We would like to remind our clients of the importance of the new W-9 rules set into effect by recent tax legislation. We cannot stress enough that your attention to this new rule is crucial.

We would like to inform you of some important points to keep in mind if you plan on allocating some or all of your patronage sourced section 199 deduction to your members.

Recently, the IRS began sending out notices related to tax year 2008 1099 forms. These notices detail problems with 1099 forms that our clients have filed, including incorrect or missing FEIN’s, incorrect names on the 1099’s, and other issues. Generally, a penalty for each occurrence is imposed, which could potentially total thousands of dollars for the client.

The red flags rule may actually go into affect on December 31, 2010. The Rule was originally supposed to become effective on January 1, 2008, with full compliance required by November 1, 2008. The FTC or Congress has delayed enforcing the Rule a couple of times in the last two years.

Enforcement of the rule has now been extended to December 31, 2010, while Congress considers legislation that would affect the scope of the included entities.

Until recently, U.S. generally accepted accounting principles (GAAP) have long been considered universally acceptable for both publicly and privately held companies. However, there have been growing concerns about the specific needs of privately held companies which must report to a narrower range of financial statement users, such as lenders, venture capitalists, and insurers.