Did You File an Information Return Record?

What is an “information return record”? According to the IRS, “An information return is a tax document used to report certain types of payments made by financial institutions and others who make payments as part of their trade or business as required by Internal Revenue Code Regulations”.

Did you file all required information returns for 2015 and earlier years? Information returns include Forms 1099, the forms you complete when you pay for certain business expenses such as rent or services performed by an independent contractor.

Now is a good time to review your filing compliance because this is the time of year the IRS typically begins sending notices for prior year information returns with missing and incorrect taxpayer identification numbers, and the penalties for errors continue to rise.

Have you received a notice from the IRS? You may be able to get penalties waived proving you acted in a responsible manner before and after the error occurred. One way to do this is to document your request for a taxpayer identification number from the vendor or other payee. You may also need to begin withholding income tax known as backup withholding from payments. You can avoid penalties by keeping accurate information return records.

At Summit CPA we can assist you with your tax and financial needs. Contact our office at (855) 977-7623 to schedule an appointment to find out how we can be of assistance.