New 1099 Questions for Business Filers
Business Filers; Schedule C, Schedule E, Schedule F, Form 1120S, Form 1120 and Form 1065 filers have been required to file Form 1099 for many years, but starting in 2011 your Business Tax Forms will contain two new questions that must be answered when preparing your tax return:
1. Did you make any payments in 2011 that would require you to file Form(s) 1099? If “Yes”,
2. Did you or will you file all required Form(s) 1099?
The IRS has also increased penalties for failure to file Form 1099; it is now a total of $200 per Form 1099 for not meeting this requirement. These new questions and the increased penalties are evidence that the IRS is trying to find businesses that are not filing Form 1099. It is more important than ever that this filing requirement is not overlooked.
This is a summary of the basic Form 1099 rules:
x If a business (which includes sole proprietors) pays $600 or more a year for services performed or rent paid to an individual, partnership, or LLC, that business is required to issue Form 1099-MISC reporting the total dollar amount paid to the service provider during the year. Form 1099-MISC also applies to payments made to corporations if made for legal services or medical services.
To do this properly, you should have each service provider give you a signed Form W-9, stating his or her name, address, and employer identification number or social security number BEFORE you make the first payment to the vendor. This will ensure you have the information needed to file the Form(s) 1099 at year-end.
Many of you are already asking service providers for W-9’s and issuing Forms 1099, but we want to reiterate a summary of the rules and remind everyone that all Business Filers are subject to the Form 1099 filing requirements. 1099’s are due to the recipient by January 31st and a copy is due to the IRS by February 28th. You can view the IRS 1099 requirements at http://www.irs.gov/pub/irs-pdf/i1099msc.pdf
You must have a W-9 from each service provider and an up to date, reconciled internal bookkeeping system that totals the payments for each vendor in order to comply with the 1099 filing requirement ie Quickbooks, Accounting CS, etc.
You can download a W-9 at: http://www.irs.gov/pub/irs-pdf/fw9.pdf?portlet=103 or call us and we will make you copies.
We hope this information is helpful and we want to remind everyone that 1099 processing is NOT INCLUDED in the “Basic” Tax, Accounting and Payroll Engagements we provide to you.
Again, 1099’s can only be prepared by you or for you, if you have W-9’s from your service providers and an up to date, reconciled “internal” bookkeeping system. If you would like more details on how to comply with this very important requirement and how we can help you, please contact us at 419-517-1117.