How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask William Ellis, CPA Your Own Question

William Ellis, CPA
William Ellis, CPA, CPA
Category: Tax
Satisfied Customers: 296
Experience:  Over 15 years of experience in public accounting
50200401
Type Your Tax Question Here...
William Ellis, CPA is online now
A new question is answered every 9 seconds

I am in need of a CFE or CPA to render an opinion regarding

Customer Question

I am in need of a CFE or CPA to render an opinion regarding the following. I am the executive director of a 100 bed, 12 month residential substance abuse center. All our students are required to work in one of our programs to pay for tuition. While we do not allow them to carry cash we do have an accounting system (Quickbooks) for all the individual student's accounts. Some are paid regular "spiff" money by the owner of one of our programs. These funds are deposited in the student account and a journal entry is entered crediting the student. At graduation I give them their balance by corporate check. Sometimes it is over $10,000. THE QUESTION. Our corporate office is nervous that we are creating an employee/employer relationship and are not 1099ing the students. Do you have some input?
Submitted: 1 year ago.
Category: Tax
Expert:  Anne replied 1 year ago.

Anne :

Hi

Anne :

Thank you for using justanswer

Anne :

I'm curious how you have come to call this money "spiff money"

Anne :

A spiff is bonus money paid to salespeople for meeting a specific sales goal. Manufacturers of products often provide spiffs. A spiff is also referred to as push money. At the end of the relevant period when the spiff is offered, the salesperson will submit proof of the sales to the manufacturer and the manufacture will cut a check. A spiff is a form of compensation and will have to be reported on your tax return.

Anne :

It should be reported as an award, or prize

Anne :

I've never heard of a "spiff" in any other connotation than with manufacturers and sales men

Anne :

Could you please explain why this money is paid to a particular student, and how it came to be known as "spiff" money?

JACUSTOMER-56j1n8i2- : Thanks for you're response. I knew you would need more detail but space was limited. Many of our students work at a call center located on campus but not owned by our corporation. They sell vacation packages and receive the spiffs as a reward for sales production. They are not allowed to have cash during their 12 months rehab program so the spiff checks are given to us with a breakdown and we deposit the checks into the student account and make journal the distribution. When the student graduates the remaining balance is given to them in the form of a check drawn against the student account.
JACUSTOMER-56j1n8i2- : I understand the reporting requirements but we do not pay the spiffs they are paid by the owners of the call centers. We simply hold the funds in our student account until they graduate. All necessary back up is kept on file showing the flow of the payments from the call center owners to our student account and then finally from our student account to the student. Is the tax reporting the responsibility of the payer, and is our documentation adequate in not issuing a 1099?
Anne :

Hi

Anne :

Thank you for that explanation. It helped alog

Anne :

slot

Anne :

alot

Anne :

sorry....seems I've lost my typing skills somewhere today....if you see them, will you please send them home....I miss them alot

Anne :

You are correct in that your facility, since they are not the payers, are not required to issue a 1099

Anne :

Since you have documentation that you are not the actual "payer", you just hold the money for the recipient, you should be fine.

Expert:  William Ellis, CPA replied 1 year ago.
Hello and thank you for allowing us at Just Answer to assist you. The next question is whether the owners of the call center are issuing the students 1099s or W-2s or are they issuing them to you? If the owners are paying you directly on the students' behalves, you may be liable for filing the tax forms since you are acting as an agent for the owners.

You also should be reporting the interest earned by the students' on Form 1099-INT to them.

This needs to be clarified because both you and your students could be subject to potential audits. If the owners' are issuing tax forms to the students, the IRS could assess the students tax on the additional payments received from you.

Thanks,

Bill Ellis, CPA, CFE

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.