Information about 1099 Filing Requirements

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We want to remind you about the 1099-MISC filing rules. Recently the IRS has begun assessing penalties for businesses failing to file 1099s or filing them late. The minimum penalty for late filing is $35 per 1099, which can add up quickly. Anyone you have paid over $600 for services in the course of your business could be eligible to receive a 1099-MISC.

These forms need to be mailed to vendors by January 31st of the year following the payment. The IRS gets a copy as well, which should be mailed by February 28th.

Trade or business reporting only. Report on Form 1099-MISC only when payments are made in the course of your trade or business. Payments for services outside your business do not require filing form 1099-MISC. You are engaged in a trade or business if you operate for gain or profit.

File Form 1099-MISC, Miscellaneous Income, for each person to whom you have paid during the year, at least $600 in rents, services (including parts and materials)

The only exception to issuing the 1099-MISC is for payments to corporations, other than incorporated legal firms (attorney PC’s). LLC’s are not exempt. You can greatly simplify the process by requiring a form W-9 be completed by all service vendors prior to issuing payments to them. The form W-9 is a formal request for the information necessary to complete the 1099-MISC since the vendor provides the business name, address, identifying number and type of business.

Since most business returns require disclosure of any payments qualifying for 1099 reporting we will be asking at the time your return is prepared if 1099’s should have been or should be issued. At that point they will be late and subject to potential penalties.

This document is intended to serve only as a reminder of the requirement to file and to do so by January 31 each year. I am writing it at this time because I have seen my first penalty assessment for late filing when that filing was voluntary (not the result of an audit). As a result, I am STRESSING these forms are supposed to be sent to your vendors by January 31.

This document is not intended to be a complete description of who should receive a 1099-MISC from you. If you need more information or would like to discuss how it applies to you, please call us.

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