Form 1099 Penalties

Businesses are required to send 1099 forms to independent contractors who perform services for them where the payments are at least $600 during a calendar year. Payments to corporations are generally exempt from 1099 reporting except for payments to attorneys. There are also questions now on business tax returns asking if all required 1099 forms will be filed. The IRS encourages businesses to file 1099 forms by big penalties of $250 per failure and double that for intentional disregard. Filing the 1099 forms late within 30 days will just get you a reduced penalty of $50 per failure. The due date for 2016 1099 forms to be sent to the IRS is 1/31/2017 which is a month earlier than 2015 1099 forms. Before you do business with an independent contractor, you should have them fill out a form W-9 to get their federal ID #.