Greatland Reminds W-2 and 1099 Filers to Prepare for New Rules, Increased Penalties in 2011
GRAND RAPIDS, Mich., Jan. 12, 2011 /PRNewswire/ -- 2010 was a significant year in the world of wage and income reporting, as Congress updated and enacted multiple new laws increasing the penalties applied to those who don't comply with tax requirements, and expanding the types of purchase payments that are reportable.
According to Greatland Corporation, a provider of W-2 and 1099 products for business, the recently passed legislation contains additional regulations expected to increase the IRS's enforcement of wage and income reporting requirements, which will ultimately result in harsher penalties for noncompliance.
"Everything we see indicates that the Internal Revenue Service remains committed to strictly monitoring the 1099 and W-2 information returns to ensure accuracy and compliance," said Bob Nault, Greatland's CEO. "We expect this commitment will dramatically increase the volume of 1099 reporting for all companies and will definitely put more pressure on businesses to complete their reporting correctly and on time."
The Small Business Jobs and Credit Act of 2010 will increase 1099 and W-2 reporting penalties across the board, which will apply to information returns filed on or after Jan. 1, 2011, and therefore, all payments made in 2010.
According to section 2102 of the approved bill, Congress made the following increases to information return (W-2 and 1099) filing penalties:
- The penalty for failing to file accurate information returns increases to $100 per return (up from $50)
- The maximum failure-to-file penalty increases to $1.5 million (up from $250,000)
- If corrected returns are filed within 30 days, the penalty increases to $30 per return (up from $15)
- The maximum penalty for organizations that issue corrections within 30 days increases to $250,000 (up from $75,000)
- The penalty for filing corrections more than 30 days after the due date, but before Aug. 1, increases to $60 per return (up from $30)
- The maximum penalty for organizations that issue corrections more than 30 days past the due date, but before Aug. 1, increases to $500,000 (up from $150,000)
For small businesses, defined as organizations with gross receipts of $5 million or less:
- The maximum failure-to-file penalty increases to $500,000 (up from $100,000)
- The maximum penalty for organizations that issue corrections within 30 days increases to $75,000 (up from $25,000)
- The maximum penalty for organizations that issue corrections more than 30 days past the due date, but before Aug, 1, increases to $200,000 (up from $50,000)
Furthermore, the penalty for failing to file due to intentional disregard has increased from $100 to $250 per return. With many 1099 and W-2 reporting penalties doubling or tripling, it is even more important for businesses to ensure that all wage and income filings are completed accurately and submitted on time.
There are many changes that will require planning in 2011 to ensure accuracy for reporting changes set to take place in 2012. For example, the new rental property reporting requirement states that if you own rental property, as a business or an individual, and pay any service provider $600 or more during 2011, you will need to report it on a 1099-MISC in January 2012. This includes painters, plumbers, electricians, accountants, lawn care services, etc. Landlords and property owners will need to start tracking the information now or risk missing details next year.
Additionally, a new provision in the healthcare reform legislation is aimed at improving reporting and closing the tax gap. It will require all businesses to not only issue a 1099 to document income paid to contract workers, but also issue a 1099 form to any business from which they purchase at least $600 in goods or services. Some estimate that this change will have the average business seeing its 1099 reporting increase tenfold – a burden expected to only be compounded next year if businesses don't begin to prepare in 2011.
Greatland (www.greatland.com) is one of the country's leading providers of W-2 and 1099 products for business. Specialized product lines include: W-2 and 1099 forms and software, business checks and software, income tax preparation supplies and software, and mortgage forms. Greatland is an employee-owned company with locations in Grand Rapids, Mich. and Green Bay, Wis. Follow us on Twitter: @GreatlandCorp
More by this Source
Greatland's Top 10 Myths for the 2013 W-2 and 1099 Reporting Season
Dec 05, 2013, 11:31 ET
Browse our custom packages or build your own to meet your unique communications needs.
Learn about PR Newswire services
Request more information about PR Newswire products and services or call us at (888) 776-0942.