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New client never mailed in his 2018 1099's or 1096

JTW54
Level 3

Two part question:

New client (Sole Proprietorship)  has prepared  his own 1096 and 1099's for the 2018 tax year but he never mailed them in.  He did furnish a copy to the independent contractors but not to the IRS.  He just didn't understand that he needed to.

Now that I'm about to file his 2018 tax returns,  I will have him mail in his 1099's and 1096 to the IRS.   I know the penalties can be high for not filing.  Does anyone know if the penalties would be more than $270.00 per 1099 because so much time has elapsed and would this automatically trigger any other actions from the IRS?  

I noticed that of the six 1099's that were completed, only two of them have the recipients social security number or tax ID number.  All the others have no SS or tax ID number.  My client has tried to contact the recipients to get their ID numbers but had no response.  Is there a way to remedy this?  

Your response would be greatly appreciated

 

 

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8 Comments 8
sjrcpa
Level 15

Client is going to learn some expensive lessons.

From this day forward client is to get a W-9 from each independent contractor before he pays them a dime.

The more I know, the more I don't know.
IRonMaN
Level 15

Unless he moves on to the next tax preparer after he finds out how much it will cost him.  I'm guessing he either won't tell the next preparer about that little mailing slip up or just say he didn't need to file any 1099s.


Slava Ukraini!
BobKamman
Level 15

Your actual 2-part question is:

1)  Can I tell a client not to file 1099's that are required?

2)  If my client with a Very Small Business on Schedule C asks me what will happen if he neglects to file six 1099's, four of which are missing TIN's, what do I tell him?

JTW54
Level 3

Thanks Bob, 

What I would really like to know is how much might the penalty be.... over $270. per 1099? 

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sjrcpa
Level 15

Isn't this in the 1099 instructions?

The more I know, the more I don't know.
JTW54
Level 3

They are.

Thank you

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dkh
Level 15

@JTW54  I've had this same situation with a client.  He doesn't like what I charge to prepare 1099s so he goes to whomever he finds cheaper.  Anyhow,  I returned the unmailed 1099s/1096 to him, explained when the forms should have been mailed, the penalties he will be charged by IRS and left it up to him.   I mark the Schedule C  I and J  yes and yes.       

JTW54
Level 3

Ok thank you 

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