At this time every year, the State of Georgia sends me a Form 1099-G. And every year, I question it. Why do I get this? The answer is simple. It's required. If the state doesn't send them, the IRS can impose fines up to $250,000.

Are you sending out required 1099s to all your independent contractors and certain other payees? Each calendar year you are required to report payments of $600 and over to certain recipients and the IRS. The deadline for submitting the forms to the recipients coincides with the W-2 deadline: January 31^st. You have until the end of February to submit the information to the IRS.

There are several different types of Form 1099. For the purpose of this article, we focus only on Form 1099-MISC for Miscellaneous Income. For a complete list of the various Form 1099s, see Appendix A to this article.

Form 1099-Misc should be submitted to each unincorporated payee you paid $600 or more for compensation for services or rent. This includes partnerships, LLCs and LLPs. Also, the form must be sent if you paid $10 or more to an unincorporated payee for royalties. Services include consulting and commissions for business items (not for personal). This does not include the purchase of goods.

There are two exceptions to the corporation rule. If you paid for services from a lawyer or medical care provided, you must report payments on Form 1099-Misc whether or not they are incorporated.

Below is a list of those you may need to submit Form 1099-Misc to each calendar year:

• Accountants
• Consultants
• Designers
• Guest speakers/Lecturers
• Performers

For a list of specific types of payments, see Appendix B. This list includes the type of payment and what type of form the payment needs to be reported on, whether it's Form 1099-Misc, another type of 1099, W-2 or other.

Form 1099 rules are constantly changing. It's important to seek professional advice to ensure you are following the most up-to-date guidance available. Failure to comply with the rules results in fees from the IRS ($50 for each Form with penalties as high as $250,000). Fees are imposed for:

• Not submitting the forms,
• Submitting incomplete or inaccurate forms, and
• Submitting forms too late.

Need more help? The IRS and IOMA (www.ioma.com) have several resources available to assist you with form 1099-MISC. Also, Swerdlin & Company provides 1099 filing services. Contact Adrian Johnson on our Compliance Team at 770.396.6601 extension 163 or email ajohnson@swerdlin.net to inquire about this service.

Appendix A

Appendix B