Posted In Taxes Accounting | Posted On 24, February 2020 | Posted By AB Value Team

Business Owners Must Know The Potential Penalties

We want to make sure we understand the rules as business owners so we want to ensure we are prepared for the unexpected. For 2020 we have to mail our 1099’s to the recipients by January 31, 2020 ; we have to file our 1099’s with the IRS by January 31, 2020 if they are getting paid as Non-employee Compensation. 

As a business owner, you will be asked on the tax return:

• Did the company make any payments in the year that would require it to file Forms(s) 1099? 

• If “yes,” did or will the corporation file required Forms 1099?

By answering these questions, you are indicating (under penalty of perjury) that your tax return is accurate and complete – including 1099 filing.

1099 Late filing penalty and Risks

If you File 1099’s late, you can get penalized ranging from $50 to $550 per 1099.. The amount of the penalty is based on when you file the correct information return, as follows:

1. $50 per 1099, if you file within 30 days of due date

2. $100 per 1099, if you file more than 30 days after the due date but by August 1; 

3. $270 per 1099, if you file after August 1;

4. $550 per 1099, if there is an Intentional Disregard of Filing

The IRS considers you to be a small business if you made $5 million or less in average annual revenues for the previous three tax years. IRS considers you a  Large Business with Gross Receipts of More Than $5 Million. 

Need More Time to File 1099’s 

You can apply for a 30 day extension for more time by filing Form 8809 with IRS. As always, you can see our reference links below and you can contact us to help with any of the things we discussed here to ensure a smooth filing. 

Reference Links:

https://www.irs.gov/pub/irs-pdf/f8809.pdf

https://www.irs.gov/government-entities/federal-state-local-governments/increase-in-information-return-penalties