The filing of Form 1099s is a hot topic with the IRS right now. Deadlines for filing Form 1099-MISC have been moved up to January 31, 2017 (from February 29 in 2016) and maximum penalties have also increased. It is more important than ever that you familiarize yourself with the filing requirements and properly file all 1099s.
- Professional Services
- Custodial Services
Generally, you don’t need to report payments to a Corporation. However there is one major exception:
- Payments of $600 or more to attorneys are and continue to be reportable whether the payment is made to a law firm or an individual attorney.
How can you tell if you need to file a Form 1099-MISC? Ask questions! Never assume that because a business name includes the word “Company” or “Co” that it is a Corporation. Business that are Limited Liability Companies or LLCs can be treated as sole proprietors, partnerships or corporations. The best way to insure you have the information you need is to get a payee to complete IRS form W-9 before you write a check.
Failure to file correct information returns by the due date can be costly. For 2016 reporting, businesses must send the 1099-MISCs to the recipients and the IRS by January 31, 2017. Other 1099 due dates are still February 28th and March 31st if filing by paper or electronically. The penalties have recently been changed for returns required to be filed after December 31, 2016 to the following amounts:
- $50 per information return if you correctly file within 30 days (by March 30 if the due date is February 28); maximum penalty $532,000 per year ($186,000 for small businesses).
- $100 per information return if you correctly file more than 30 days after the due date but by August 1; maximum penalty $1,596,500 per year ($532,000 for small businesses).
- $260 per information return if you file after August 1 or you do not file required information returns; maximum penalty $3,193,000 per year ($1,064,000 for small businesses)