What types of tax obligations stem from payments to suppliers, contractors and other types of payees?

Payments to suppliers, contractors, and other types of payees or partnerships come with a variety of tax obligations, which differ depending on factors like the payee’s status, the nature of the services, and the country in which the transactions take place. The following are some of the key tax obligations businesses may need to consider when making payments to these entities: Withholding Taxes Companies may be required to withhold a portion of payments for tax purposes. Tax codes will differ based on region and compliance requirements. Independent contractors: For domestic workers, organizations may need to report payments for services provided. However, direct withholding is not typically required. Non-resident withholding tax: Payments to foreign contractors may trigger withholding obligations from that region’s tax authority. This ensures taxes are collected from non-residents earning income within the country. Goods and Services Tax (GST), Sales Tax, and Value-Added Tax (VAT) When paying suppliers, companies may be obligated to pay or collect consumption tax. Regulations vary: Sales Tax: In the U.S., sales tax must be paid on certain goods and services—typically at the point of sale. GST/HST: In Canada, companies may need to pay the Goods and Services Tax or Harmonized Sales Tax. VAT: In Europe and other regions, businesses may be required to charge and remit Value-Added Tax. Cross-Border Payments and Transfer Pricing Payments to foreign suppliers may trigger additional tax obligations related to international regulations. Transfer pricing: Payments between related entities in different countries must follow fair pricing rules to prevent profit shifting. This ensures appropriate taxation in each jurisdiction. Tax treaties: Double taxation treaties between countries can reduce withholding rates or clarify which nation has taxing rights over certain payments. Other Forms of Tax to Consider Employment tax Corporate income tax deductibility Provincial or state tax Excise and customs duties Indirect tax and use tax

What are the benefits of self-service supplier management?

Self-service supplier management offers myriad benefits that enhance accuracy, improve relationships, and streamline operations. Here are some of the key advantages: Precise Data Accuracy When new suppliers manage their own onboarding process, the likelihood of data entry mistakes decreases. Suppliers are vested in ensuring their data and all information are accurate. Real-Time Access from Anywhere Vendors can access a self-service portal at any time, from anywhere. They can check on invoice status, payments, and orders in one place. Better Supplier Relationships Companies can build stronger, more collaborative relationships by providing suppliers with tools and templates to manage their own data. Vendors will always appreciate the transparency, quality management, and attention to detail. Their autonomy will lead to increased trust and satisfaction. Improved Reporting and Analytics Self-service supplier portals often come with built-in tools for reporting and analytics. These solutions provide valuable insights into supplier scorecards, transaction histories, and spend patterns, helping companies make informed decisions, increase sustainability, and optimize their supply chain. Greater Compliance and Security A self-service portal and supplier management system often include features that ensure compliance with industry standards and regulations. Additionally, these finance modules provide secure environments for suppliers to submit sensitive information, reducing the risk of data breaches. Additional Benefits Increased efficiency and less workload Improved communication and collaboration Faster dispute resolutions Significant cost and labor savings Easily scale to accommodate more suppliers

How does Tipalti support IRS-compliant tax reporting at year-end?

Tipalti supports IRS-compliant tax reporting at year-end by automating collecting, validating, and filing tax forms. This ensures businesses comply with U.S. tax regulations, reduce manual errors, and avoid penalties. Here’s how Tipalti facilitates IRS-compliant tax reporting: Automated Tax Form Collection Tipalti automatically collects the right tax forms (e.g., W-8, W-9) from suppliers, contractors, and other payees during onboarding. The system determines the correct form to collect based on the payees' country of residence and tax classification. Validation of Tax Data Tipalti integrates with the IRS’s Taxpayer Identification Number (TIN) matching service. The TIN matching service integration helps validate the accuracy of the TINs provided by U.S. payees. It also ensures that the tax identification numbers submitted are correct, reducing the risk of mismatches that could trigger IRS penalties. Year-End Tax Form Generation At the end of the year, Tipalti generates IRS-compliant tax forms, including: Form 1099: For reporting payments to U.S. individuals and contractors. Form 1042-S: For reporting payments made to foreign entities or individuals subject to withholding. IRS E-Filing Tipalti is a compliance platform that can electronically file forms directly with the IRS, reducing the need for manual tax return filing. Our solution streamlines the workflow of submitting the required forms, ensuring compliance with IRS deadlines. Additional Ways Tipalti Supports Year-End Filing Batch filing for bulk tax forms Automated withholding calculations Apply relevant tax treaty benefits Compliance alerts and notifications Global tax compliance

How does Tipalti handle tax form validation and verification?

