Everyone needs to be aware of a few 1099 related issues this year. If you have a business and you paid more than $600 to any individual, partnership, or sole proprietorship during the you must issue a 1099 form to that person and report the information to the IRS. You must give the 1099 to the person by 1/31/2012 and file with the IRS by 2/29/2012. Failure to do so will cause you to incur penalties starting at $30 per 1099 form which should have been filed and can go to $100 per form.
You must obtain a federal identification number or social security number from the person you paid or will pay money to. You may have to withhold 20% from amounts paid to these individuals or subcontractors, generally if they do not give you their identification number or if you did not previously obtain it and cannot now get it from them.
There are now questions on your income tax return if you have rental property or a business which ask if you should have filed 1099 forms and if so if you did. These questions must be answered truthfully. There are additional penalties if they are not.