January is almost upon us, and it’s time to begin preparing for tax reporting. This year, Rentec will simplify this task with automated e-file features for your 1099-MISC forms to both vendors and owners. Rentec will provide full e-file functionality with the IRS as well as mail out, as necessary, paper copies to the recipients and states. In preparation, we recommend the following:
- Edit your vendors and owners and verify you have the correct federal tax id number. For individuals this is their social security number (SSN), and for businesses it’s their employer identification number (EIN). Request a W-9 form from any vendor or owner for whom you don’t already have one on file.
- While in there, verify that the mailing address is accurate for each owner and vendor. The address is where their copy of the 1099 form will go to, which they will use for filing their personal or corporate return.
- Verify your numbers. It’s never too early to begin auditing your data. Review the 1099 Tax Assistant report and make sure the number match your records. This same data will be use for populating the e-file in January.
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Copy B of the 1099 must be furnished to the recipient by January 31st, 2013 and the filing deadline for reporting to the IRS is February 28th if filing by paper, or March 31st if filing electronically. Being prepared and meeting this deadline can save you from incurring IRS penalties. The IRS has instituted the following penalties for late or non-filers. The penalty applies if you fail to file timely, you fail to include all the information required to be shown on a return, or you include incorrect information on a return. The penalty also applies if you file on paper when you were required to file electronically, you report an incorrect TIN or fail to report a TIN, or you fail to file paper forms that are machine readable.
The amount of the penalty is based on when you file the correct information return. The penalty is:
- $30 per return if you file correctly within 30 days after the deadline; maximum penalty of $250,000 per year ($75,000 for small businesses).
- $60 per return if you correctly file more than 30 days after the due date, but by August 1st; maximum penalty $500,000 per year ($200,000 for small businesses)
- $100 per return if you file after August 1st or you do not file the required information returns; maximum penalty of $1,500,000 per year ($500,000 for small businesses)
* The IRS considers any business making an average of $5 million in gross revenue or less a small business.