Form 1099 Deadline Looms

By Marcia Richards Suelzer, Toolkit Staff Writer

If you paid someone, other than one of your employees, more than $600 for services that they provided to your business in 2010, then you need to give that person a Form 1099-MISC by January 31, 2011, or face a $50 penalty per form.

• Act Now. Unlike most IRS forms, fileable versions of Form 1099 series cannot be downloaded from the IRS web site. Instead, an approved paper version must be used. These can be obtained from the IRS, but you can also obtain authorized versions from any of the major office supply chain stores.

Your obligation to the IRS doesn't end when you provide the individual with a copy of Form 1099-MISC. You also will need to file a copy with the IRS by February 28, if you file using a paper copy. (You have until March 31 if you opt to file electronically, using a vendor registered with the IRS's Filing Information Returns Electronically (FIRE) system.)

• Plan Ahead. If you are interested in electronic filing, the IRS provides a listing of FIRE providers. Some providers offer free services to employers that only need to file one or two forms. Others, such as eFileMyForms.com, offer streamlined sign-up, online service and low prices per form.

Whether you pick "paper" or "electronic," you want to make sure to file the information returns with the IRS by the due date. If you don't file on time, or if the form is incomplete or inaccurate, you may face a penalty for each late form. The amount of the penalty increases with the passage of time. The penalty is $15 per form if you file within 30 days of the due date, up to a maximum of $25,000 for a small business; $30 per form if the form is filed more than 30 days late, but by August 1 (up to a maximum of $50,000 for a small business), and $50/form after August 1 (up to a maximum of $100,000 for a small business.)

Posted January 28, 2011.