With the release of the 2011 Income Tax Return forms, we discovered new questions regarding 1099 reporting requirements that the IRS has slipped onto the Tax Returns for businesses (including Partnerships, S-Corporations, Corporations, and Schedule C). You now must answer “Yes” or “No” to the following questions:
- “Did you make any payments in 2011 that would require you to file Form(s) 1099?”
- “If ‘Yes’ did you or will you file all required forms?”
While 1099 reporting obligations for businesses have existed for many years, these new questions tighten the vice considerably by forcing businesses to confirm their obligation and sign regarding compliance.
The most common types of payments made in the course of a trade or business that must be reported on Form 1099-MISC include: rents, services, and attorney fees in excess of $600 to an individual or business not operating as a corporation. Attorney fees must be reported even if paid to a corporation. The Form 1099-INT is used to report interest payments in excess of $10 to an individual or business not operating as a corporation.
If you have made such payments in 2011 and have not yet filed 1099 forms, they must be filed before February 29, 2012 to avoid a late filing penalty. For more information on 1099 reporting requirements you can visit the Internal Revenue Service website (www.irs.gov) or call our office and we can help you determine if you are in compliance with the reporting requirements. If you are required to file 1099 forms and have not, our staff can assist with this as well.
To maintain 1099 compliance in future years it is good practice to obtain a W-9 forms from new vendors prior to payment. This form can be found on the Internal Revenue Service website or provided by our office.
If we can assist you in 1099 processing or if you have further questions, feel free to contact our knowledgeable CPAs and staff.