Businesses are seeing increased penalties associated with filing form 1099-MISC late or not filing at all. 1099-MISC forms are due on January 31, 2020, and businesses risk hefty fines if they fail to file. It’s important to note that there are no extensions available for 1099-MISC forms with non-employee compensation.
1099 Misc Penalties for Businesses
For businesses with gross receipts of $5M or less if 1099-MISC filed:
- No more than 30 days late; $50 per statement, up to a maximum of $194,500
- More than 30 days late but before August 1st: $110 per return; up to a maximum of $556,500
- After August 1 or not at all: $270 per return; up to a maximum of $1,113,000
- Intentional disregard; $550 per return. No limitation.
For large businesses over $5M in revenue, the penalties are the same, but the maximums are more.
According to the IRS website penalties may also apply if filed 1099-MISC:
- Fails to report a taxpayer ID#
- Reports an incorrect TIN
- Incorrect information is included on the statement
- File paper forms are not machine-readable (handwritten forms may become subject to penalties)
Businesses should obtain W-9’s from all vendors, especially those whom you will be issuing 1099-MISC forms.
When to File a 1099-MISC
Below are a few examples of payments made by businesses that require a 1099-MISC form to be filed with the IRS. Generally, businesses that pay $600 or more over the course of the year for the following are required to file a 1099-MISC form:
- Rent
- Services performed by someone you do not employ
- Prizes and awards
- Medical and health care payments
- Payments to an attorney
In addition, use Form 1099-MISC to report that you made direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment.
For a complete list, visit the IRS.gov website. Click here to read more about the 1099-MISC form on the IRS.gov website.
How DHJJ Can Help
Penalties for businesses that fail to file timely 1099-MISC forms are increasing. If you are unsure if your business is required to file 1099-MISC, contact DHJJ at 630-420-1360.
