Did your business make any payments that would require filing Form(s) 1099-NEC or other similar forms? Just a friendly reminder, you may be required to issue annual 1099 forms for payments made in the course of your trade or business for services. 

 

Form 1099-NEC, formerly line 7 from Form 1099-MISC, is used to report payments for services provided TO your business by unincorporated (self employed, LLC, partnership) vendors and independent contractors when payment exceeds $600 for the year. All four of the following conditions must be met to be required to send form 1099-NEC

 

1. The payment must be made to a non-employee

2. The payment must be made for services to the trade or business

3. The payment was to an unincorporated entity (if payments are legal services they are required)

4. Payment or payments totalled $600 or more for the year

 

If you fail to provide correct payee statements, you may be subject to a penalty per statement up to certain designated maximum amounts. Please see the IRS Information Return Penalty Rates at the end of this document for specific information.  In addition, the Internal Revenue Service (IRS) could assess 28% backup withholding to you for failing to file the required form.

 

If this applies to you, please respond to our email to start the next step. We will send a template back after you indicate you want us to assist you. In that template, please be sure to review each name, address, zip code, and Social Security number or federal identification number (EIN) for accuracy. We will provide more detailed instructions on filling out the template in the follow up email. We do recommend that you use IRS Form W-9 to obtain complete information from your vendors. Use of this form will shift IRS penalties for incorrect information from you to the vendor. As the requester, you are required to retain this form in your files. The link to the IRS website where you can obtain Form W-9 is: https://www.irs.gov/pub/irs-pdf/fw9.pdf.

 

We do charge for this service as we have to file forms with the IRS, the state, and mail forms to the recipients of the 1099. We charge a base fee of $15 per payee, regardless of the the number of forms filed. Then on top of that, we charge $15 for the first ten forms filed and each form filed after that is $10 per form. If you need to file 12 different 1099 forms, we would charge $15 base fee, $15 times the first ten forms or $150, and then $20 for the last two forms for a total of $15 + $150 + $20 or $185. 

 

We will need this information by January 20th, 2022 AT THE LATEST so your Form 1099s can be filed in a timely manner. If you need help cleaning up your records in order to know how much vendors were paid, we are happy to help with that but please let us know ASAP so we can make sure we have everything we need. If you have any questions, please let us know.

 

Sincerely,

 

Michael S. Pease, CPA

MSP Tax & Accounting

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