December 10, 2014
Are you aware of the IRS regulations regarding Form 1099 reporting for Forms 1065, 1120, 1120S and 1040 Schedule C (Self-Employment) ?
IRS has included the following two questions in the previously named forms:
1. Did you make any payments in 2014 that would require you to file Form(s) 1099?
2. If “Yes,” did you or will you file all required Form(s) 1099?
The IRS is requiring you to sign your tax returns, under penalty of perjury, saying that you fully understand the Form(s) 1099 filing requirement and have complied with them.
Our clients typically have to file a 1099-MISC for payments of $600 or more for services to a non-employee that is not a corporation. An LLC does not qualify as a corporation and does not enjoy the same exemption from reporting. Payments of $600 or more for services to an LLC must be reported on Form 1099.
Some common examples are payments to :
• Management company (management fees)
• Attorney (even if incorporated) - Payments to attorneys must be reported even if they are a corporation.
This does not cover all situations where 1099s are required to be filed, and ultimately you are responsible for complying with the IRS regulations as they apply to your specific situation. The Form 1099(s) are due to the recipient on January 31 and are subject to penalties of up to $100 per form for being filed late or having incomplete information.
We have recently learned that IRS has an internal mandate that all business tax returns under examination will be closely reviewed to ensure all required 1099s were filed. Agents will scrutinize the detail for any contract labor or consulting expense looking for payments that should have been reported on Form 1099. This makes proper reporting more important than ever.
We are here to answer any questions or assist you with 1099s as needed, just contact us.
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