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Are freight services 1099 reportable?


If you receive a freight quote or freight rate, that is considered taxable income. The person or company who provides the quote is required to issue you a Form 1099-MISC. However, there are a few exceptions. For example, if the freight services are provided by the US Postal Service, then they are not reportable.

Answer From schneiderdowns.com

The follow-up question that we receive is how the Form W-9 should be completed since no Form 1099 reporting is required. The instructions to the Form W-9 do not address this situation. The exemptions that can be listed on the form apply solely to back-up withholding and FATCA (Foreign Account Tax Compliance Act) reporting. One option would be to complete the Form W-9, but to add the following statement to the top of the form: Exempt from Form 1099 Information Reporting by Reg. 1.6041-3 ( c ).

Form 1099 Requirements. From irs.gov

I.R.C. § 6041(a) requires any person who makes payments in the course of his trade or
business to another person of rent, salaries, wages, premiums, annuities, compensation, remuneration, or other fixed or determinable gains, profits, and income of $600 or more in any taxable year to file an information return with the Service.

POSTF-106467-14 3

I.R.C. § 6041A contains similar rules for, in relevant part, “service-recipients.” If any
service-recipient pays in the course of his trade or business $600 or more in any
remuneration to any person for services performed by such person, the servicerecipient must file an information return with the Service. I.R.C. § 6041A(a). No return
is required under section 6041A with respect to a payment that is exempt under section
1.6401-3 of the regulations from the return requirement of section 6041. Prop. Treas.
Reg. § 1.6041A-1(d)(2); see also H.R. Conf. Rep. No. 760, 97th Cong., 2d Sess. 567
(1982) (noting that, in the absence of regulations under section 6041A, the existing
section 6041 exceptions apply).

How much does a freight broker make per load?

Payments of bills for merchandise, telegrams, telephone, freight, storage, and similar
charges are exempt from the return requirement of section 6041. Treas. Reg. § 1.6401-
3(c) (emphasis added).

The Service has repeatedly interpreted the word “freight” in section 1.6401-3(c) to mean
a method or service for transporting goods or the cost of such transportation. See, e.g.,
PLR 9348058 (June 14, 1993), PLR 9329001 (March 5, 1993), PLR 9127002 (March
13, 1991, PLR 9325004 (March 5, 1993). Payments for transporting goods, whether
incidental or integral to a taxpayer’s business, are therefore excepted from information
reporting. The fact that the payments may be made to an independent operator does
not change this exception.

Although private letter rulings are not binding precedent, I.R.C. § 6110(k)(3), we agree
with their analysis that the freight exception in section 1.6401-3(c) is to be read broadly
and consistently with the common meaning of “freight.” We also note that the freight
exception has existed in the regulations since 1918 and that Congress has, on many
occasions, amended sections 6401 and 6401A without changing the freight exception.


The facts you have presented indicate but do not conclusively prove that the payments
in question are for hauling freight. To the extent you are able to develop facts to
support that the payments may, in fact, be attributable to other items (for example,
interest, compensation for services other than hauling freight, referral bonuses, sign-on
bonuses, etc.), then the freight exception may not apply and an information return may
be required. If you would like additional legal advice after you know more about the
specific nature of each payment, please return to us for assistance.

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Nikolas White

Logistic, Warehouse and Shipping Services Expert. My work has been published in many different formats across North America with topics ranging from international trade to global logistics or supply chain management–all on the forefront of what’s happening right now!

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