IRS requires a 1099 (commonly called a ‘ten ninety-nine’) to be issued to any individual, partnership, or other unincorporated entity to whom you make payments of 600.00 or more in any calendar year. This does not mean a 600.00 payment it means a cumulative total of 600.00 or more during the year.
All payments to corporations are exempt from reporting requirements (except certain medical payments). Save yourself some trouble and don't bother with these.
IRS is primarily concerned with individuals who are not actually companies. Most of us think of these people as "independent contractors". However, the law requires 1099 reports for all unincorporated entities (sole-proprietorships, partnerships, etc). The fines for non-compliance are 50.00 per 1099, but the risk of being fined for not reporting is extremely low. A common misconception held by many is that IRS can disallow a deduction for a legitimate business expense simply because a 1099 was not properly issued. This is not true.
We suggest that, at an absolute minimum, you file a 1099 for any individual that could be considered an independent contractor. This would include outside consultants as well as "employee-type" workers who are hired to do specific jobs but are not legally considered to be employees.
Although we will gladly assist you in preparing 1099’s, we cannot accept any responsibility for compliance with this reporting law, including non-filing, the filing of incorrect 1099's, or 1099's with incorrect amounts, or incorrect identification numbers (regardless of fault).
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