Tipalti handles tax form validation and verification by automating the collection, validation, and verification process for various tax forms. The validation ensures that the data provided by payees is compliant with tax regulations. Here's how: Real-Time Validation Tipalti validates the data provided by payees in real time. As payees fill out their tax forms, the system checks the data for completeness and correctness, reducing the chances of missing or inaccurate details that could lead to compliance issues. Automated Tax Form Collection The system collects the necessary tax forms from suppliers and other payees during onboarding. Based on the payee's residency and tax classification, Tipalti determines whether a U.S. payee should submit a W-9 form or a non-U.S. payee should submit a W-8 form (such as W-8BEN or W-8ECI). TIN (Taxpayer Identification Number) Matching Tipalti also integrates with the IRS’s TIN matching service to validate the accuracy of the TINs provided by payees. This ensures that the name and TIN combination matches the IRS’s records. Error Notifications It automatically flags the issue if the system detects invalid or incomplete data, such as incorrect TINs or missing information on a tax form. These notifications prompt the payee or the AP team to correct the information before payment processing. Withholding Tax Calculations Based on the verified tax data, Tipalti will automatically calculate the applicable withholding tax rate for both U.S. and non-U.S. payees. For U.S. payees, this includes applying the correct rates for 1099 reporting. Tipalti applies withholding taxes for international payees based on the relevant tax treaties. Additional Ways Tipalti Handles Tax Validation Securely store all tax forms and verification data Comprehensive audit trail of all tax form submissions Any required withholding taxes are applied according to IRS guidelines

Home / AP Automation / Tax Compliance

Tackle Tax Compliance Like a Pro

Our automated tax compliance solutions give you confidence and efficiency as your business scales across borders.

Tax Compliance Features

Cut Tax Risks and Automate Your Filing Process

Collect and validate—without the stress. Our solution ensures you’re IRS-compliant, allowing you to reduce errors and late filings. With global tax capabilities, you can confidently navigate complex regulations and simplify your year-end process.

Be IRS-Compliant and Slash Tax Risks

Tipalti’s tax solution for US payers simplifies the process and helps your company comply with IRS tax provisions. You can require all payees to fill out tax forms or provide their VAT/local tax ID as part of self-registration on the Tipalti portal. You can rest easy knowing your payment operations are always up-to-date with the latest US tax laws.

Meets IRS requirements, as prescribed by KPMG
Optionally set tax ID submission as a requirement during onboarding, regardless if payees hit the IRS $600 threshold

Digitize Tax Form Collection and Validation

Tipalti’s guided tax form wizard helps suppliers of US payers choose the correct form based on country and business structure. Once the correct tax form is selected, Tipalti digitizes documents and applies 1,000+ rules, including TIN matching to ensure the proper data has been provided. At year-end, Tipalti generates 1099/1042-S tax preparation reports and calculates any necessary withholdings.

Supports W-9, W-8BEN, W-8BEN-E, W-8EXP, W-8IMY, W-8ECI, or Form 8233
Tax IDs are collected digitally and optimized for electronic signatures
Verification ensures tax information is complete and helps protect from IRS penalties

Go Global With International Tax Capabilities

For non-US payers, local and VAT tax ID collection is available. For European countries, we also support document collection so payees can provide additional information when needed and self-billing invoices where payees must approve invoices before payments can be processed.

Collecting and validating local and VAT tax IDs in 60+ countries*
Built-in tax engine validates against 3,000+ rules to help prevent ID errors and issues

*Supported countries are: Argentina, Australia, Austria, Azerbaijan, Brazil, Bulgaria, Canada, Chile, China, Colombia, Costa Rica, Croatia, Cyprus, Czech Republic, Denmark, Dominican Republic, Estonia, Finland, France, Germany, Greece, Honduras, Hong Kong, Hungary, India, Indonesia, Ireland, Israel, Italy, Japan, Kuwait, Latvia, Lithuania, Luxembourg, Malta, Malaysia, Mexico, Netherlands, New Zealand, Paraguay, Peru, Philippines, Poland, Portugal, Romania, Russia, Saudi Arabia, Singapore, Slovakia, Slovenia, South Africa, South Korea, Spain, Sweden, Switzerland, Thailand, UAE, Ukraine, United Kingdom, Uruguay, Vietnam.

Simplify Your Year-End Tax Filing

Save time and improve efficiency with our e-filing integrations. Give your team the tools they need to avoid the end-of-year crunch and get your tax filings completed and out the door before the IRS’s deadline of January 31.

Integrate with Zenwork’s Tax1099.com solution and eFile 1099-MISC, 1099-NEC, and 1042-S documents with the IRS. Then, send the forms electronically and/or via USPS to recipients.

DAC7 Tax Rules for Digital Platforms

Tipalti collects the necessary payee data, executes your global payments, and produces tax preparation reports to save you time complying with the EU’s DAC7 reporting obligations for digital platforms.

