Rebecca Martinez, CPA, and
Crystal Gonzalez-Solis, CPA
Beginning in 2011, the IRS updated all business entity tax returns as well as the
Schedule C (Profit or Loss from Business) and Schedule F (Profit or Loss from
Farming) of individual tax returns to inquire and document whether the taxpayer is
required to file 1099s and if they were filed - further enhancing the taxpayers'
Forms 1099-MISC is required to be filed by businesses that make certain payments to
non corporate entities (with some exceptions) for qualifying services. Individuals
who report income and expenses from rental property and business entities whose only
business activity is rental activity are not required to file forms 1099-MISC.
Forms must be filed for each payee for payments including, but not limited to:
- At least $10 in royalties or broker payments in lieu of dividends or tax-exempt
- At least $600 in rents, services, other income payments, or medical and health
- Gross proceeds of $600 or more paid to an attorney (including corporations)
These forms must be provided to each payee by January 31st of the following tax year
and must be filed with the IRS (along with Form 1096 - Annual Summary and Transmittal
of U.S. Information Returns) by February 28th. Penalties for late filing range from
$30 - $100 for each 1099-MISC, depending on how late the forms are issued.
Intentional disregard of filing these forms will result in a penalty of at least $250
with no maximum amount.
In order to accurately and timely file these returns, we strongly encourage all
required filers to provide Form W-9 (Request for Taxpayer Identification Number and
Certification) to each payee that provided services and request that the forms be
completed and returned. A good practice is to have the service provider sign off on
the Form W-9 when they are initially contracted. Once completed, the Form W-9 will
contain the information needed in order to complete Form 1099-MISC. Incomplete and
incorrect Forms 1099-MISC will be subject to the same penalties as if the forms were
filed late (penalties range from $30-$100 per Form). Form 1099-MISC and Form 1096
can be electronically filed or paper versions can be sent to the IRS (if you file
more than 250 Form 1099-Misc you must file electronically). Please note that paper
versions must be printed on official, scannable IRS forms which can be ordered from
the IRS or office supply stores.
Please feel free to contact
Burton McCumber & Cortez, LLP if you have any questions or need