Prevent that Oops letter from the IRS
Its January!
As we all know there is a deadline date for the 1099’s and W2’s to be submitted to IRS and provided to the respective individuals. However, are you aware there are penalties that IRS can bestow upon business owners for missing those deadlines?
For instance, if a W2 or 1099 form is not filed there is a penalty of $250. It does not sound like much but if there were 10 forms the penalty would be $2500.
What if you file late? Yes, IRS has that covered. It begins at $50 and can go up to $100 per form. Again, if there are 10 forms the penalty can be from $500 to $1000.
There are other reasons besides not filing or being late where IRS can and will issue penalties.
Specifically, a penalty may apply if you:
- Fail to file on time
- Don’t provide all required information
- Include incorrect information
- Fail to report a TIN (or report an incorrect TIN)
- File paper forms that are not machine readable
- File paper forms when you are required to e-file (this can be $280 per form)
Below are two forms you may need for accurate reporting:
One is W4 which is for the employees
https://www.irs.gov/pub/irs-pdf/fw4.pdf
The other is W9 which is for independent contractors.
https://www.irs.gov/pub/irs-pdf/fw9.pdf
As a suggestion you may want to check with your employees and contractors if there have been any changes. Unfortunately sometimes with vendors you may have to hold the payment until you receive the W9.
As an owner, It should be a standard practice to request a W9 form from any new vendor/contractor. Unfortunately, the only leverage you may have to get one is payment.
Be aware, too, that under section 6722, the penalty amounts can double if you fail to provide correct payee statements and you cannot show reasonable cause. To avoid penalties for reasonable cause, you must prove that the failure was due to an event beyond your control or “significant mitigating factors.”
**Note – This is not an exhaustive list of the penalties that may occur.
If you have other bookkeeping deadline dates that should be posted please email us the name of the item and the date it is due
