1099 Alert: Business Taxpayers Will Find New Questions on Tax Returns Regarding 1099 Filing Requirements

February 7, 2012

Are you filing as one of these types of business taxpayers: Sole Proprietors (Form 1040 Schedule C), Partnerships (Form 1065), or Corporations (Forms 1120 and 1120S)? If so, you will see two new questions on your return. First, you will be asked whether you made any payments in 2011 that would require the filing of Forms 1099. If you answer yes to that question (indicating that 1099 Forms are required), a related question will ask whether you have filed (or will file) all required 1099 forms.

The IRS requires all businesses (S-Corp, C,Corp, Partnerships, Schedule D, and Sole Proprietorship), including not-for-profits, to issue a Form 1099 to any individual or unincorporated business who was paid in excess of $600 during the calendar year. This is required whether the payment was done in one lump sum or if it was spread out over the course of the year. These Forms 1099 must have been sent to the service provider by January 31, 2012. It should be noted that Forms 1099 are not required if payment for the service was made electronically (debit card, PayPal, credit card, etc.), in which case the bank or credit card company who made the actual payment is responsible for sending out the Forms 1099.

The deadlines for filing the Forms 1099 with the IRS are February 28, 2012 for paper filing and April 2, 2012 for electronic filing. The penalty for failing to file the forms can be as much as 50% of the amount paid for the services.

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