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1099 Form Compliance

Information

It's that time of the year again! The IRS is placing significant emphasis on taxpayer compliance with information reporting laws. To fulfill your obligations, you must submit Form 1099-NEC (non-employee compensation) for each individual you have paid at least $600 during your business operations, including any attorney who received $600 or more in 2024. Additionally, you may need to file a 1099-MISC for various payments such as rent, medical expenses, royalties, and prizes.

 

If you have 10 or more information returns you are now required to e-file. Information returns include, 1099s, W-2s, 1065, 1120/1120S, etc. All Form 1099 submissions must be e-filed with the IRS and sent to the recipient by January 31, 2025. Penalties will be imposed on businesses for each form received after this date. If you would like HFA to prepare these forms, kindly submit all necessary information as soon as possible or by, Friday, January 17, 2025 to assist you. This will enable us to prepare the forms and return the package to you before the deadline, as no extensions are available for these forms.

 

Failure to provide Form 1099s without showing reasonable cause will result in penalties from the IRS. These penalties apply if you fail to furnish the statement by the due date, omit required information, or include incorrect details. The penalty structure is as follows:

 

  • $60 per information return for those filed correctly within 30 days after the due date (by February 28), with a maximum penalty of $664,500 annually ($232,500 for certain small businesses).

  • $130 per information return for those filed more than 30 days after the due date through August 1st, with a maximum penalty of $1,993,500 annually ($664,500 for certain small businesses).

  • $330 per information return for those filed after August 1st or not filed, with a maximum penalty of $3,987,000 annually ($1,329,000 for certain small businesses).

  • A penalty of at least $660 is charged for intentional disregard with no maximum penalty.

  • For incorrectly filed forms the amount of  penalty is based on when you furnish the correct payee statement. It is a separate penalty, and is applied in the same manner as the penalty for failure to file correct information returns by the due date, as described above.

 

You need to engage our firm specifically to prepare your 1099s. If your business undergoes an audit, the IRS will seek documentation of expenses and copies of filed 1099s for the year-end of 2024.

 

For your convenience, we have attached Form W-9. Kindly make copies and request your subcontractors to provide current information for this year's form.

 

If your business address or contact information has changed, please provide us with the updated information for accurate reporting.

 

If you have any questions or concerns regarding your 1099 filing requirements, please get in touch with us.

 

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