The IRS has increased the penalty for failing to properly file a Form 1099-MISC to $250 per occurrence. The IRS is looking at this issue when they are conducting audits. As an example, failing to send/file 30 required 1099s could result in a penalty of $7,500.
Any unincorporated business or individual to whom you paid more than $600 during your taxable year must be sent a Form 1099-MISC. You need to file the 1099 by January 31st of the following taxable year. Many companies do not realize that some of their vendors are not incorporated, such as their CPA or lawyer. Note that lawyers, even if incorporated, must be sent a 1099.
You must issue a Form 1099-MISC to each person to whom you have paid at least $600 in rents, services (including parts and materials), prizes and awards, or other income payments. You are required to issue a Form 1099-MISC only for payments you made in the course of your trade or business, not for personal purposes. You will need to send a Form 1099-MISC to any individual, partnership, LLC, LLP or estate that this applies to.
The easiest way to compile vendor information for a Form 1099-MISC is a W-9. If you expect to pay more than $600 to a vendor, require them to fill out a W-9 before you pay them. The W-9 will give you all the information you need to complete the 1099. You can get a W-9 form here.
To obtain a Form 1099-MISC you need to order them from the IRS, pick them up from an IRS service center, or pick them up at your local post office, while supplies last. They are not available online as they are in triplicate. You need to compile all of your 1099s and submit them to the IRS with a Form 1096 and submit them by the deadline. You can get a Form 1096 here.
While you are required to issue all 1099s to your vendors by January 31st,the deadline to submit Form 1099-MISC and Form 1096 to the IRS is February 28th.
Please click here to view the IRS guidelines for the Form 1099-MISC.
Don’t ignore the 1099 or the process. It could save you major penalties for not filing the forms.
If you need more information about this article, please contact Jamie Downey at JMDowney@DowneyCoCPA.com or 800-849-6022.
