TMTW # 76 – 2011 Form 1099 reminder

Tax and Money Tip of the Week
2011 Form 1099 Reminder
 January 11, 2012 | No. 76


We wanted to take an opportunity to remind all our business owners that the 2011 Form 1099s are due to be filed in the coming weeks. Here’s a quick update.
In 2010, a law was passed that would have required companies and many individuals to issue 1099s to practically all vendors. Due to public outcry that law was repealed. However, beginning with the 2011 tax returns, the IRS has added some new disclosure requirements.
The following questions have been added to all business returns, including schedule C, Schedule F and Schedule E on individual returns (1040), as well as corporation (1120) and partnership (1065) returns.
·  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 1099?
Generally, if you are operating a business and you pay anyone other than a corporation $600 or more during the year for services provided (including parts and materials), you are required to issue a 1099 to that entity (Person or Business “Service Provider”) by January 31, 2012.
The penalty for not filing a required 1099 with the IRS is $100 per 1099.  There is also a $100 penalty for each 1099 not provided to the recipient Service Provider.  If it is determined that a taxpayer willfully neglected to file 1099s, the penalty is $250 per 1099 not filed with the IRS and another $250 per 1099 penalty for not providing a copy to recipients.
Given that this is an area of greatly increased IRS scrutiny this year, we recommend that all business owners review your vendors’ payments for 2011, and determine who may or should receive a 1099.  Verify that you have the entity’s proper name, address and federal ID number.
You are welcome to contact our office if you have any questions or would like our help with Form 1099s. They are due to be filed by January 31, 2012. Questions or Comments?

You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week.

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