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2017 – 1099 Filing Requirements

January 12, 2018 Uncategorized Comments Off on 2017 – 1099 Filing Requirements
As we enter the new year, 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. There are additional filing requirements if you paid dividends, interest and /or retirement benefits.

Made a Payment

If, as part of your trade or business, you made any of the following types of payments:
  • Payments, in the course of your trade or business: (1099-MISC) 
    • Services performed by independent contractors or others (not employees of your business) (Box 7)
    • Prizes and awards and certain other payments (see Instructions for Form 1099-MISC, Box 3. Other Income, for more information)
    • Rent (Box 1)
    • Royalties (Box 2)
    • Backup withholding or federal income tax withheld (Box 4)
    • Crewmembers of your fishing boat (Box 5)
    • To physicians, physicians’ corporation or other supplier of health and medical services
      (Box 6)
    • For a purchase of fish from anyone engaged in the trade or business of catching fish (Box 7)
    • Substitute dividends or tax exempt interest payments and you are a broker (Box 8)
    • Crop insurance proceeds (Box 10)
    • Gross proceeds of $600 or more paid to an attorney (generally, Box 7, but see instructions as Box 14 may apply)
  • Interest on a business debt to someone (excluding interest on an obligation issued by an individual) (1099-INT)
  • Dividends or other distributions to a company shareholder (1099-DIV).  Only applicable if your business is or was previously taxed as a C-Corporation.
  • Distribution from a retirement or profit plan or from an IRA or insurance contract to a plan beneficiary(1099-R)
  • Payments to merchants or other entities in settlement of reportable payment transactions, that is, any payment card or third party network transaction (1099-K)

Other Possible Reporting Situations:

If, as part of your trade or business, you were subject to any of the following situations:
  • Payment of mortgage interest (including points) or reimbursements of overpaid interest from individuals (1098)
  • Sale or exchange of real estate (1099-S)
  • You are a broker and you sold a covered security belonging to your customer (1099-B)
  • You are an issuer of a security taking a specified corporate action that affects the cost basis of the securities held by others (Form 8937)
  • You released someone from paying a debt secured by property or someone abandoned property that was subject to the debt (1099-A) or otherwise forgave their debt to you (1099-C)
  • You made direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment (1099-MISC)
Please contact us for additional guidance if you think any of these situations may apply to you.

Not Required to File Information Returns

You are not required to file information return(s) if any of the following situations apply:
  • You are not engaged in a trade or business.
  • You are engaged in a trade or business and
    • the payment was made to another business that is incorporated, but was not for medical or legal services or
    • the sum of all payments made to the person or unincorporated business is less than $600 in one tax year
For more detailed information, please see General Instructions for Certain Information Returns or specific form instructions.
Filing Options:
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 at year-end. In addition, many service providers offer an arrangement where they will process payments to your vendors 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 from vendors to collect tax information such as the vendor’s correct business name, address, and Tax Identification Number.  This information is needed to file Form 1099s at year-end.   If you obtain the completed Form W-9 from each vendor before you issue them a payment, you will ensure that you have collected the required information for 1099 reporting. Form W-9 can be found at the following link: http://www.irs.gov/pub/irs-pdf/fw9.pdf.
Please Note:  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 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 2017 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.
Increased Penalties:
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 $536,000 or $187,500 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 $1,609,000 or $536,000 for small business filers;
  • $260 penalty per information return for filing a 1099 after August 1st with the calendar year maximum increased to $3,218,500 or $1,072,500 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 info@newburg.com.

Disclaimer: Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. If desired, Newburg & Company, LLP would be pleased to perform the requisite research and provide you with a detailed written analysis. Such an engagement may be the subject of a separate engagement letter that would define the scope and limits of the desired consultation services.

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