Freight and 1099's

[Jiggers]

Does a company have to issue a 1099 for freight? I believe at one time this was excluded from the requirement. I would assume this is for paying a freight company for hauling.

But what about hiring an individual that provides his own vehicle for hauling? A company hires someone that has his own vehicle and trailer to haul products. or merchandise.

I also encounter this with farmers who hire someone who owns a cattle trailer and pickup to haul the farmer's cattle to market. Would a 1099 be required?

[ChEAr$]

Does a company have to issue a 1099 for freight? I believe at one time this was excluded from the requirement. I would assume this is for paying a freight company for hauling.

But what about hiring an individual that provides his own vehicle for hauling? A company hires someone that has his own vehicle and trailer to haul products. or merchandise.

I also encounter this with farmers who hire someone who owns a cattle trailer and pickup to haul the farmer's cattle to market. Would a 1099 be required?

I see no reason why a 1099 would not be required, provided said cattle trailer owner wasn't a corporation. Just like hiring a mobile welder to come out to the farm and repair machinery. He uses his own portable welding equipment, just a a hauler uses his own trailer.

[newbie]

1099 not required for payments for freight

http://www.irs.gov/instructions/i1099msc/ar02.html

Exceptions. Some payments are not required to be reported on Form 1099-MISC, although they may be taxable to the recipient. Payments for which a Form 1099-MISC is not required include:

-Payments for merchandise, telegrams, telephone, freight, storage, and similar items;

[newbie]

But what about hiring an individual that provides his own vehicle for hauling? A company hires someone that has his own vehicle and trailer to haul products. or merchandise.

I also encounter this with farmers who hire someone who owns a cattle trailer and pickup to haul the farmer's cattle to market. Would a 1099 be required?

IMO cattle are your goods, you pay someone to haul your goods that is freight to get your goods to market. If you hire someone with their own vehicle to haul your products that is frieght too.

[ChEAr$]

http://www.irs.gov/instructions/i1099msc/ar02.html

Exceptions. Some payments are not required to be reported on Form 1099-MISC, although they may be taxable to the recipient. Payments for which a Form 1099-MISC is not required include:

-Payments for merchandise, telegrams, telephone, freight, storage, and similar items;

What Jiggers talked about is not "freight". Freight is that hauled by common carriers, and not Joe Blow whom farmer Jones hires to take something into town for him.

Freight, telegrams, tele[phone are regulated by the US gobment.

[Jiggers]

What brings the question up is that I see lots of farmers writing checks to individuals and classifying it as "Hauling" or "Freight", just to avoid the 1099.

When I say that 1099's are needed, they respond that this is freight and exempt.

What I read is that "freight" is exempt. No further definition of "freight" from the IRS, naturally.

Now I have an feed store doing the same thing. They are short of drivers, so they are hiring individuals and writing checks as "freight" to these drivers.

I am just looking for something definitive that I can go back to them with to insist on 1099's.

[newbie]

Just my opinion -

What Jiggers talked about is not "freight". Freight is that hauled by common carriers, and not Joe Blow whom farmer Jones hires to take something into town for him.

Freight, telegrams, tele[phone are regulated by the US gobment.

The instructions say:

Payments for which a Form 1099-MISC is not required include:

-Payments for merchandise, telegrams, telephone, freight, storage, and similar items
~~~~~~~~~~~
I respectfully disagree as I don't read into the instruction government regulated. "Merchandise,....storage, and similar items" are not regulated by the government.

I do agree that if Farmer Jones hires Joe Blow to take something into town it would not automatically be freight, but if that something would be taking cattle to market, then it would be delivering his goods and I would consider that to be freight.

Kind of like the EIC audits - how far do you have to go? If the Farmer tells you the check was for freight and has paid invoices for "transporting cattle to market", what more proof is needed?

The facts & circumstances of each case need to be looked at.

If the feed store has random drivers on a regular basis I might want to take a closer look to see if they should actually be classified as employees.

[Snaggletooth]

Might Hold Up

Calling an onion a rose doesn't make it smell good.

I don't think that is what the IRS means by "freight", but as Jiggers says "no further definition is given."

Based on the written word, failure to issue a 1099 might hold up in court were it challenged.

[Jesse]

I have a textbook that had different examples of when a 1099-MISC is/is not required, although I'm not sure where to find the the TAM which might provide some guidance, one of the examples:

Form 1099 Reporting of a Farmer:
$750 paid to a neighbor for hauling grain - Form 1099-MISC is not required because the payment was for freight [T.A.M. 91-27-002 (March 13, 1991)]

[ChEAr$]

This is the first discussion of the "freight" issue I've ever seen

Next thing you iknow, truck drivers with their own rigs will insist of not receiving 1099-misc from the company for whom they drive.

I dunno, but even though IRS may not define it in the instructions for 1099misc, freight means haulage by what is termed "common carriers".

[ChEAr$]

Try this one

I have a client who is retired military (not that that has anything to do with anything). He drives a vehicle provided by his employer, a drug store, and delivers prescriptions to the store's customers. He receives a 1099 misc end of year.

Question: would YOU classify drugs as freight?

[JohnH]

I'd sure like to see him go through customs if he travels out of the country.

Customs agent : "Occupation?"

Client : "Drug courier."

[newbie]

This is the first discussion of the "freight" issue I've ever seen

Next thing you iknow, truck drivers with their own rigs will insist of not receiving 1099-misc from the company for whom they drive.

I dunno, but even though IRS may not define it in the instructions for 1099misc, freight means haulage by what is termed "common carriers".

I don’t get your analogy, if a company hires a truck driver to haul their own produced goods it is freight. If the trucking company is hiring another company to drive a third parties goods they are paying for a service.

I have a client who is retired military (not that that has anything to do with anything). He drives a vehicle provided by his employer, a drug store, and delivers prescriptions to the store's customers. He receives a 1099 misc end of year.

Question: would YOU classify drugs as freight?

If he is driving his employer provided vehicle at the employer’s direction and control I would suggest maybe he should be receiving a W-2 at the end of the year.

Does a company have to issue a 1099 for freight? I believe at one time this was excluded from the requirement. I would assume this is for paying a freight company for hauling.

But what about hiring an individual that provides his own vehicle for hauling? A company hires someone that has his own vehicle and trailer to haul products. or merchandise.

I also encounter this with farmers who hire someone who owns a cattle trailer and pickup to haul the farmer's cattle to market. Would a 1099 be required?

Back to the original question, does a company have to issue a 1099 for freight? Per the instructions the answer is no.

In my opinion exactly what is considered freight would depend on the facts and circumstances. Does the individual that is hauling the cattle haul for other farmers as well? Would it make a difference? I don’t know, I don’t deal with cattle farmers, is it customary to have someone haul the cattle to market? If so I would expect these to be some pretty sizable “freight” bills that would not occur frequently thru out the year. If the farmer is paying someone or several people $25 every other week it’s probably not “freight”.

But just because some hick hauler doesn’t haul the cattle from one end of the nation to the other on commercial runs doesn’t necessarily disqualify the payment as payment for “freight”, all facts and circumstances need to be looked at. Again just my opinion. But also in my opinion there is a difference between “hauling” a trailer full of raised cattle to market and delivering a bottle of pills to a consumer. But I've been wrong before!