny's Avatar
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    Smile @Ranae Thank you
    Quote Originally Posted by LinkShare Moderator View Post
    Lanny,
    Rakuten LinkShare will not be sending 1099-MISC to publishers. The helpcenter article below has the information the agent provided you but also shows how you can calculate how much you have been paid in 2012.

    LinkShare Publisher Help Center :: When will LinkShare send me a Form 1099?

    We do advise that you speak with your tax consultant on the best way to report this to the US government.
    --Ranae
    Hi Ranae: Thank you, for replying to this thread! Your participation is much appreciated! That explains why my Form 1099-MISC did not arrive in the U.S. Mail. I saved the LS web page you referenced, on my hard drive, so if the I.R.S. communicates with me, about not having a Form 1099-MISC for 2012 (I've received that form from LinkShare for previous years and included the information on the Form 1099-MISC with my Form 1040), I can Forward that LinkShare web page to them. I will report the Commission earnings to the I.R.S. on my Schedule C. No problem about that. And, I calculated how much LS paid me during 2012, last week, before I contacted LS Publisher/Affiliate Support, requesting a Form 1099-MISC be sent to me via email, as a .pdf file. So, I am ready to roll and now I can begin working on my 2012 tax return. :-) Cordially, Lanny

  13. #9
    Full Member Lanny's Avatar
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    Smile @Convergence Thank you!
    Quote Originally Posted by Convergence View Post
    Guess Linkshare considers themselves "Third Party Network" payers...

    Instructions for *Form 1099-MISC (2012)
    Yes. Thank you for the link above. The first part begins:
    "Specific Instructions

    File Form 1099-MISC, Miscellaneous Income, for each person to whom you have paid during the year:

    At least $10 in royalties (see the instructions for box 2) or broker payments in lieu of dividends or tax-exempt interest (see the instructions for box 8);

    At least $600 in rents, services (including parts and materials), prizes and awards, other income payments, medical and health care payments, crop insurance proceeds, cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish, or, generally, the cash paid from a notional principal contract to an individual, partnership, or estate;"

    I would have assumed that "other income payments" would include Commissions LinkShare paid to Affiliates/Publishers. However, I am now certain that LinkShare has had their Tax Attorneys look into this issue and that LinkShare is not required to send the Form 1099-MISC to Affiliates/Publishers.

    Your participation in this thread is greatly appreciated! I believe you felt as I did, that LinkShare should have sent the Form 1099-MISC to the Affiliates/Publishers for 2012, and it was great to have your input.

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  15. #10
    Full Member Lanny's Avatar
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    Smile @Convergence Box 7. Nonemployee Compensation
    @Convergence Farther down, in the I.R.S. link you posted with the Form 1099-MISC instructions, I found this:

    "Box 7. Nonemployee Compensation

    Enter nonemployee compensation of $600 or more. Include fees, commissions, prizes and awards for services performed as a nonemployee, other forms of compensation for services performed for your trade or business by an individual who is not your employee, and fish purchases for cash. Include oil and gas payments for a working interest, whether or not services are performed. Also include expenses incurred for the use of an entertainment facility that you treat as compensation to a nonemployee. Federal executive agencies that make payments to vendors for services, including payments to corporations, must report the payments in this box. See Rev. Rul. 2003-66, which is on page 1115 of Internal Revenue Bulletin 2003-26 at www.irs.gov/pub/irs-irbs/irb03-26.pdf.
    What is nonemployee compensation? If the following four conditions are met, you must generally report a payment as nonemployee compensation.

    You made the payment to someone who is not your employee;

    You made the payment for services in the course of your trade or business (including government agencies and nonprofit organizations);

    You made the payment to an individual, partnership, estate, or, in some cases, a corporation; and

    You made payments to the payee of at least $600 during
    the year."

    "commissions" is on the 3rd line of what I quoted above, but apparently LinkShare has cleared this with the I.R.S. and that is why they did not mail the Form 1099-MISC to Affiliates/Publishers this year.

    I'm going to begin working on my Tax return for 2012, A.S.A.P.

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  17. #11
    ABW Ambassador isellstuff's Avatar
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    I think someone on Rakuten's team did not interpret US tax law correctly. The 1099-K is not the correct form for affiliates especially given the $20K dollar threshold.

    I think Rakuten is just setting themselves up for trouble in the future. Maybe because they are a Japanese company, they feel that they can work by a different set of rules????

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  19. #12
    Full Member Lanny's Avatar
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    @isellstuff Thank you! I agree with what you wrote!
    Quote Originally Posted by isellstuff View Post
    I think someone on Rakuten's team did not interpret US tax law correctly. The 1099-K is not the correct form for affiliates especially given the $20K dollar threshold.

    I think Rakuten is just setting themselves up for trouble in the future. Maybe because they are a Japanese company, they feel that they can work by a different set of rules????
    Thank you. I agree. The only thing I can think of that would exempt LinkShare from this requirement is if their Tax Attorney(s) received a letter from the I.R.S., exempting LinkShare from this requirement. A Waiver. There is a name for that. A letter with a Ruling from the I.R.S. Iím not sure what the correct term is, but the I.R.S. does send letters with rulings.

  20. #13
    ...and a Pirate's heart. Convergence's Avatar
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    Quote Originally Posted by isellstuff View Post
    I think someone on Rakuten's team did not interpret US tax law correctly. The 1099-K is not the correct form for affiliates especially given the $20K dollar threshold.

    I think Rakuten is just setting themselves up for trouble in the future. Maybe because they are a Japanese company, they feel that they can work by a different set of rules????
    Been reading up on this some more.

    "Technically" LS is correct as they are not "paying" affiliates for commissions (except in the case of any referral commissions) but merely acting as the go between or processor for merchants. Have read Amazon is doing this as well (don't know because we are in Colorado and not an affiliate).

    One question I have right now is not about the $20,000 but the "AND 200 or more transactions" - what's a transaction? Does each commissioned sale equal one transaction? Is a payment monthly payment from one channel a transaction? Or, is a consolidated payment from a single merchant a transaction?
    Last edited by Convergence; February 20th, 2013 at 04:13 PM.
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  22. #14
    ABW Ambassador isellstuff's Avatar
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    It would seem that filing a 1099-k would lend validity to the idea that we establish an "affiliate nexus" instead of us just "selling advertising" by implying a stronger bond with merchants. Why would a affiliate marketing company such as LinkShare want to go down that road?

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  24. #15
    ...and a Pirate's heart. Convergence's Avatar
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    Imagine it saves them a ton of money - both preparing/sending 1099-MISC and not having to declare the commissions affiliates earn as income and turning around and having to declare same as an expense.

    • Affiliate earns $xxx
    • Merchant pays LS $xxx + fees
    • LS processes merchant payment of $xxx to affiliate
    • LS declares fees as income


    Expect the other networks to follow suit next year.

    Quote Originally Posted by isellstuff View Post
    It would seem that filing a 1099-k would lend validity to the idea that we establish an "affiliate nexus" instead of us just "selling advertising" by implying a stronger bond with merchants. Why would a affiliate marketing company such as LinkShare want to go down that road?
    Establishes nexus about as much as PayPal or any other payment processor would. Think of the affiliate network as your "merchant account/payment processor"...
    Salty kisses, Sandy toes, and a Pirate's heart...

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