DAC7 features can be enabled alongside Tipalti’s IRS and international tax capabilities for seamless multijurisdictional tax compliance in a single solution. The solution is also suitable for compliance with the UK Platform Operators Regulations.

Integrations

Pre-built connections to extend automated workflows

Easily extend and simplify your workflows with pre-built integrations and powerful APIs for your ERPs, accounting systems, performance marketing platforms, HRIS, SSO, Slack, credit cards, and more.

See All Integrations

Testimonials

Don’t just take our word for it,

see what our customers are saying

Tipalti was a godsend for us. Everything’s done on your phone and email—you just click approve, and you’re done. We never miss a payment, we are never late. Payments is a seamless process for us.

Amanda Afeiche

VP of Finance and Administration, T3 Micro

When we automated, we had an accounts payable person who was spending 40 hours a week doing accounts payable. Now that the system is automated, the accounts payable time is probably in the five to 10 hours per week arena.

David Fractor

Chief Financial Officer, ImaginAb

When I started there, we had an AP staff of two and a half people. And I have taken that down to a part-time person. That’s how much time we saved.

Sondra Brandt

Accounting Manager, SugarCRM

Customer Stories

Explore our customer success stories

PubMatic

PubMatic streamlined global mass payments, cut processing time to 3 minutes, and enhanced operations with a robust NetSuite ERP integration.

Product

AP Automation

Mass Payments

Procurement

Region

United States, Global

Industry

AdTech

Size

100 – 1000

Endera

With Tipalti, Endera streamlined invoices, automated vendor onboarding, and improved international payments by eliminating manual wire transfers.

Product

AP Automation

Region

United States

Industry

Software and technology

Size

Sub 100

T3 Micro

T3 Micro cut manual work by 50%, avoided adding finance headcount, and streamlined international payments across multiple currencies.

Product

AP Automation

Region

United States, Global

Industry

Software and technology

Size

100 – 1000

Next Insurance

NEXT Insurance automated 1,000+ monthly invoices and saved 2+ hours per week with a streamlined approval workflow.

Product

Region

Industry

Size

bluTonic

Payments are faster, lost checks are no longer a problem, and vendor relationships have improved across the board.

Product

Region

Industry

Size

JLab

With Tipalti, JLab’s AP team boosted productivity by 68% and managed 35% more invoices without adding headcount.

Product

Region

Industry

Size

Cybereason

Cybereason customized purchase requisitions to fit its structure and built a seamless integration with its ERP, NetSuite.

Product

AP Automation

Procurement

Region

United States, Global

Industry

Software and technology

Size

1000+

Service Rocket

ServiceRocket cut AP time by 80%, reduced staffing needs, improved global compliance, and integrated YayPay and NetSuite.

Product

AP Automation

Region

United States, Global

Industry

Business services

Size

100 – 1000

ImaginAB

ImaginAb saved 1,750 AP hours yearly, avoided new hires, and sped up monthly financial close with automation.

Product

Region

Industry

Size

How It Works

Up and running in weeks, not months

Collaborative customer support with customized onboarding to get you operational quickly

Step 1

Plan

Kickstart your success with a comprehensive setup call that reviews your manual AP workflow, outlines the onboarding plan, validates technical configurations, and prepares for training.

Step 2

Configure

Tipalti’s implementation experts set up your hosted portal, create sample payment files, configure payment options and email integrations, and establish ERP integrations using our pre-built solutions.

Step 3

Deploy

In-depth training for AP staff on the Tipalti Hub and the end-to-end AP automation functionalities, ensuring thorough knowledge transfer to turbocharge your successful launch.

Step 4

Adopt

Support user adoption and change management during launch while guiding suppliers through onboarding. Once set, you’ll be ready to execute your first payment run and officially launch Tipalti.

Step 5

Optimize

Continued technical support by phone and email. Tipalti customer success team learns your goals and offers solutions to reach them.

Platform Features

Work smarter, not harder

With AI and machine learning capabilities, an intuitive UX, and quick and easy global payments, you can drive unprecedented efficiency.

AI

Smarter processes. Instant insights. More productivity. Less manual work. Tipalti AI actually gets things done.

Global

Manage all entities’ payables operations from a single system. Enable each entity to operate with its own unique workflows and branding.

Payment Fraud Protection

Proactively prevent fraud by identifying unusual patterns. Block suspicious payees from receiving payments, prevent them from creating new accounts, and get notified of abnormal activities.

Controls and Compliance

Stay up-to-date and protected automatically, with multi-jurisdictional tax compliance, built-in payment protections, and enterprise-grade controls and security.