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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, LLC, or S-Corporation that you have paid at least $600 during your business operations in 2023, including any attorney who received $600 or more. Additionally, you may need to file a 1099-MISC for various payments such as rent, medical expenses, royalties, and prizes if you had paid $600 or more.

 

All Form 1099 submissions must be e-filed or sent to the IRS by January 31, 2024, as well as sent to all recipients. 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 19. 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 if you correctly file within 30 days (by March 30 if the due date is February 28); maximum penalty $630,500 per year ($220,500 for small businesses, defined below).

  • $120 per information return if you correctly file more than 30 days after the due date but by August 1; maximum penalty $1,891,500 per year ($630,500 for small businesses).

  • $310 per information return if you file after August 1 or you do not file required information returns; maximum penalty $3,783,000 per year ($1,261,000 for small businesses).

 

You need to engage our firm specifically to prepare your 1099s with responsibility of filing them with the IRS. If your business undergoes an audit, the IRS will seek documentation of expenses and copies of filed 1099s for the year-end of 2023.

 

Above is a link to a Form W-9 for your convenience. Please make copies and have your subcontractors provide current information for this year’s form.

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If your business address has changed, please provide us with the updated address 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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