AR 215-1 2010 - Soldier Support Institute - U.S. Army

of an independent trade, business, or profession). Sporting officials and instructors under contract with a NAFI/entity
may be employees of the NAFI/entity for Federal income and employment tax purposes (FICA and all other taxes paid
by the NAFI/entity are added to the contract cost). Under these circumstances, individuals will be notified that, for
Federal income and employment tax purposes, they will be treated as NAF employees regardless of the provisions of
AR 215–4.
(2) DOD 7000.14–R, volume 13, chapter 8 (para 080701; see also IRS Pub 15-A), lists common law rules that are
used by local offices of the staff judge advocate (SJA) to characterize employment relationship to identify appropriate
taxes to be withheld and paid.
(3) An individual who disputes the employment relationship may appeal directly to the IRS. Pending the final IRS
decision, the individual will be treated as an employee or independent contractor, as determined by an SJA using the
common law factors.
b. Reporting independent contractor payments to the IRS will be in accordance with DFAS-IN Regulation 37-1,
chapter 32 (para 321008).
4–11. Taxes on employee tips
a. Withheld compensation includes allowances for tips received by employees of food and beverage programs, as
specified in appendix C. Addresses for requesting IRS publications and forms are found in DOD 7000.14–R, volume
13 and DFAS-IN Regulation 37-1 (para 321007).
(1) Nonappropriated fund employees receiving tips in the amount of $20 or more in any month must report tip
income to the employing NAFI/entity using IRS Publication 1244 and IRS Form 4070 (Employee’s Report of Tips to
Employer) or a locally prescribed equivalent. Reports will be filed by the 10th of the month following the month in
which tips were earned.
(2) Each NAFI/entity employing more than 10 food service employees will file IRS Form 8027 (Employer’s Annual
Information Return of Tip Income and Allocated Tips). See appendix C and the Tip Allocation and Tip Reporting
Manager’s Guide found at www.armymwr.com.
b. Federal income and employment tax records will be retained by the NAFI/entity for 4 years.
4–12. Reporting prizes
Nonappropriated fund instrumentalities/entities involved in awarding cash or merchandise prizes to individuals participating
in contests or other such competitions will report awards in accordance with DFAS-IN Regulation, chapter 32.
4–13. Annual reports to the Internal Revenue Service
Returns made on IRS Forms 1099–MISC (Miscellaneous Income) and 1096 (Annual Summary and Transmittal of U.S.
Information Return) for a calendar year will be filed with the appropriate IRS district by each NAFI/entity on or before
28 February of the following year. A copy of IRS Form 1099–MISC will be sent to the person receiving payment from
the NAFI/entity not later than 31 January of the year following payment from the NAFI/entity. Addresses for
requesting IRS publications and forms are found in DFAS-IN Regulation 37-1, chapter 32. The contracting officer must
provide proper information about the taxpayer to their servicing accounting office through the submission of an IRS
Form W–9 (Request for Taxpayer Identification Number and Certification) and provide the form with contractual
documents.
4–14. State and local sales and use taxes
a. Nonappropriated fund instrumentality/entity operations are not subject to direct taxation by State or local tax
authorities, except when specifically authorized by Federal statute. Nonappropriated fund instrumentalities/entities will
cooperate with State and local officials to the degree that such cooperation is not construed as a submission to State
and local regulations and control and such cooperation does not adversely affect MWR programs.
b. Nonappropriated fund instrumentality/entity retail sales are not subject to State sales and use taxes, except for the
sale of tobacco products and soft drinks through vending machines.
(1) Sale of tobacco products exempt from State tax is limited to packs or equivalents for on-premises consumption.
(Only the AAFES and commissary sales stores sell in bulk.) Other sales of tobacco products in the United States,
including all vending machines sales, require payment of State sales tax.
(2) Over-the-counter sales of soft drinks for immediate consumption at MWR snack food operations are exempt
from State tax. (Only the AAFES outlets sell in bulk.) State sales taxes are paid for vending machine sales in the
United States.
c. The sale of State tax-free alcoholic beverages will be in accordance with chapter 10.
d. State taxes on gasoline or other motor fuels measured by sales, purchases, storage, or use will be collected and
paid under the provisions of 4 USC 104.
e. Most tax questions are fact specific, are complex, and require close examination of State or Federal statutes and
case law by the local SJA.
AR 215–1 • 24 September 2010
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