Industry Alerts
It is important to note that the IRS is focusing heavily on 1099 taxpayer compliance this year by enforcing penalties and increasing fines. Penalty rates can range from $50 to $530 per return depending on how late the correct Form 1099 is filed.
Generally, any person, including a corporation, partnership, individual, estate, and trust, who makes reportable payments, as defined below, during the calendar year must file information returns to report those transactions to the IRS. This includes furnishing a hard copy Form 1099 to the recipients of the income.
Filing penalties may apply if you:
(1) don’t file a correct information return by the due date and a reasonable cause is not shown;
(2) file on paper when you were required to file electronically;
(3) fail to report a taxpayer identification number (TIN);
(4) report an incorrect TIN; or
(5) fail to file paper forms that are machine readable.
Penalties for failure to furnish correct payee statements may apply if:
(1) you don’t provide a correct payee statement by the applicable date and a reasonable cause isn’t shown;
(2) all required information isn’t shown on the statement; or
(3) incorrect information is included in the statement.
If you have questions about 1099s, please contact us. We are happy to help.