Are you Required to Issue 1099s?
Businesses and individuals with business type activities, such as certain rental activities, are required to issue 1099s to unincorporated vendors who provided services to them during the year. If you paid another individual, a partnership or an LLC for providing services to your business, you are required to issue them a 1099 by January 31st of each year. Copies of the 1099s and a transmittal are due to be mailed to the IRS by February 28th each year. The most common types of 1099s issued are for cleaning services, repairs and maintenance, landscaping, contract labor, rent, interest and professional services provided by unincorporated entities (such as IT companies and accounting firms).
Gordon, Keeter & Co. is incorporated, so our clients are not required to send us a 1099. However, there is not a penalty for sending a 1099 when you are not sure. The IRS has starting moving towards stricter compliance with the 1099 filing requirements in the last several years. Every income tax return now has a question regarding whether or not your business was required to file 1099s and a second question regarding whether or not you have filed or plan to file the required 1099s. Additionally, this year the IRS has increased amount of penalties that can be assessed for taxpayers who do not comply with the 1099 filing requirements.
If you would like more information regarding the 1099 filing requirements, please contact our office.