It pays to stay on top of our game this year, every year really, but the IRS is really putting the petal to the metal on fines for late and non-filers. It's time to start thinking about this now and make sure you have the proper TIN (Taxpayer Identification Number) on file. The TIN is an individual's social security number (SSN) or a business's employer identification number (EIN).
The 1099-MISC form is pretty simple with just a few fields; however, accuracy is key. One tiny mistake can cost you a lot from the IRS, not to mention inconveniencing your client if they rely on the information (most do). The IRS has been encouraging property managers to e-file their 1099s for some time. E-filing has numerous benefits as well: it is cheaper, more accurate, saves paper, and is instant. You can also wait to file later with the IRS if you e-file, if you wish. If you are using a product specialized for the property management industry, it may have e-file support built right in so it's as easy as a click of the mouse to submit all your 1099s instantly and then automatically mail copies to the recipients.
-- IRS Penalties For 2012 Tax Filing --
Copy B of the 1099 must be furnished to the recipient by January 31st, 2013 and the filing deadline for reporting to the IRS is February 28th if filing by paper, or March 31st if filing electronically. Being prepared and meeting this deadline can save you from incurring IRS penalties. The IRS has instituted the following penalties for late or non-filers. The penalty applies if you fail to file timely, you fail to include all the information required to be shown on a return, or you include incorrect information on a return. The penalty also applies if you file on paper when you were required to file electronically, you report an incorrect TIN or fail to report a TIN, or you fail to file paper forms that are machine readable.
The amount of the penalty is based on when you file the correct information return. The penalty is:
$30 per return if you file correctly within 30 days after the deadline; maximum penalty of $250,000 per year ($75,000 for small businesses).
$60 per return if you correctly file more than 30 days after the due date, but by August 1st; maximum penalty $500,000 per year ($200,000 for small businesses)
$100 per return if you file after August 1st or you do not file the required information returns; maximum penalty of $1,500,000 per year ($500,000 for small businesses)
* The IRS considers any business making an average of $5 million in gross revenue or less a small business.
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Nathan is a member of Rentec Direct who provides property management software, tenant ach payment processing, tenant credit check and criminal reports for property managers and landlords.
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