The 2015 1099-MISC forms must be provided to recipients by February 1, 2016 per the IRS. The forms are due to the IRS by February 29, 2016 for paper returns or March 31, 2016 for electronic filing. A Form 1096 should be included with your filing.
Who should receive a 1099?
In general, the following situations will require a Form 1099:
- For payments in the amount of $600 or greater for the following: rents, services performed by a non-employee, prizes and awards, other income, medical and health care, crop insurance proceeds, cash payments for fish or other aquatic life you purchase from anyone engaged in the trade or business of catching fish, cash paid from a notional principal contract to an individual, partnership or estate, payments to an attorney, any fishing boat proceeds, director’s fees;
- Direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment;
- Each person from whom you withhold federal income tax under the backup withholding rules.
There are exceptions to these. One general exception is payments to a corporation including an LLC that is treated as a C or S Corporation for tax purposes. Prior to paying a vendor, businesses should obtain a W-9 from all vendors in order to determine whether or not a 1099 form is necessary. If the vendor will not provide a valid TIN, then the business must withhold 28% from their payment. Failure to follow backup withholding rules can result in penalties to the payer. The intentional failure to file form 1099 has a penalty of $500 per information return with no maximum penalty.
Also, when a W-9 is received, look for indications of a foreign company, such as address. Foreign companies will have different reporting forms and will not require a 1099. The latest W-9 revision includes Box 4 which is for exemption codes from the Foreign Account Tax Compliance Act (FATCA) reporting.
If you have any questions, please contact Gina Whitis at gwhitis@deandorton.com or by calling (859) 255-2341.