Are there any limitations for over reporting 1099s?

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Q. (cont.) For instance, when dealing with a large master vendor file, is it OK to report all vendors income on 1099s? Basically is there any downside to over reporting and intentionally reporting a number of corporations?

A. This is a question I don't believe we've seen before. For that reason, I called the IRS.

I spoke with IRS information agent Ms. D'Angelo, ID# 1001306043. She told me that while there's no prohibition to over-reporting and sending 1099s to everyone on your vendor master list, everything you do report needs to be complete and accurate--all of it must meet the IRS reporting requirements, whether you needed to issue them or not. By creating a lot of extra 1099s, you increase the likelihood that you will have an incorrect TIN or other piece of information, and that in turn increases your chances for receiving notices and penalties.

The other thing you'll want to consider is how this will be perceived by your vendors. They may not like receiving 1099s they shouldn't have gotten, and that may cost you time fielding phone calls, create the perception that you are not familiar with the tax code, and create an overall negative impression of your organization.

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