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To: Parish and School Business Managers
From: Michael Warren, Controller, Office of Finance
As tax season begins, please see the following reminders about several issues relating to our tax responsibilities for 2018 and tax planning for the 2019.
Accounts Payable and W9s: Any individuals or entities that were provided payments for services rendered during the tax year are required to provide a completed W-9 to either the parish or school business office, or the Office of Finance at the Chancery.
The internal and external auditors require that a W-9 be on file, thereby ensuring that any 1099s required for payments of $600 or more from a single location (EIN) are accurate and reported, and recipients comply with tax regulations.
Examples: A supply priest receives 10 mass stipends during the year for celebrating mass at St. Joseph’s, and is paid $100 per Mass. The $1,000 paid is greater than the $600 IRS threshold, so the priest should be provided a 1099 for that compensation. Order Priests are not paid directly, since any payments must be made to their Order.
If he also received $150 at another parish, the amount would remain taxable to the priest, but the IRS does not require a 1099 to be generated, since it is below the $600 threshold. Other examples include musicians, organist fees, cleaning services, and repair and maintenance services.
Domestic Speaker Stipends or Fees: Any stipends or fees paid for presentations given within the archdiocese are generally taxable. All payees are required to complete a W-9 to be compliant with IRS taxability rules and 1099 reporting requirements.
Exceptions to the W9 are allowed in certain specific instances, including corporations and certain types of LLCs – though payments to medical service providers, attorneys and accounting firms always require a W9 and 1099s.
Payments that are made internationally need to comply with IRS rules as well. If the compensation is for personal services performed within the United States, then the following rules apply:
There are two types of International Speaker Fees:
Speakers coming from international countries that have a Tax Treaty with the United States are exempt from having withholding and from reporting, but must complete IRS Form 8233 (Exemption From Withholding on Compensation for Independent Personal Services of a Nonresident Alien Individual) and file with the archdiocese. This treaty information can be found at IRS.gov, under Form 8233. Tax treaty agreements are set up country by country, and allow the respective tax authorities to recognize withholdings done with other treaty countries, thereby simplifying tax reporting and filing. Australia is one example.
Speakers coming from international countries that do NOT have a Tax Treaty with the United States are not exempt from withholding, and must obtain a Tax Identification Number from the IRS and furnish to the archdiocese in advance of their visit. Individuals in this category are allowed to have travel related expenses paid on their behalf (air fare, hotel, meals), as a means of compensation, but compensation cannot be given to them without violating IRS tax rules. An alternative for this would be for a donation to be made to an Order or International Charity recognized by the IRS. Otherwise, if the fees are for compensation above and beyond travel costs, then the IRS requires a 30% withholding requirement be made. This places the responsibility for filing a tax return upon the individual, for such services rendered in the United States. Colombia is one example.
Unknown SSNs: If you did not obtain a W9 or the SSN of a priest who received stipends during the year, you should contact Veronica Reyes in Priest Personnel (email@example.com or 404-920-7333) to find out if the priest is allowed to receive compensation.
If he is not allowed to receive compensation, then the payment should be made to the priest’s Order.
If the priest is allowed to receive compensation, and you provided payment(s) to him during the year which total $600 or more, but you did not obtain a W9 or SSN for him, please contact Michael Warren (MWarren@archatl.com or 404-920-7411) or Jeffery Dean (JDean@archatl.com or 404-920-7418) to obtain the SSN for tax reporting purposes.
Order Priests: Neither 1099s nor W2s can be generated for priests who are members of an Order – any such payments should be made directly to the Order.
If you have any other questions relating to 1099s or tax deadline dates, or need other assistance, please contact Michael Warren at MWarren@archatl.com or 404-920-7411.