Posted in general
With sharply increased information reporting penalties in their second year (as high as $260 per late Form 1099), timely issuance of Form 1099s has become a critical imperative for many businesses. The urgency for timely reporting is compounded by the continued presence of questions on Forms 1065, 1120, 1120S, and 1040, asking whether the taxpayer made any payments in 2016 that would require the taxpayer to file Form(s) 1099. Starting this year, taxpayers also face earlier deadlines for reporting W-2 and 1099 information to the Social Security Administration and the IRS.
Practice Aid: See ¶320,690 for a client letter that explains the requirement to file Form 1099 and the significance of the Form 1099 question on the various returns.
Penalties for Failing to File Correct 1099s
Information reporting penalties apply if a payer fails to timely file an information return, fails to include all information required to be shown on the return, or includes incorrect information on the return. The penalties apply to all variations of Form 1099.
The amount of the penalty is based on when the correct information return is filed. For returns required to be filed for the 2016 tax year, the penalty is:
For purposes of the lower penalty, a business is a small business for any calendar year if its average annual gross receipts for the three most recent tax years (or for the period it was in existence, if shorter) ending before the calendar year do not exceed $5 million.
Observation: Last year's increase in information return penalties represents the second time in just a few years that Congress has enacted sharp increases. For Form 1099s filed after August 1 or not filed at all, taxpayers face a 500% increase in the per-item penalty compared with the pre-2010 amount.
Last Updated by Admin on 2017-01-17 01:20:13 PM