New 2009 Features

New for Tax Year 2011
New Laws

You are no longer required to send 1099 forms to ALL corporations. That part of the law was canceled.

There is a new and dangerous hidden Tier 3 penalty of $100 per form for mis-matched Tin/Name combinations. It is dangerous because you will not know about it until it's too late. That's a $1000.00 fine for just 10 mis-matches. But there is an easy solution. Please see Tin Matching for more information.

SSN Masking

New: The IRS has extended the pilot program for SSN Masking (Truncation) Program. This OVERRIDES the 1099 General Instructions "What's New". See this link for all information: http://www.irs.gov/formspubs/article/0,,id=239769,00.html

Thus, 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 A (the red scanner ready pre-printed forms) which are mailed in a bundle to the IRS and could be stolen from the US mail. This is another good reason to e-File your 1099 forms to the IRS using the IRS secure transfer site, even if you have just a few.

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.

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.

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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.