Self employment tax and incentive payments

Discussion in 'Tax' started by John, Feb 24, 2004.

  1. John

    John Guest

    IRS Pub 3204 says automotive manufacturers' incentive
    payments (reported on 1099 MISC) are not subject to SE tax.
    Does this only apply to automotive manufacturers' incentive
    payments? What about other industries, are their incentive
    payments subject to SE tax?? (chemical manufacturers, for
    example).

    Thank you

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    John, Feb 24, 2004
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  2. "John" <> wrote:

    > IRS Pub 3204 says automotive manufacturers' incentive
    > payments (reported on 1099 MISC) are not subject to SE tax.
    > Does this only apply to automotive manufacturers' incentive
    > payments? What about other industries, are their incentive
    > payments subject to SE tax?? (chemical manufacturers, for
    > example).


    I treat this as one of the interpretative areas; the
    important thing to correctly apply the law as it exists.
    Remember, IRS Publications are not legally authoritative and
    cannot be relied on. I'd look at the underlying code
    section and any relevant revenue rulings, and if available
    any court cases that address the issue. The big caveat here
    is that unless you are a tax professional you need be very
    careful in interpreting what you read in an IRS Publication.

    That being said, if these really were incentive payments I
    wouldn't let the fact they came from a business other than
    an auto manufacturer stop me from treating them in a similar
    fashion.

    Good luck,
    Gene E. Utterback, EA

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    Gene E. Utterback, EA, Feb 25, 2004
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  3. John

    A.G. Kalman Guest

    John wrote:

    > IRS Pub 3204 says automotive manufacturers' incentive
    > payments (reported on 1099 MISC) are not subject to SE tax.
    > Does this only apply to automotive manufacturers' incentive
    > payments? What about other industries, are their incentive
    > payments subject to SE tax?? (chemical manufacturers, for
    > example).


    It works for all industries as long as it has the same set
    of facts as in Pub 3204. Basically, it is a sales incentive
    paid by the manufacturer to either a dealer, distributor or
    remarketer or a salesperson working for such a firm.

    --
    Alan
    http://taxtopics.net

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    A.G. Kalman, Feb 25, 2004
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