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  • Miki Afik-Shifman

1099-Misc need to be issued by January 31


Who Must File Form 1099-MISC ?, Each person to whom you have paid during the year: At least $600 in: – Rents, – Services performed by someone who is not your employee (including parts and materials), – Prizes and awards, – Other income payments. Only when payments are made in the course of your trade or business. Personal payments are not reportable. You are engaged in a trade or business if you operate for gain or profit.

However, nonprofit organizations are considered to be engaged in a trade or business and are subject to these reporting requirements. Payments to Attorneys The term “attorney” includes a law firm or other provider of legal services. Attorneys’ fees of $600 or more paid in the course of your trade or business are reportable on box 7 of Form 1099-MISC

Exceptions: Some payments do not have to be reported on Form 1099-MISC, although they may be taxable to the recipient. Payments to a corporation (including a limited liability company (LLC) that is treated as a C or S corporation). But see Reportable

W-9 Form- Request for Taxpayer Identification Number and Certification

You better ask a vendor to fill out a W-9 Form before you issue him a check. It will save you time and headaches when you will need to issue him a 1099-Misc at the end of the calendar year.

What happens when a vendor does not want to provide you with a W-9 ?

The business should contact the vendor, up to three different methods and occasions for the payee’s Tax ID, in order to avoid a penalty for failing to include a Tax ID on the Form 1099 filed by the business.

If a payee refuses or neglects to provide a Tax ID when properly requested by a business, the business should immediately begin backup withholding, at the rate of 28 percent, on any reportable payments made to the payee (and remit this amount to the IRS).

Finally, if a contractor, vendor, or other payee refuses or fails to provide his Tax ID, the business should still fill out and timely file its 1099 information return(s) with a notation that the payee failed or refused to provide his taxpayer identification number.

Penalties for failure to file Congress has increased the penalties for failure to file or late filing of Forms 1099 effective January 1, 2016. Currently, the penalty to file correct information returns or to provide a correct payee statement is $100 for each return for which such penalty occurs, up to $1.5 million per calendar year.


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