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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.
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.)
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.