As the year-end approaches, we wanted to provide you with some reminders regarding Form 1099 filing requirements:
Form 1099 Reporting Requirements:
In the course of your trade or business if you paid $600 or more for services to non-incorporated vendors (individuals, partnerships, LLPs and LLCs) for subcontracted or freelance services, professional fees and/or rent, you are required to issue them a Form 1099-MISC by January 31st. Starting with 2016 returns, forms with non-employee compensation in box 7 need to be filed with the Internal Revenue Service and state authorities by January 31st whether filed electronically or by paper. There are additional filing requirements if you paid dividends, interest and /or retirement benefits.
We would like to direct you to an IRS-approved website that can electronically transmit the filings to the appropriate tax reporting agency and mail the recipient copy on your behalf:
Once the data is entered, this service will do the rest. The cost is $3.49 per form and the cost declines if filings are more than 50 forms. This is a very cost effective means to file your 1099s.
As an alternative, you may wish to consider using your payroll service to file these forms and/or to make payments to your service providers that require a 1099 form. The payroll service can issue these payments via check or direct deposit to the vendor and can accommodate the filing requirements to the respective tax authorities.
Form W-9 is required for vendors to provide tax information such as the vendor’s correct business name, address, and Tax Identification Number to the Company. If you give the Form W-9 to your service providers before you issue them a payment, you will also have the required information for 1099 reporting at year end. Form W-9 can be found at the following link: http://www.irs.gov/pub/irs-pdf/fw9.pdf.
As a reminder, Newburg & Company, LLP is not responsible for filing these forms on your behalf.
Two Questions on Business Returns Aimed to Improve Compliance:
We wanted to remind you that there are two relatively new questions that have been added to all business returns to confirm compliance which include sole proprietors (Schedule C), corporations and partnerships (including LLCs and LLPs). For example, the corporate tax return reads:
“Did the corporation make any payments in 2016 that would require it to file Form(s) 1099? Yes or No”
“If Yes, did the corporation file or will it file all required Form(s) 1099? Yes or No”
Owners and officers of their respective businesses are signing the return under penalties of perjury. It is important as the preparer of your tax returns, that we remind you of these questions as they are requisite to the filing of your return.
Failure to issue a 1099 can result in a disallowance of the deduction as well as incurring penalties for each Form 1099 not filed.
The following penalties are in effect:
•$50 penalty per information return for filing a 1099 not more than 30 days late with the calendar year maximum increased to $532,000 or $186,000 for small business filers;
•$100 penalty per information return for filing a 1099 more than 30 days late and by August 1st with the calendar year maximum increased to $1,596,500 or $532,000 for small business filers;
•$260 penalty per information return for filing a 1099 after August 1st with the calendar year maximum increased to $3,193,000 or $1,064,000 for small business filers;
•$530 penalty per information return for intentional failure to file, with no maximum penalty.
Please do not hesitate to contact us should you have any questions regarding your 1099 filing requirements. As an alternative, feel free to email us your questions at firstname.lastname@example.org.