January 30, 2013

Who do I send 1099-MISC to?

Due to a recent rash in request for W9’s from us to our dealers, I thought I would take a few minutes to go over some 1099 instructions.

You can read the form yourself here: http://www.irs.gov/pub/irs-pdf/i1099msc.pdf

1099’s are required to be sent out to based on the following:

File Form 1099-MISC, Miscellaneous Income, for each person to whom you have paid during the year:
* At least $10 in royalties (see the instructions for box 2) or broker payments in lieu of dividends or tax-exempt
interest (see the instructions for box 8);
* At least $600 in rents, services (including parts and materials), prizes and awards, other income payments,
medical and health care payments, crop insurance proceeds, cash payments for fish (or other aquatic life)
you purchase from anyone engaged in the trade or business of catching fish, or, generally, the cash paid from
a notional principal contract to an individual, partnership, or estate;
* Any fishing boat proceeds; or
* Gross proceeds of $600 or more paid to an attorney.  ( See Payments to attorneys, later. )
In addition, use Form 1099-MISC to report that you made direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment. You must also file Form 1099-MISC for each person from whom you have withheld any federal income tax under the backup withholding rules regardless of the amount of the payment.

Now – at first that sounds like you should send us one ( as you’ve paid us at least $600 in services ).  However, the instructions then go on to say…

**Exceptions.**
Some payments do not have to be reported on Form 1099-MISC, although they may be taxable to the recipient. Payments for which a Form 1099-MISC is not required include all of the following:

* Generally, payments to a corporation. ( But see Reportable payments to corporations, later. )

There are others, but that’s the one we want to focus on.  We are a corporation.  Currently ( this is not to say the IRS won’t change this at some future point ) we are exempt from needing a 1099. Now it does go on further to state which payment types made to a corporation still need to be reported, but nizeX does not qualify as any of those payments.  But for your information, they are:

Reportable payments to corporations:
The following payments made to corporations generally must be reported on Form 1099-MISC:
* Medical and health care payments reported in box 6.
* Fish purchases for cash reported in box 7.
* Attorneys’ fees reported in box 7.
* Gross proceeds paid to an attorney reported in box 14.
* Substitute payments in lieu of dividends or tax-exempt interest reported in box 8.
* Payments by a federal executive agency for services (vendors) reported in box 7.

As you can clearly see, the monies paid by you for your nizeX service do not fall under any of those categories, thus, we, as a corporation, are exempt from you needing to send us a 1099.

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