Master Guide to Form 1099 Compliance

 As closing the tax gap continues to occupy both Congress and the IRS, there are continued IRS enforcement efforts designed to increase reporting by payers, increase the withholding of federal tax where required, and produce more accurate reporting of income by taxpayers.

The 2016 Master Guide to Form 1099 provides detailed instruction surrounding the reporting rules, regulation updates and changes, and provides indexed information for the very wide range of reporting scenarios that you could encounter in Accounts Payable. The wealth of supporting documentation will help ensure that you are reporting accurately, on-time, and staying in-compliance. This is a must-have resource for AP professionals.

The book will cover:

  • Form 1099-MISC Reporting Deadline Changes

Form 1099-MISC reporting amounts as non-employee compensation (“NEC”; reported in box 7) are now due to both the payee and the IRS January 31, beginning with forms filed in January, 2017 reporting tax-year 2016 payments. The January 31 IRS due date applies equally to paper forms and electronically filed forms. For 1099-MISC box 7 reporting, electronic filing does not give you any later filing date.

  • New audit and examination programs

If a company undergoes an employment tax examination by the IRS, the examiner is required to also determine whether the company filed information returns as required. The internal IRS directive calls the examiners’ attention specifically to look at: Forms 1099-MISC, 1099-K, 1099-INT and W-2, plus “etc.”

If the appropriate forms were not correctly filed, the examiner must consider expanding the audit to include a penalty case file and/or review your company’s Form 945 (the report of non-wage withholding liability and federal tax deposits) in connection with establishing whether backup withholding requirements have been met.

  • Increased penalties

The basic penalty for failure to file or failure to furnish statements increases from $250 per item to $260 per item beginning with 2016 information returns due in 2017. For section 6721 and 6722 penalties, which are assessed for failures to timely file accurate 1099s and furnish Form 1099 statements to payees, the amounts for calendar-year maximums are:

  • $3,178,500 for penalties at $260 each item under the general rule;
  • $1,589,000 for penalties at $100 per item applicable if corrections are done by August 1;
  • 529,500 for penalties at $60 per item applicable if corrections are done within 30 days after the required filing date.

For smaller businesses, annual gross receipts $5 million or less, the corresponding calendar-year maximum amounts are $1,059,500; $529,500; $185,000.

  • Elimination of Automatic 30-Day Extension

Proposed regulations, REG-132075-14, provide for elimination automatic of 30-day extensions of the IRS filing due date, and the first filings for which this could apply would be 2017 forms due in 2018. When the automatic 30-day extension is eliminated, the IRS will still accept and consider requests for 30-day extensions only in cases of extraordinary circumstances or a catastrophe such as a natural disaster or fire destroying the records you need for preparing 1099s, and if the request is certified under penalties of perjury by an individual authorized to sign for the reporting business.