here it is..
Current Rules in a Nutshell
Background: For many years, businesses have been required to report various payments on different versions of Form 1099. For instance, when a business pays $600 or more during a calendar year to an independent contractor for services, the business must issue the contractor a Form 1099-MISC that reports the amount paid that year. The business must also furnish a copy of the Form 1099-MISC to the IRS. This reporting procedure helps contractors remember to include the payments on their tax returns, and it helps the IRS ensure that income is reported.
Under rules now in effect, other types of payments that businesses must report on Forms 1099 include:
1. Commissions, fees, and other compensation paid to a single recipient when the total amount paid in a calendar year is $600 or more.
2. Interest, rents, royalties, annuities, and income items paid to a single recipient when the total amount paid in a calendar year is $600 or more.
When a Form 1099 is required, it must show:
· The total amount for the calendar year;
· The name and address of the payee;
· The tax ID number (TIN) of the payee (For privacy reasons, it's okay to show a truncated TIN on a 1099 issued to an individual);
· Contact information for the payer; and
· The payer's TIN.
If your business doesn't have a payee's TIN, you may be required to institute backup federal income tax withholding at a 28 percent rate on payments.
In most cases, the rules summarized above apply to payments made by not-for-profit organizations since they are generally considered to be businesses for Form 1099 reporting purposes.
If a payer inadvertently fails to issue a proper Form 1099, the IRS can assess a $50 penalty. The penalty for each intentional failure can be $100 or more.
