Year-End Tip:  New Deadlines for 1099s – How to Get Ready NOW!

By Cindy Brinker

November 30, 2016

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We’ve all heard the horror stories of fraudulent returns being filed in taxpayer’s names.  To minimize the opportunity for fraud, the Protecting Americans from Tax Hikes Act, was passed by Congress and signed by the President in December 2015. The act revises the filing deadline to January 31 for certain types of Form 1099.


Form 1099-MISC – New Filing Deadline

The new January 31 deadline applies only to 1099-MISC, Box 7.  People and companies that paid miscellaneous income of more than $600 to individuals or independent contractors must give the payee the Form 1099-MISC and report the amounts in Box 7Nonemployee Compensation.  This form must be given to the recipient and filed with the IRS by the deadline of January 31.

If you don't have amounts in Box 7, then the deadline for furnishing the form to recipients is February 15, 2017.  The deadline remains February 28 for paper filings or March 31 for electronic filings.  Since the 1099’s can be filed together, the recommendation is to file all 1099s by January 31.

 

1099 Deadlines (Due Dates) for 2016/2017

Form

Due to Recipient

Mail Filing to IRS

E-Filing to IRS

1099-MISC Box 7

January 31, 2017

January 31, 2017

January 31, 2017

1099-B

1099-S

1099-MISC Boxes 8 or 14

February 15, 2017

February 28, 2017

March 31, 2017

Tips for Preparing Form 1099-MISC

As the end of year approaches, it is important for all employers to prepare well in advance as there is no room for procrastination.  Here are the steps to take now to ensure you will meet the new filing deadlines and avoid penalties: 

  • Make sure you have a Form W-9 for each payee and confirm the accuracy of all information.
  • Order 1099-MISC forms and the transmittal form (Form 1096). The IRS changes these forms every year.
  • If you are using a payroll service to pay your independent contractors, submit year-end adjustments and confirm the accuracy of all information as soon as possible.
  • Reconcile your actual amounts paid to the detailed 1099 amounts now so that you can correct any discrepancies, leaving only December to reconcile at year-end.
  • Check for errors before you submit to the IRS.

Who should receive a Form 1099-MISC?

Generally, a Form 1099-MISC must be provided to any "nonemployee", such as independent contractors, to whom you paid $600 or more during the calendar year. In general, payments include: 

  • Services performed for a trade or business by people not treated as its employees. Examples: fees to subcontractors or directors and golden parachute payments.
  • Rental of real property and equipment
  • Payments to a physician, physicians' corporation, or other supplier of health and medical services issued mainly by medical assistance programs or health and accident insurance plans (such as pre-employment physicals)
  • Fish purchases for cash
  • Attorney’s fees
  • Gross proceeds to an attorney, such as for legal settlement (Box 14- Due to IRS February 15th)
  • Substitute payments in lieu of dividends or tax-exempt interest

New Penalties for Late Filing

The new penalties range from $50 to $500 per missed 1099 tax form, depending on how late the forms were submitted as detailed below. Additionally, the penalty increased from $100 to $250 per failure to file correct information returns.

NEW

Penalty per Form

OLD

Penalty per Form

Length of Delay

$50

$30

Failure corrected in 30 days

$100

$60

Failure corrected after 30 days but before August 1

$250

$100

Failure corrected after August 1

$500

$250

Intentionally neglecting to file

How might the new deadlines help?

This first year will be a test to see if the deadline change reduces the statistics for fraudulently filed returns.  In theory,

  • The 1099 information is uploaded into agencies systems by January 31;
  • Individuals begin filing tax returns in February (still waiting to see what date IRS will begin allowing returns to be filed);
  • Matching to documented W-2’s and 1099’s can occur immediately and returns with incorrect information can be rejected.

 

Final Thoughts

Being prepared, informed and ready to file your 1099s will help to minimize your risk of penalty.  Taxpayers in a trade or business should have non-employee workers or contractors complete a Form W-9 if they believe payments to any individual might add up to $600 or more for the year. To the extent anyone is paid $600 or more, a Form 1099-MISC should be issued prior to January 31.

If you have any questions about the 1099 filing, you can reach us at any time.  We’d be happy to help you out.  


 

Best Practices, Year-End Planning, 1099

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