1099s are "information returns" that you are required to prepare to report various payments made in the course of your trade or business to individuals and/or businesses. Employers can be penalized for failure to comply with the 1099 filing requirements. The General Instructions for Forms 1099, 1098, 5498, and W-2G explain why these forms need to be filed, how they should be prepared, and to whom they should be sent. The first page of the instructions highlights the current year changes to the various types of 1099s. Reviewing these instructions before preparing your 1099 forms will help you file your forms in compliance with IRS requirements.

Some guidance on filing Form 1099-MISC follows:

• On the 1099-MISC form, you are required to report amounts paid of $600 or more and Royalties of $10 or more.
  
  1099-MISC forms should not be given to an employee unless the employee is in fact self-employed and providing a service that is totally unrelated to the work they perform for you as an employee. Typically independent contractors offer their services to the public and you, and the person for whom the services are being performed has the right to control or direct only the result of the work, but not the means or methods used to accomplish the work. The consequences of treating someone as a subcontractor when they are an employee are that you may be held liable for the employment taxes of the worker and any benefits they would have been eligible for.
  
  
• 1099-MISC forms are not required for payments made to a corporation unless the corporation is a physician, a provider of medical or health care services, or an attorney. You need a taxpayer identification number (TIN) for anyone you are sending a 1099. This will be either their social security number or federal identification number. You can request the number by mailing them a W-9 form. A W-9 is your proof that the identification number you are using is the number they gave you, in the event you receive a notice from the IRS of a discrepancy and a request for back up withholding. If a recipient does not provide you with a TIN, leave the TIN box blank on the 1099 and file it anyway. Keep on file any correspondence proving you tried to obtain the TIN.
  
  
• Remember, backup withholding of 28% is required on payments made to persons without a TIN or refusing to give you a TIN or on payments made pursuant to an IRS notice requiring backup withholding.
  
  
• If you withhold backup withholding the regular filing limits for 1099s do not apply. In other words, you must prepare a 1099 regardless of the amount of the payment made to them. For example-A 1099-MISC form for lawn service does not need to be filed for amounts paid totaling less than $600; however, if there was backup withholding, a 1099-MISC would be filed for all amounts, including those under $600.
  
  For sole proprietors you may use the social security or employer identification number; the IRS prefers the social security number. You should show the individual's name on the first name & address line of the 1099 and the "doing business as" name on the second line. You may not enter only the business name.
  
  If you are using a social security number for reporting, you should not enter the business name. Instead, use the individual's name, or it's very likely you will receive a backup withholding notice. If payments were issued in more than one person's name, only one name may be shown on the first line; the name that corresponds to the TIN reported. Show other names of recipients or business names in the space below the first line if desired, before the address.

Forms are due to recipients by January 31th and to the IRS by February 28th of each year. If you are filing electronically, forms are due by March 31, 2008. Before filing, be sure that there are no amounts typed in an incorrect box, no zeros typed in boxes unless required to correct an error, no strikeovers, and no use of punctuation other than decimal points. Do not staple or tape your forms together. The telephone number of the 1099 provider must be included in the name and address section of most 1099 forms. This number must provide direct access to someone who can answer questions about the statement. The telephone number is not required on Copy A of the forms, which is filed with the IRS. Do not fold the forms when mailing. If you file 250 or more of any one type of form, you are required to file your forms on magnetic media. A signed 1096 transmittal form must be mailed with each type of 1099 form you file.

OTHER INFORMATION RETURNS

There are many other information returns with their own filing requirements. Some of the most common include:

• Form 1098- Mortgage Interest Statement: Mortgage interest (including points) you received in the course of your trade or business from individuals & reimbursements of overpaid interest. The reporting threshold is $600 and Form 1098 must be issued by the business or individual receiving the mortgage interest income. These are generally mortgage loans secured by a qualified deed of trust or other security interest in the property.
  
  
• Form 1099INT - Interest Income: This includes interest that you paid in the course of your trade or business from individuals or unincorporated businesses. Reporting is required if the amount of interest paid exceeds $10. Form 1099INT must be issued by the business or individual paying the interest.
  
  
• Form 1099DIV - Dividend Income: This includes dividends that your corporation to individuals (does not apply to S-Corporations). Reporting is required if the amount of interest paid exceeds $10. Form 1099INT must be issued by the corporation paying the dividends.

  Overview Letter: 1099 Information
  2007 Client Letter & 1099 Forms