Tax Lawyers in San Francisco Bay Area

Christopher P. Housh, EA

San Francisco California Enrolled Agent

Are you required to File 1099s?

by Chris Housh 29. January 2013 09:56

This winter, I was a panel member for a seminar regarding IRS Form 1099 and What you Need to Know.   In preparing for my lecture, I was able to review some of the recent changes in 1099 requirements.  Now, since 1099s are due by February 28th, many of our clients are wondering if they are required to file 1099’s.  Below is a brief description of compliance requirements.   By no means is this comprehensive and it is not meant to take the place of specific advice regarding your specific tax situation.  Therefore, please do not hesitate to contact me if you have any questions or concerns.    

Who must file form 1099?

Form 1099-MISC is an IRS form to report  payments over $600 for the year for servicers and merchants who are individuals or partnerships.    Payments made to corporations generally do not require a 1099 be issued, however, it may be good practice to do so.  

While onetime payments over $600 may be memorable, it is important to note that the filing threshold is $600 for the year.   For instance, it is not uncommon to have a repairman out early in the year, pay him less than $600, and then use his services again later and have the total for the year exceed the $600 limit. As a result, you overlook getting the information needed to file the 1099s for the year. Therefore, it is good practice to have individuals who are not incorporated complete and sign the IRS Form W-9 the first time you use their services.   Penalties for failing to file 1099s or filing inaccurate forms have increased recently and range between $30 - $250 per form, depending on the situation.  

One way to minimize the risk of compliance problems is to have a properly completed and signed Form W-9s for all independent contractors and service providers.   IRS Form W-9 is an IRS form that allows you to obtain the data required to file the 1099s for your vendors. It also provides you with verification that you complied with the law should the vendor provide you with incorrect information.  To avoid a penalty, copies of the 1099s must to be sent to the IRS by February 28, 2013.

The tax attorneys, CPAs, and Enrolled Agents at Moskowitz LLP, A Tax Law Firm have successfully prepared tens of thousands of current year and delinquent individual income tax returns, corporate tax returns, partnership tax returns, trust tax returns, and estate tax returns. Our goal is to aggressively and legally limit the tax bills of our clients.   Part of this is advising businesses on tax planning techniques and how to comply with all tax laws so that you avoid penalties for non-compliance.      There may be significant advantages in having our law firm prepare your tax returns for any year in which large or complicated transactions occurred. Our office could advise you on the advantages and disadvantages we believe would apply to you in taking certain positions on your tax returns.

I welcome the opportunity to speak with you regarding your 1099 filing obligations, individual and business tax situation, or any other tax matter.

Disclaimer:  Because of the generality of this blog post, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Prior results do not guarantee a similar outcome. Furthermore, in accordance with Treasury Regulation Circular 230, we inform you that any tax advice contained in this communication was not intended or written to be used, and cannot be used, for the purposes of (i) avoiding tax related penalties under the Internal Revenue Code, or (ii.) promoting, marketing, or recommending to another party any tax related matter addressed herein.

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Chris Housh is an Enrolled Agent with Moskowitz LLP | Disclaimer | Copyright ©2012 Moskowitz LLP all rights reserved.