New 1099/1096 Due Date!
Over the last several weeks, we have received a number of inquiries about the IRS changing the submission deadlines for 1099/1096 forms to January 31st for both the independent contractor and employer copies, whether electronic or paper.
Historically, January 31st has been the deadline for the contractor copies, but now, rather than being due between February 28th and March 31st (depending if you sent in hard copies or filed electronically), the employer copy is also due by January 31st. The more I think about the implications of the change, the more I realize how significant the impact can be.
In years prior to this change, sending out contractors’ 1099 copies by January 31st allowed business owners enough time to receive and review correction requests and error notifications. In effect, these forms were not cast in proverbial stone until the copies were sent to the government about a month later.
And as it happened, most years, for one reason or another, we had customers that would request that we make changes or reissued 1099 forms. While we always do our best to ensure accuracy, we still had a one month buffer to make changes if we needed to.
Now, with the employee and employer deadlines being at the same time, what can we do to stay compliant and make January go as smoothly as possible? The single best piece of advice we have – prepare early!
- Ensure that your books are up to date and in order prior to year-end, so that you can spend your first couple of weeks of the New Year concentrating on generating forms rather than scrambling to categorize transactions and reconcile accounts for the whole year.
- Make sure that all of the W-9 information is current and correct PRIOR to sending out 1099s. This will require going through the list of vendors, identifying the ones requiring 1099s, and making sure their W-9 information is correct.
- Ensure that the list of expense categories used to generate the 1099 forms is complete and correct.
- Generate the vendor 1099 forms early and mail them out as soon as you have all the necessary information (ideally, by mid-January). Then, be sure to request that any contractor with questions or issues notify you ASAP to allow time for corrections.
- Set appropriate expectations with your contractors to make sure they are ready to spend the necessary time to review their 1099 forms and allow enough time to make necessary corrections prior to the January 31st deadline.
Despite the condensed time table, by being proactive, staying organized, and working diligently, you can ensure you stay compliant with these new guidelines!
Inna Korenzvit is Founder and Principal Accountant at KORE Accounting Solutions, a future-focused management accounting firm specializing in providing legal professionals and business owners with the data and insights they need to stay compliant and run more profitable firms.