Automobile manufacturer incentives paid to salesmen are not subject to SE, so would incentive payments by manufacturers of equipment and from financing company's which are not the acutal employer also be considered not subject to SE? Thank you for your input.
-
-
I certainly would not treat those pays as se taxable.ChEAr$,
Harlan Lunsford, EA n LA -
This question nags me from time-to-time when someone gets "SPIFFS" from the manugfacturer. In addition to autos, I've seen it with salespersons who sell appliances, mobile homes, farm equipment, auto parts, tires, batteries, and other products.
It seems to me that the IRS provided pretty good cover with its memo on this subject (Pub 3204), so I followethe same rule for other businesses. If the payment is made by the manufacturer directly to the salesperson and bypasses the employer, I treat it as income not subject to SE tax. (I think Rev.Rul. 1970-337 is the basis for the publication but I haven't looked it up).
Things are a little more vague when the payment is made by the manufacturer to the employer, who then passes it along to the employee, but the publication offers leeway to also not treat these payments as wages. I've seen some employers make these payments separate from wages and then issue a 1099. In any case, they are clearly not SE earnings because the sales person/employee is not engaging in a business activity.
I usually enter a note on Line 21 describing the payment - usually it's simply called a SPIFF, but other times it's "Manufacturer Incentive" or some simliar name. I try to be sure and get the word "Manufacturer" in the description in th hopes that if t's ever questioned I can try and tie it back to the IRS memo.
Last edited by JohnH; 02-13-2010, 08:05 AM."The only function of economic forecasting is to make astrology look respectful" - John Kenneth GalbraithComment
Comment