2016 Form 1099 Due Dates & Penalties

Every person engaged in trade or business must file an information return for payments made to another person for services performed in the course of the payer’s trade or business if the aggregate remuneration paid to the person is $600 or more in any tax year.   The return is made on Form 1099-MISC accompanied by Form 1096.

Form 1099-MISC, Box 7, reports non-employee compensation of $600 or more.  These amounts may include fees, commissions, prizes, awards, compensation for services performed, and certain other payments.   If the following four conditions are met, the payer generally must report payments in box 7 of Form 1099-MISC:

  1. The payment is made to someone who is not an employee of the payer
  2. The payment was made for services in the course of the payer’s trade or business
  3. The payment was made to an individual, partnership, estate and in the case of attorney’s fees, even corporations must receive a 1099.   Please note that LLC’s that have not file form 8832 and made an election to be taxed as a corporation are not exempt from information reporting requirements.   Attorney fees are always reportable, even if they are incorporated.
  4. The payer made payments to the payee of at least $600 during the year.

Other 1099s for Dividends (1099-DIV), Interest (1099-INT), for mortgage interest received (1098) may also need to be filed by certain taxpayers.

NEW FOR 2016

The 2015 PATH Act has accelerated the due dates for Form 1099-MISC, as well as W2’s effective for 2016 forms that are due in 2017.  ALL Forms 1099-MISC and Forms W2 must be filed by Jan. 31, 2017, without regard to how they are filed with IRS (1099’s) or SSA (W2’s).   There is no automatic extension of this due date. 

However, a 30 day extension may be obtained by requesting that on Form 8809.

https://www.irs.gov/pub/irs-pdf/f8809.pdf

PENALTY

The penalty amount for the non-filing or incorrect filing of Forms W2/W3 or 1099-MISC will be based on when the initial/correct form is filed.

  1. The initial penalty amount will be $50 per form for any form filed after the due date but within 30 days of the initial due date.  If the form is not correct and not corrected by Aug. 1, it will be considered not filed and subject to the late filing penalties.  The maximum late filing penalty is $532,000 per year.
  2. Any Form W2 or Form 1099-MISC filed after the 30th day from the initial due date but on or before August 1st will be subject to a $100 per form penalty.  The maximum penalty is $1,596,500 per year.
  3. If Form W2 or 1099-MISC is filed after August 1st, the penalty is $260 per form.  The maximum penalty is $3,193,000 per year.
  4. An intentional disregard for the rules is subject to a $530 per form penalty with no maximum.

Before paying any outside or service person it is advisable to have them complete and sign a Form W-9 so that you will have the info available in the event a 1099 is required. 

https://www.irs.gov/pub/irs-pdf/fw9.pdf