Professional Service Firms Articles - FORM 1099 MISC

Forms 1099-MISC must be furnished to the recipient no later than January 31, 2005.

FORMS 1099-MISC are required to be filed in the following instances:

1. For each person paid at least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest
2. For each person paid at least $600 in rents, services, prizes and awards or other income.
3. For gross proceeds paid to an attorney. 
4. If you have withheld any federal income tax under the backup withholding rules regardless of the amount of the payment.

The following payments are exempt from the requirements to file Form 1099-MISC:

1. Payments to a corporation, other than for attorneys' fees, payments in lieu of dividends or tax-exempt interest
2. Payments for merchandise or similar items.
3. Payments to a tax-exempt organization.

If you file 250 or more 1099s, you must file the forms electronically or by magnetic media. The 250-or-more requirement applies separately to each type of form. For example, if you file 500 Forms 1099-MISC and 100 Forms 1099-INT, you must file the Forms 1099-MISC electronically or by magnetic media, but you may file the Forms 1099-INT by paper. Acceptable forms of magnetic media are IBM 3480, 3490E, 3590 or 3590E tape cartridges; and 31/2 inch diskettes. Electronic submissions are filed using the Filing Information Returns Electronically System (FIRE System). You may access the FIRE System via the Intranet at http://FIRE.IRS.gov. See IRS Publication 1220(www.irs.gov) for electronic filing specifications. If you file electronically, you may file by March 31, 2005. Massachusetts also requires anyone with 250 or more Forms 1099 to file them on magnetic media, using IBM 3480 cartridges or diskettes and Form BMRS-3. More information can be obtained at the Massachusetts DOR website (www.dor.state.ma.us).

For New England filers, paper returns with Form 1096 and copy A of Form 1099 should be mailed by February 28, 2005 to the IRS at:

INTERNAL REVENUE SERVICE
CINCINNATI, OH 45999

For Massachusetts, a copy of Form 1096 and copy 1 of Form 1099 should be mailed by February 28, 2005 to:

MASSACHUSETTS DEPT OF REVENUE
FORM 1099 REPORTING
PO BOX 7045
BOSTON, MA 02204

Payers can match the recipient name and the taxpayer identification number on the IRS website (www.irs.gov) in order to minimize the amount of backup withholding and penalty notices.

Find out how our expertise in accounting for professional service firms can add value to your business. Email us or call us at 1 (888) 875-9770.

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