Beginning in 2017, there are revised filing deadlines for Form 1099-MISC. In prior years, you have had to issue contractors their 1099-MISC on or before January 31, furnishing a copy of the 1099-MISC to the IRS by February 28th. You must now furnish the IRS their copy by January 31.
Therefore, it is IMPERATIVE that you provide our offices all information related to the issuance of Form 1099-MISC for 2016 on or before January 6, 2017 in order for us to guarantee your compliance with the accelerated filing deadlines.
Not sure if you need to issue a form 1099-MISC? Here are the factors to consider:
Do you have W-9's on file for non-employee workers or contractors? Taxpayers in a trade or business should have non-employee workers or contractors complete a Form W9. A backup withholding requirement of 28% of the amount paid applies to reportable payments where the payee (i.e. non-employee worker or contractor) DOES NOT furnish a taxpayer identification number (TIN) by completing a W-9.
Did you make any reportable payments? Payments requiring a 1099-MISC form include commissions, fees, interest, rents, royalties, annuities and any other type of compensation or income to a single recipient. The forms are required to be issued under the following situations:
- Payments to any one vendor of $600 or more during the tax year in the course of your trade or business. The vendor must be an individual, LLC, or partnership; payments to corporations currently do not require a 1099, except for noted below.
- Professional fees to an attorney, doctor or other professional are included, as long as they are made in the course of your trade or business. Do not issue a 1099 for payments that are for personal expenses.
- Payments to corporations are included only if they are for medical, health care, legal or fishing activities.
- Payment of $600 or more in rent for office space, machines, equipment or land in the course of your trade or business if the payment was made to an individual, LLC, or partnership, not a corporation.
All business income tax forms, including Schedules C and E, contain the following two questions:
- Did you make any payments in 2016 that would require you to file Form(s) 1099?
- If “Yes”, did you or will you file all required Forms 1099?
Answering these questions on the tax forms is providing information under penalties of perjury. Substantial penalties may be imposed for incorrect answers.
The penalty to file correct information returns or to provide a correct payee statement (i.e. Form 1099-MISC) is $250 per failure, up to $3 million per calendar year. The penalties are doubled to $500 for intentional disregard.
If the payor takes corrective action, penalties are reduced. If the failure is corrected within 30 days of the required filing date, the penalty is reduced to $50 per failure; if corrected after 30 days but before August 1, the penalty is reduced to $100 per failure.
As your trusted business partner we cannot stress enough that your compliance with these important filing requirements is A NECESSITY! Please do not hesistate to contact us at 610-250-0862 with any questions or concerns you may have.