Heads up if you have a business and you haven't dealt with this yet. You could be behind the 8 ball, but there is still time to get out from under the problem.
The IRS has been playing with how they can increase "compliance"--making sure everyone is filing their tax returns and paying their fair share of taxes. A report issued a while back issued by the GAO indicated that a huge number of folks aren't filing tax returns at all. So that has the IRS looking for ways to get everyone to file returns. And what we are communicating in this blog talks about a IRS change that could impact you as the "payor" of money that needs to show up on someone's tax return. They think that if they put pressure on the payor, they'll get more recepients to comply.
Long story short, if you have a business, are a sole proprietor or are otherwise self employed and you paid anyone or any other unincorporated business $600 or more for services or rents in 2011 in the course of your trade or business, then you'll be required to affirmatively state on your 2011 return if you had any payments that met the requirements to send out Forms 1099 Misc and then if you say yes, then you'll need to affirmatively state that you did send them out. When we sign our returns, we are signing under perjury rules...so something to take serious.
Commonly overlooked: home office rent. If you are a renter and you pay a person or an LLC for your rent and if you end up deducting $600 or more of your rent for "home office expense", then you need to send your landlord a Form 1099 Misc.
When is the deadline for filing these forms? Technically, the deadline to send these forms out was January 31, 2012 for payments made in 2011. However, you don't have to send a summary of all forms to the IRS until either February 28th (or March 15th if you use an electronic filing service.) So if you think you have a few you should have sent and haven't sent these out to the folks you paid yet, you can jump on this now and take action. The deadline that is enforced more regularly is the IRS deadline (Feb 28 or March 15).....not the January 31 deadline (well, that's the way its been over time.)
We've been filing these forms for our clients since 2012 began. If you think this applies to you and need help, give us a ring. You can find out contact info on our website www.cjspadycpa.com.