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In case you missed it, the IRS has moved up the filing date for 1099s that report non-employee compensation in Box 7, such as payments to independent contractors. The reporting date to the IRS is now January 31, the same date that 1099s must be issued to all recipients. This deadline applies whether the forms are filed electronically, or on paper. (Note that if you don't have amounts to report in Box 7, then the deadline remains February 28 for paper filings and March 31 for electronic filings.)
The January 31 deadline has long applied to businesses, landlords, and farmers providing these forms to all independent contractors or vendors who were paid $600 or more during the previous calendar year, and that date remains unchanged. This new accelerated government deadline will help the IRS fight fraud and identify theft, verify legitimate returns, and issue refunds more quickly to all taxpayers eligible to receive them.
Not only has the filing date been moved up, the IRS has also increased the penalties for failure-to-file, late filing, and intentional disregard of filing requirements. Late 1099s filed within 30 days of the due date will face a penalty of $50 per form. Beyond 30 days, the penalty increases on a sliding schedule, depending on how many days late the records are, so you could pay up to $250 per instance (which means $250 for not sending to the IRS, and $250 for not giving to the recipient, for a total of $500). If you are required to file 1099s but choose not to, you can face a major penalty of $520 per form.
With this earlier deadline, it's important to be prepared. Each 1099 is matched with a Social Security number and if the IRS can't match information on the submitted forms, they won't release a refund. The best way to meet deadlines and avoid penalties is to ask all independent contractors and vendors for a W-9 before you issue any payments. Form W-9 contains all the information you'll need to prepare any required 1099s, including the full name, mailing address, and Social Security number or Tax ID number of the vendor or contractor.
If you need help meeting the January 31 deadline or have questions about the 1099 filing process, contact us today.