by Mitch Reitman - Reitman Consulting Group, Inc.
Most of you have heard me discuss the perils of treating employees as “contractors” and issuing them IRS forms 1099. Not only is it a bad idea to treat an employee as a contractor, the IRS has instituted new requirements, and penalties, for misfiled and late filed 1099’s. Filers can receive up to a $530 per record penalty, (a $3+ million maximum penalty for even a mid-sized penalty), if delivering 1099 or W-2 statements and after the IRS deadlines. To make things worse, even if you can scrape together the penalty money, penalties aren’t deductible against your Federal Income Tax liability.
Intentional disregard for furnishing or filing information returns is a $530/return penalty.
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