Today’s eMail contained the following message:
“I need to file two corrected 1099-MISC’s that were filed by an online service that doesn’t do corrections. Can you help me?”
Now that you mention it, yes we can. But it’s a matter of some curiosity (a) why someone offering to process 1099s would not provide correction services and (b) why someone would buy such a service.
The process of issuing, printing, mailing and filing information returns (1099s) is of necessity squeezed into a few short time periods. The first, January, is probably the worst. You have at most 31 days to prepare taxpayer copies of 1099s and get them in the mail – 33 if January 31 falls on a Saturday.
Wouldn’t it be nice, you say, if IRS would move that deadline back a week or two. But alas, the recipients of most 1099s need the information contained therein to prepare their own tax returns. Every day you give to the 1099 preparer is taken from the taxpayer.
Starting earlier is also problematic. Since 1099s in general report activity for a calendar year, you may find it hard to get complete data before the big ball drops in Times Square.
Stretching the Window
There are a number of things you can do to ease the pressure in January:
- Make sure that your Accounts Payable procedures include without exception the collection of Taxpayer Identification Numbers, names, and addresses of all payees – preferably before writing the check. Even where not required, a signed W-9 is a decided asset. Getting and organizing this basic information can be spread over the whole year, saving you a lot of hassle come January.
- Invest some time during the year in verifying payee data – including, where appropriate, the use of IRS’s TIN Matching program.
- A system which issues tax documents tends to have as many auditors as it has recipients. Get them working for you by being responsive to their inquiries and processing them before the filing deadline.
- File electronically – even if you are well below the 250-form limit beyond which electronic filing is required. This moves the filing deadline from February 28 to March 31, giving you a whole extra month to polish 1099 data before IRS sees it.
- Outsource everything that you can. The most important use of you, your staff and your IT folks is on tasks which require an understanding of your business. Concentrate those valuable resources on information gathering and problem resolution. Let someone else worry about forms, envelopes, printing, and carting the whole shebang down to the post office.
When you process a lot of data involving a lot of different people, it’s not surprising that errors crop up here and there. Indeed, as the message in today’s eMail attests, having only one or two 1099s to issue doesn’t eliminate the possibility of error.
Not to worry. IRS knows that mistakes are possible and has a procedure for correcting virtually anything that goes wrong. These procedures for the 1099 family of forms is detailed in IRS Publication 1220, Part A, Section 8, which you can download from www.irs.gov if you like that sort of thing.
Filing a correction may involve a penalty, but your chances of getting that penalty abated are much better if you file than if IRS discovers the error without your help. Penalties also increase for corrections filed after August 1. Your best bet is always to file a correction as soon as you discover an error. Diligence counts.
The 1099 Connection Advantage
By taking off your hands the mechanical tasks of printing, mailing, and electronic filing, 1099 Connection lets you concentrate on things which only you can do. When corrections are needed, our on-line system makes the job of entering them easy and straightforward. We then process those corrections in an appropriate manner, mailing corrected copies to recipients and generating electronic corrections as needed. If you correct a form before it is filed, IRS sees the corrected form as the original, not as a correction.
And if you find yourself having to correct a 1099 which was filed under a system that can’t handle corrections, call us.