New for Tax Year 2009
Warning: Please read the NEW compliance issues, and proposed 1099
laws below.
New SSN Masking
1099 Express supports SSN masking! The
responsibility for protecting recipients from identity theft has been placed on
the filing company by the IRS under this new program.
In December 2009, the IRS announced a new program to increase security by
allowing you to mask the first 5 digits of recipients SSN.
For example, the SSN would be shown as XXX-XX-6789. This applies only to
the recipient copy only, which is usually sent in the mail. SSN Masking
does not
apply to the IRS copy or other copies. Please see
Notice 2009-93
on the IRS official web site, for more details.
It is easy to use this new security feature in 1099 Express. Unfortunately, because of this new IRS
ruling, if you choose not to mask your SSNs, you might be exposed to unnecessary risk
and/or liability. Under this program you may mask only Social Security Numbers coded
such as
123-12-1234. You may not mask Employer Id numbers such as 12-1234567.
1099 Express does the work of substituting the X's automatically on the correct
forms! You are not expected to mask numbers manually. However, if you have
dash-less numbers, use the easy solution to set dashes in EINs only.
For complete details, see the HELP/INDEX menu Topic No. 37 in the 1099 Express program.
Printing 1099s to PDF files for e-Mailing to recipients
Paperless is the wave of the future. CPAs are often e-Mailing complete and
secure 1040 tax returns. 1099 Express has this new feature free at no extra
cost:
Instead of creating 1099s on blank paper with your laser printer, 1099 Express can create an encrypted,
password protected PDF file for each recipient. Each PDF file contains that person's 1099
form exactly as it would appear if created on blank paper. The password is the person's Tax ID
number. The PDF cannot be opened unless the recipient knows the Tax ID number.
This method is probably more secure than paper forms which could be
stolen in the mail.
Thus, if you have that person's e-Mail address, you can safely e-Mail each person's 1099
as an attachment.
Therefore, it would be a good idea to begin requesting each person's e-Mail
with
the W-9 form, if you want to use this feature. Warning: Never e-Mail 1099 forms unless they are password
protected. Doing so could subject you to risk and liability.
For complete details see the HELP/INDEX menu Topic No. 6a in the 1099 Express program.
New State e-Filing requirements
For 2009 forward, many states are requiring e-Filing 1099 and W-2 forms. For example,
Minnesota requires that:
- Tax Year 2009 e-File all W-2s or 1099s if more than 50 forms.
- Tax year 2010 e-File all W-2s or 1099s if more than 25 forms.
- Tax year 2011 e-File all W-2s or 1099s if more than 10 forms.
So how do I check my STATE's Requirements? Answer: CLICK HERE.
You can also see HELP/INDEX menu Topic No. 23 in the 1099 Express program.
To avoid penalties, if you have to file to the
states, you might as well e-File to the IRS and the states at the same time
under the Combined Federal/State filing program. Each state had different
requirements. Some states may require the IRS
Pub. 1220 file, or the SSA EFW2 file, instead of the Combined Federal/State
filing program.
1099 Express and W-2 Express software can solve these compliance issues in
almost every instance.
New Proposed Legislation HR 3408 makes CORPORATIONS reportable and INCREASES
1099 penalties:
1099-Misc filers will see significant increases in penalty assessment if this
legislation becomes law. Organizations that do not comply can be at serious
financial risk for penalties, interest and withholding, for many reasons,
including filing late, filing with incorrect Tax ID/Name combinations, not
e-Filing when required, not reporting payments to corporations, and more. For
example, a $2,500 penalty for 50 late forms would increase to $12,500,
and a failure to e-File 300 forms (forgetting corporations) would increase from
$15,000 to $75,000. These penalties are scheduled to apply to 1099s filed
after December
31, 2009.
Sec. 2: Payments to corporations must be reported on form 1099.
Sec. 5: Increase in Information Return Penalties: Failure to file correct
returns: $50 to $250 per form. Penalty maximum increased from
$250,000 to $3 million. Similar increases for late filing, corrections,
and intentional disregard, failure to provide correct payee statements, and
other information reporting requirements, such as failure to e-File.
READ the bill: House Bill HR can be found here:
www.1099Express.com/HR3408.pdf
Update 12-29-09: This bill's sponsor is Rep. James McDermott (D-WA7). His office
(Rebecca) said today that HR 3408 is currently in the Ways and Means committee
and had not yet reached the house floor for a vote. There is a rumor that these
provisions may be included in the new "Health Care" bills before Congress, as a
way to increase revenue from the private sector to the US Treasury. Therefore,
please take extra precaution to stay in compliance with your 1099 reporting.
Home Page
Disclaimer: This information is presented entirely for the benefit of
1099Express customers. 1099Exress, it's employees, agents and assigns, herein called 1099Express, do not, and can not,
give tax advise. You should consult your tax advisor and obtain advise based
strictly on your personal or business tax situation.
1099Express is not liable for any outcome based on the use of this information, and can not predict any outcome.
All information presented herein is used at your own risk and liability.