Essentially the repeal of the Comprehensive 1099 Taxpayer Protection Act and Repayment of Exchange Subsidy Overpayments Act of 2011put back in place the normal 1099-Misc reporting requirements.
Below is a general guide to assist you in preparing your forms 1099-MISC.
Who should prepare Form 1099-MISC?
-
Report only payments made in the course of your trade or business.
-
Personal payments are not reportable.
-
Nonprofit organizations are considered to be engaged in a trade or business and are subject to the reporting requirements.
Who should receive a Form 1099-MISC?
-
Individuals
-
LLCs
-
Partnerships
-
Corporations (under certain situations, see below)
-
Attorneys or law firms regardless of their business organization type (corporation, partnership, LLC, etc.)
When should a corporation receive a Form 1099-MISC?
-
Medical and health care payments reported in box 6.
-
Fish purchases for cash reported in box 7.
-
Attorneys’ fees reported in box 7.
-
Gross proceeds paid to an attorney reported in box 14.
-
Substitute payments in lieu of dividends or tax-exempt interest reported in box 8.
What should be included on Form 1099-MISC?
-
At least $10 in royalties paid during the year.
-
At least $600 (cumulative) in rents, services (including parts and materials), prizes and awards, other income payments, medical and health care payments, crop insurance proceeds, cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish, or, generally, the cash paid from a notional principal contract to an individual, partnership, or estate.
-
Any fishing boat proceeds paid during the year.
-
Cumulative gross proceeds of $600 or more paid to an attorney.
Electronic filing
If you are required to file 250 or more information returns you must file electronically. The 250 or more requirement applies separately to each type of form. The IRS encourages you to file electronically even though you are filing fewer than 250 returns.
When should the 1099s be filed?
The recipient’s copy should be mailed no later than January 31, 2012. The IRS copy should be mailed no later than February 28, 2012.
What are the penalties if you fail to file or file incomplete 1099s?
The amount of the penalty is based on when you file the correct information return. The penalty is:
- $30 per information return if you correctly file within 30 days (by March 30 if the due date is February 28); maximum penalty $250,000 per year ($75,000 for small businesses)
- $60 per information return if you correctly file more than 30 days after the due date but by August 1; maximum penalty $500,000 per year ($200,000 for small businesses)
- $100 per information return if you file after August 1 or you do not file required information returns; maximum penalty $1,500,000 per year ($500,000 for small businesses)
A small business is defined as having average gross receipts of $5,000,000 or less for the three most recent tax years.
Does Missouri or Illinois need a copy of the 1099s?
- Missouri requires that Form MO-99 be filed with the Missouri Department of Revenue for payments of more than $1,200 made to residents or non-residents, if the income is allocable to Missouri. A summary form MO-96 must accompany these forms.
- Illinois does not require a copy of Form 1099-MISC. They do require that you maintain a copy of the federal 1099-MISC in your records for a minimum of three years in case they request a copy.
If you have any questions regarding this tax letter or any other tax matters, please feel free to contact a Stone Carlie Tax Professional at 314-889-1100, or email us at taxinfo@stonecarlie.com
Comments (0)