The Internal Revenue Service requires that you file information returns, Forms 1099-MISC, for payments totaling $600 or more that are issued by your trade or business to individuals not treated as your employees, as well as to unincorporated entities such as partnerships and LLCs. This reporting applies to payments for services such as professional fees, contract labor, commissions, director fees, other non-employee compensation, and rents. With the exception of legal services, payments to corporations are exempt from these reporting requirements. In addition, you may be required to issue Form 1099-DIV to report dividends or liquidating distributions or Form 1099-INT to report interest payments.
The IRS requires Form 1099-MISC to be filed on or before January 31, 2019, when you are reporting nonemployee compensation payments in box 7.
The following penalties generally apply to the trade or business required to file information returns. The penalties apply to paper filers as well as to electronic filers. If you fail to file a correct information return by the due date and you cannot show reasonable cause, you may be subject to penalties. These penalties also apply if you file on paper when you were required to file electronically, you report an incorrect Taxpayer Identification Number or fail to report a TIN, or you fail to file paper forms that are machine readable.
The amount of the penalties is based on when you file the correct information return. The penalties are as follows:
- $50 per information return if you correctly file within 30 days
- $100 per information return if you correctly file more than 30 days after the due date but before August 1
- $270 per information return if you file after August 1 or you do not file required information returns.
If you need assistance with the preparation of your Forms 1099, please forward the name, address, social security or federal identification number, amount and type of payment for each applicable payee, as well as a copy of your 2018 QuickBooks file so that we can extract the necessary data, to your Untracht Early representative no later than January 15, 2019. The fee for compiling the information and/or preparation of the Forms 1099 will be based upon our standard hourly rates.