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The 411 on The 1099s

January 14, 2016

The 2015 Forms 1099 must be provided to payees by February 1, 2016, with the exception of Forms 1099-B, 1099-S, and 1099-MISC (only for payments in boxes 8 or 14), which must be furnished to payees by February 16, 2016. All Forms 1099 are due to the Internal Revenue Service (IRS) by February 29, 2016. Electronically filed Forms 1099 must be submitted to the IRS by March 31, 2016.

Form 1099 is an information return used to report different types of income to the IRS and the payee. The IRS requires a yes/no response on federal business tax return Forms 1065, 1120, and 1120-S, and on Schedules C and E of Form 1040 on individual returns, to indicate whether the applicable Forms 1099 for the tax year were filed.

For security purposes, filers may now truncate a payee’s identification number, such as only showing the last 4 digits of a social security number (SSN), individual taxpayer identification number (ITIN), adoption taxpayer identification number (ATIN), or employer identification number (EIN), on a payee statement. The IRS copy must still show the full identification number.

Form 1099-MISC is used to report payments made in the course of a trade or business in excess of $600 to any unincorporated U.S. business or U.S. individual. Reportable payments include payments for services (including parts and materials), nonemployee compensation, rents, prizes and awards, medical and health care payments, and attorney fees. Form 1099-MISC is also required for payments in excess of $10 for royalties or broker payments in lieu of dividends or tax-exempt interest. However, any payments to vendors made with credit cards will be reported by the credit companies themselves and are not required to be included on a payer's 1099-MISC.

Generally, payments made to corporations and tax-exempt organizations are exempt from reporting requirements. However, payments made for legal services, medical and health care payments, and substitute payments in lieu of dividends or tax-exempt interest must be reported regardless of whether the entity is a corporation.

The IRS will enforce penalties for non-compliance or incomplete information returns. Penalties for not filing or late filing range from $30 to $100 per information return, with a maximum penalty of $1,500,000. If failure to file is due to intentional disregard, the penalty is at least $250 per information return with no maximum penalty limit.

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NSBN LLP
1925 Century Park East, 16th Floor
Los Angeles, CA 90067

(310) 273-2501