It’s that time of year again! Time to enjoy friends and family and reflect on our past year. Most importantly though, it is time to start thinking of our tax filing obligations as a business owner!
One of those responsibilities is filing 1099 forms for any individual or business, who is not an employee or a corporation that was paid $600 or more during the year for services, rents or attorney’s fees.
We want to emphasis this because the IRS has begun focusing heavily on taxpayer compliance with information reporting laws. (Per new guidelines and due dates) All Form 1099’s, must be mailed to the recipient by January 31, 2020. This year HFA will be e filing the Internal Revenue Forms 1096 and government copies of Form 1099. Forms received by the IRS after the due date will be subject to a penalty.
If you would like us to prepare these forms for you, please submit all information by January 10, 2020, so we can prepare the forms timely and return them to you so that you will be able to mail them to recipients before the due date. Unless you specifically, engage our firm to prepare your 1099s, you are responsible for preparing and filing Forms 1099.
We have provided the following to show the seriousness of these filing obligations:
If you fail to provide Form 1099s and cannot show reasonable cause for the failure, you will be subject to a penalty. The penalty applies if you fail to provide the statement by the deadline, fail to include all information required on the statement, or include incorrect information on the statement. The penalty is:
- $50 per information return for returns filed correctly within 30 days after the due date (by February 28 if the due date is January 31), with a maximum penalty $250,000 a year ($75,000 for certain small businesses);
- $100 per information return for returns filed more than 30 days after the due date with a maximum penalty $500,000 a year ($200,000 for certain small businesses); and
- $260 per information return for returns filed with missing or incorrect name/TIN combo or not filed at all, with a maximum penalty of $1,500,000 a year ($500,000 for small businesses).
Attached is a Form W-9 for your convenience. Please make copies and have your subcontractors provide current information for this year’s form.
If you are audited, the IRS will request documentation of expenses and will require copies of 1099s filed for the year-end 2019.
The IRS could charge a penalty for forms filed with incorrect information. Also, if your business has moved or if you have changed the mailing address please provide us with the new address for the forms.
Please feel free to reach out to us with any questions or concerns regarding your 1099 filing requirements.
Very truly yours,
HOLMAN FRENIA ALLISON, P.C.