What To Know About 1099's Rules and Regulations

We would like to remind you of the rules and regulations with respect to the issuance of 1099’s for the 2021 calendar year. It is your responsibility as a business owner to comply with these reporting requirements.

You should begin gathering the information that will be needed for preparation of Forms 1099-MISC & 1099-NEC (Non-Employee Compensation) for the 2021 tax year as soon as possible. Please review the payments you have made so far to your vendors during the year. If you need assistance in gathering this information, please contact our office.

Have you paid a single vendor a total of at least $600 during the year for any of the following?

Use Form 1099-Misc for:

• Rents

• Cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish

• Prizes or awards

• Payment to Physicians or medical offices

• Generally, the cash paid from a notional principal contract to an individual, partnership, or estate; gross proceeds paid to an attorney (for example, a settlement agreement)

• In addition, use this form or Form 1099-NEC, to report that you made direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment.

Use Form 1099-NEC for:

• Services performed by someone who is not your employee (including parts and materials)

• Payments to an attorney in the course of your trade or business

Exceptions to these requirements are as follows:

Payments for which a Form 1099-MISC is not required include all of the following:

• Generally, payments to a corporation (including a limited liability company [LLC] that is treated as a C or S corporation) except for payments made to an attorney or for fish purchases – 1099’s must still be issued for these types of payments.

• Payments for merchandise, telegrams, telephone, freight, storage, and similar items

• Payments made with a credit card or payment card

If you have made payments you believe may require a Form 1099 to be issued, and you do not have the EIN for this vendor on file, please forward a Form W-9 to the vendor and ask them to complete the from and return it to you as soon as possible.