1099 tax form changes could hurt businesses that don’t comply
Tax changes for the 2012 year can trip up any business, but this year the penalties for not complying with 1099 regulations have increased. For any company filing these documents, the use of third-party 1099 processing services, as Business News Daily suggests, can help companies avoid any for mistakes.
According to Accounting Today, one of the major changes this year is that anyone filing a 1098, 1099 and 5498 can now truncate his or her Social Security, taxpayer or adoption taxpayer number on 2012 forms. The only exception is the 1098-C forms, on which recipients must write out their entire identification number.
Another large change is important to consider for anyone in the agriculture business. For any business that has hired a H-2A visa agricultural worker, payments over $600 will now be reported on a W-2, not a 1099. If the employee does not supply a tax identification number, earnings should be reported on a 1099-misc form.
On the 1099-B form, some boxes have been renumbered and moved around, so businesses and recipients should be cautious when filling out this form. In addition, fields on the form have been added to report "the stock or other symbol, quantity sold, whether basis is being reported to the IRS, and state income tax withheld."
Additional changes on the 1099 and other tax forms could cause a business hiring freelance workers to make mistakes that could result in hefty fines. By working with an online, IRS-approved vendor when managing tax forms, businesses can avoid the potential penalties and remain profitable.
Tab Service Company is a leading provider of 1099 outsourcing services. As an SOC2-approved service organization, we apply industry-best practices to our approach with clients.