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Are Clinical Research Sites Complying with the IRS?

“Nothing is certain except death and taxes.”

-Benjamin Franklin

taxesPeople hate talking about taxes. Plain and simple.

However, in 2009 Congress made it a priority that payments in clinical research must be reported to the IRS as income – more than $600 distributed to an individual participant requires a 1099-MISC.

We’ve heard from clients and industry partners that managing payments within a clinical trial for tax purposes, remains as clear as mud, and we wanted to understand why.

Three Reasons Tax Remains Taboo in Clinical Trials

There are multiple reasons that this topic continues to be avoided, and through our experience in working with some of the leading research organizations, we’ve identified three core issues:

  1. Complexity: Let’s face it. The 1099-MISC process is complicated and can be a foreign concept if not your primary role. Education is required to help all clinical research stakeholders become more comfortable with this subject and understand the priority it should take within the participant payment/reimbursement process.
  2. Unclear filing ownership: Is it the site? Is it the sponsor? There are differing opinions as to who is ultimately responsible for processing 1099s, performing withholding and more. On top of these responsibilities, concerns over data privacy and keeping personal participant information confidential can further blur the lines over who does what.
  3. Manual processes: The actual process of tax management can be extremely manual and resource draining, often comprising of multiple systems, spreadsheets, etc. This administrative burden can have a significant downstream impact on sites and pharmaceutical companies of all sizes and types. Often, organizations lack the tools and technology to effectively and efficiently manage taxes related to stipends and reimbursements.

The Case for Improving Tax Management

Greenphire’s ClinCard solution has processed more than 7 million participant payments. Some of these payments may cover limited expenses such as parking, however, depending on the trial, an individual may receive substantial compensation covering visits, treatments, travel expenses, etc. totaling more than $600 - therefore, making it reportable to the IRS. This creates additional burden on sites who have the responsibility of collecting and managing the 1099-MISC submission process.

At Greenphire, innovation is built into our DNA. Our solutions are never static. In this case, we met with ClinCard clients to understand their pain points around tax management. While we had already been supplying 1099-MISCs, it was clear that there are many more tax reporting needs facing the clinical research community.

Our product team worked to identify the requirements needed to fulfill the compliance obligations for U.S.-based companies to better report to the tax authority. Based on the feedback from our clients around the burden and uncertainty of taxes for clinical payments, we decided to take our participant payment expertise to the next level and create a streamlined workflow, introducing new enhancements within our ClinCard solution designed to assist with tax management.

Our latest release now offers enhanced functionality supporting better tax compliance, including:

  • Ability to automatically withhold a portion of taxable payments when a Taxpayer Identification Number (TIN) is not present or valid
  • Real-time TIN Validation
  • Configuration flexibility allowing clients to determine their appropriate settings
  • Enhanced reporting for remittance transparency

We get it. Taxes aren’t your favorite subject. But we are here to help ease the burden.

Learn more about Greenphire’s new ClinCard Tax Toolkit now. Call 215-609-4365 or request a demo today.

 

 

Zach Hales
Written by Zach Hales

As Product Manager for ClinCard, Zach oversees the strategic direction of the ClinCard solution.