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1099-Misc - Not Something to Ignore

Posted 1/19/2017

A few years ago two questions were added to all business returns and I believe some business owners still don't understand the importance of these two little question.  The first ask "Did you make payments that would require 1099?"  The second ask "If yes, did you issue them?" (are you going to comply).  Keep in mind these questions become part of the income tax return that is being signed "under penalties of perjury".  So, here we are in the heat of 1099 season and getting some businesses to issue these documents can be like pulling teeth.  What every business owner should understand is the requirement of the tax accountant under Circular 230.  We have Due Diligence requirements and can be fined if we knowing put false information on a tax return as well as banned from the e-file program.  So, if you fail to provide the 1099 info and refuse to issue the required documents, then we have no option but to answer those two little questions as follows:  1) Did you make payments that require 1099?  YES, 2) Are you going to comply? NO.  If the return is signed with any other answer, I believe you have committed perjury.  In our opinion, we believe this information will be used to select returns for audits.  I hear people tell me all the time, "I don't want any RED FLAGS"!  Then issue the 1099 forms!