Help! I have an independent contractor that doesn't want his 1099 - What are the penalties for him and me if I don't issue it?
Tax Professional Answers
The amount of the penalty is based on when you file the corrected information return. The penalty is:
$30 per information return if you correctly file within 30 days (by March 30th if the due date is February 28); the maximum penalty is $250,000 per year although it is only $75,000 per year if you meet the special definition of a small business.
$60 per information return if you correctly file more than 30 days after the due date but by August 1; the maximum penalty is $500,000 per year and $200,000 for a small business.
$100 per information return if you file after August 1 or you do not file the required information returns, maximum penalty is either $1,500,000 per year or $500,000 per year depending on whether you qualify as a small business.
There is no penalty to the contractor if you do not report the income on an information return but he is required to report all income, from whatever source, even if he does not get a 1099. He can be subject to penalties for under reporting of income.
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