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4. Auto Repair Services: This involves
mechanical labor used to tune up a vehicle and provide other services. The sale
of merchandise is not required to be reported via Form 1099 statement. 5. Janitorial/Gardening: Some body shops
maintain very clean premises and surroundings to present a better image. This
often requires the use of individuals on a consistent basis. 6. Accounting Services: Many shops utilize
independent bookkeepers and accountants to do the monthly entries, prepare
sales tax and employment tax returns, financial statements, and information
returns. 7. Lease Agreements: Body shops often
lease the premises for the shop. 8. Interest: In Corporate cases with bona
fide loans to shareholders Form 1099-Int statements should be prepared for the
interest payments made. 9. Finder's Fee: In one case, it was
determined that an auto body shop was paying fees for referrals. 10. Auto Body Labor: In some case, workers
may be true independent contractors or the taxpayer may actually sub-contract
overflow work. In these cases, Form 1099 statements are definitely required. AUDIT TECHNIQUES Many of the steps
mentioned here will take quite a bit of time to complete. However, because of
the size of potential adjustments it is worthwhile. 1. Request proper information: To simply
request the Form 1099 statements prepared for calendar year is usually not
sufficient. The Form 1096, Annual Summary and Transmittal of U. S. Information
Returns, should also be requested since this summarizes the number of Forms
1099 prepared and submitted to the particular service center responsible. If
there were any schedules prepared by the accountant or taxpayer to compute the
Forms 1099, these should be requested as well since they often facilitate the
audit work. If no schedules were prepared, then the cash disbursements journals
which encompass the calendar year should be requested. 10-2 Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chapter 10 Glossary |