1099's and O/O

Yes it is legit, when he does his taxes, he takes his summary settlement and use that for the totals and if he is audited, he brings the settlements as proof of income.

 

Were you told this by your own tax attorney, or at least a CPA?

If not, I'd be checking that out for myself.

 

Don't have to issue 1099's for transportation.

 

The IRS has issued another item of guidance stating that Form 1099 need not be issued for income from freight services. Treas. Reg. 1.6041-3(c) exempts payments for "freight services" from the general requirement for payors to issue Form 1099 to independent contractors and others with which they do business. Thus, trucking companies need not issue Form 1099s to owner-operators that are under lease for freight hauling services. The same rule applies to farmers that make payments in connection with the trucking or hauling of livestock, grain or other farm products - no Form 1099 is required.

 

That regulation has been in place since 1918. It's application is intended primarily for freight brokers. In the case of an audit, a business claiming the freight exemption, would have to prove that all compensation paid was exclusively for the movement of freight, and nothing else. If there was any compensation, no matter how small of an amount, for anything that is not the actual movement of freight, then a 1099-NEC must be filed for all compensation.

So if you get paid to deadhead, detention, securement, or any other accessorials, those are not freight. In addition, if your carrier reimbursed or helped pay any expenses such as plates, insurance, permits, repairs, etc., that would also exclude you from the "freight" exemption.

Now let's apply some common sense. If a regulation that has been around for over 100 years exempted transportation companies from income reporting requirements, why do huge companies with teams of expensive tax lawyers still file 1099s for all their contractors?

 

Most will issue one, but you're wrong in the "freight only". There were no "brokers" when the law was written.
40+ years and i've never had a shipper issue a 1099 to me, according to you they would have to with the unloading, detention, ect.

 

We're not talking about shippers, this discussion is in reference to trucking companies in regards to independent contractors.

 

Now you're stretching, freight payment is freight payment regardless of who is paying. The law has no provision for "additional charges".

Most will send one because it works in their accounting program.

 

The IRS has issued another item of guidance stating that Form 1099 need not be issued for income from freight services. Treas. Reg. 1.6041-3(c) exempts payments for "freight services" from the general requirement for payors to issue Form 1099 to independent contractors and others with which they do business. Thus, trucking companies need not issue Form 1099s to owner-operators that are under lease for freight hauling services. The same rule applies to farmers that make payments in connection with the trucking or hauling of livestock, grain or other farm products - no Form 1099 is required.