INSIGHTS & IDEAS

Issuing Forms 1099 to independent contractors

There is a new question of business tax returns asking businesses if they are required to file Forms 1099, and if so, if they complied.  Answering incorrectly may subject taxpayers to penalties, not issuing required Forms 1099 may subject businesses to audits. 

Employers are required to file a Form 1099-MISC by January 31, 2012 to any non corporate service provider who was paid at least $600 for services during 2011.  Although employers are not required to provide Forms 1099-MISC to corporate service providers, (except for attorneys and medical service providers doing business in corporate form) they are required to document with a Form–9, Request for Taxpayer Identification Number and Certification, that the service provider is indeed a corporation.   To avoid potential penalties for not sending Forms 1099 to all qualified service providers, employers should error on the side of issuing a Form 1099-MISC when it is not clear whether or not one is required. 

 

Paper copies must be mailed to the IRS no later than February 28, 2012.  If filed electronically, they must be submitted to the IRS by April 2, 2012.  It should be noted that the due date is February 28, not February 29, during Leap years.



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