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New 1099 Deadlines and Penalties for 2016

Originally Posted on the QBOChat Blog

1099 Tax Time is coming. And this year, it’s going to be shorter, more intense, and more costly than ever before. That’s due to two key changes that come into play for Tax Year 2016.

Change #1 - 1099-MISC Box 7 E-File Deadline Now January 31st

In years past, there was a little bit of wiggle room between when you delivered 1099s to your recipients and when you had to file that info to the IRS. Two months of wiggle room to be precise.

During this time, recipients had an opportunity to call out any mistakes on their forms and corrected forms could be prepared accordingly.

For 2016, that’s no longer the case.

The IRS has changed the E-file deadline from March 31st to January 31st for 1099 forms with Box 7 - “Nonemployee Compensation” income. Box 7 is the most common type of income found on the 1099. You or your client likely have at least one of them to file for this year. So, for practical purposes, this makes it a best practice to deal with all your 1099s by January 31st of this year.

Change #2 - Penalties for Both Filing and Delivery are Up

As if having a shorter deadline weren’t enough, the consequences of missing that deadline have been increased. Across the board, late penalties are up. Some have more than doubled. And, these penalties apply to both filing and delivery to your recipients. Here’s a rundown of the increases for this year:

Filing with IRS

  • Within 30 Days of Deadline
  • From $30 to $50 per form
  • After 30 Days of Deadline
  • From $50 to $100 per form
  • After August 1st or Do Not File
  • From $100 to $260 per form
  • Intentional Disregard
  • From $250 to $530 per form

Delivery to Recipient

  • Within 30 Days of Deadline
  • From $30 to $50 per form
  • After 30 Days of Deadline
  • From $50 to $100 per form
  • After August 1st or Do Not File
  • From $100 to $260 per form
  • Intentional Disregard
  • From $250 to $530 per form

What Can You Do?

The remedy is easy: start early and use software. The biggest risk to you missing the tighter deadline is missing info. You’ll need to ensure you and your clients have all the required information necessary from your recipients to file their forms. Usually, this takes the shape of a missing or out of date Legal Name, Physical Address, or Tax Identification Number.

So start reaching out to your recipients now to make sure you have an up to date W-9! You can use software (like what we’ve built at Payable) to track down that missing information for you. Come January 2017, all that will be left to do is add the payment information for 2016, file the 1099s with the IRS, and deliver the 1099s to your recipients. As you might have guessed, Payable automates those activities, too.

Tad is the Co-Founder and CEO of Payable.

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