I would like to share an experience I had with two clients last week.  These two taxpayers received IRS penalties related to late filings of forms 1099. After I revised the filing dates of these forms I Informed the clients that these forms were filed late. My office did not file these forms for these clients.

As the IRS continues to enforce 1099 compliance by small business, the risk of not filing out those forms is large.

Not providing a correct statement (intentional disregard) carries a penaly of $250 per 1099, with no maximum for the year. Late filing of mandatory 1099s could lead to penalties ranging from $30 to $100 per 1099, with a maximum of $500,000 a year for your smaill business. The amount of the penalty is based on when you file the corirrect information return.

The due date to provide these foms to your independent subcontractors is January 31st. You are required to send these forms to the IRS by February 28th to avoid these penalties.

I am recommending my clients to keep good records of payments made to Independent subcontractors and collect forms W-9 with the information needed to prepare these forms on time.

If you require any additional information regarding the filing of these forms, please call my office.

Have a great week!!!

Julio Jiron, CPA

Written by: Julio Jiron, CPA

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