“I don’t have that many 1099’s.” Taxpayers are required to have W-9 forms to prove that 1099’s are not required, even if there are only a few vendors with whom the taxpayer pays
“I’ll just pay the penalties if I get caught.” Recent changes have significantly increased the penalties for non-filing. Non-filed 1099’s are now subject to a penalty of $530 per non-filed 1099. If the IRS determines there was intentional disregard, the penalties double
“My vendors won’t provide W-9 information.” Not a problem, however, you will be required to pay 35% of the vendor payment to the IRS for backup withholding.
“If I don’t issue required 1099’s the IRS will just disallow the deduction.” This is not true – the IRS will require late filing with the appropriate penalties and/or backup withholding assessed.
Here is some info to help you determine who you are required to provide with a 1099-MISC, filing deadlines, and penalties for late or non-filing.
Form 1099-MISC instructions
You must file a form 1099-MISC for those persons you paid at least $600 in rent or to perform services when that person is not your employee. Payments of $600 or more for prizes and awards, medical and health care payments, and payments to an attorney have also required the filing of form 1099-MISC. The amount reported is for payments made in the course of your trade or business; personal payments are excluded.
The exception to reporting of payments is those amounts paid to C or S corporations. Form 1099-MISC is required for payments to individuals, sole proprietors or single member LLC’s and partnerships.
In order to determine entity type, you should provide a Form W-9 Request for Taxpayer Identification Number and Certification to all entities that you engage to perform services for your business when it is not obvious that the entity is a corporation (i.e. name includes Incorporated, Inc., Corporation, Corp., P.C.). This form will provide you with a social security or employer identification number, as well as the entity’s federal tax classification. The classification is important as it is used to determine whether or not a 1099-MISC form is required to be filed by you. The W-9 is not filed with the IRS but retained by you.
**It should be noted that if an entity does not provide you with Form W-9 information, you are required to take backup withholding from payments for services provided.
Form 1099-MISC filing deadlines
Form 1099-MISC forms reporting non-employee compensation are due by January 31, 2018 to both the IRS and the recipient; all other 1099-MISC payment types are due February 28, 2018 if filing by paper, March 31, 2018, if filing electronically. These forms are due to recipients no later than February 15, 2018.
Form 1099-MISC penalties
Due to the increase in penalty rates in the past year and our recent experience with IRS 1099 form audits, we want to share the following penalty information:
-Forms filed 30 days late or less: $50 per 1099-MISC form
-Forms filed 31 days late through August 1: $100 per 1099-MISC form
-Forms filed after August 1 or not at all: $260 per 1099-MISC form
-Intentional disregard: $530 per 1099-MISC form
NOTE: These penalties will be assessed twice for each non-filed 1099: once for your failure to file the information and again for your failure to furnish a form to the recipient. Therefore, penalty rates are double the amounts listed above. Penalties may be applied not only for late filing, but also incorrect reporting of taxpayer identification numbers or other information, filing forms that are not machine-readable, and not reporting all required information.
We hope you find this information useful as you prepare for 2017 filing requirements. Your payroll provider may be able to assist you with 1099 preparation or you can utilize software and online packages. Should you need further assistance understanding the requirements or in the preparation and filing of Form 1099, please contact our office.Leave a reply →