1099-MISC Not Filed by Business and do not want to file them

[KC-CPA]

I have a small business client that has an extension I am filing for him and the emphamis questions, are you required to file 1099, and if so will you file them - yes or no. The client has 3 1099's that should have been filed but did not send the 1099's. He wants to answer "no" have you sent them or will you send the 1099's, because he doesn't not want to send someone a 1099 this late, he would just rather answer no.

The question seems to be wide open, will or do you intend to send the 1099's. Regardless he has penalties most likely $100.

Not having a situation like this, I am not sure of all the ramifications, generally the business owner states yes he will send them and sends them.

Any thoughts? How have you guys dealt with this situation? As a preparer, I am wondering what significant penalties the owner could have and if he pays the penalty does he have to send the 1099's later or not?

Thanks.

[JohnH]

I tell them the questions are simple and so are the answers. They can answer honestly or have someone else prepare their return - also a simple matter in my mind.

[Jiggers]

Simple questions and simple answers. Either yes or no.

The penalty problem, if any, is the taxpayer's problem and not your's.

Most of my clients have brought me copies of the 1099's that they issued, or I issued them in Jan/Feb for many clients.

I do have one return, not complete, and will not be completed by Monday as the client just hasn't brought some missing information in. Including the answers to the 1099's questions.

[Questionguy101]

Simple questions and simple answers. Either yes or no.

The penalty problem, if any, is the taxpayer's problem and not your's.

Most of my clients have brought me copies of the 1099's that they issued, or I issued them in Jan/Feb for many clients.

I do have one return, not complete, and will not be completed by Monday as the client just hasn't brought some missing information in. Including the answers to the 1099's questions.

I am just curious. The tax preparer knows the client should issue a Form 1099. But because of the client insistence, the preparer checks 'no' for him to the question. Would there be any ramifications on the preparer if found out?

[JohnH]

That should never happen.

But if it did I'd think the preparer has exposed himself to a slam dunk preparer penalty if there's an audit.

[Jiggers]

I am just curious. The tax preparer knows the client should issue a Form 1099. But because of the client insistence, the preparer checks 'no' for him to the question. Would there be any ramifications on the preparer if found out?

I would never answer "NO" for the first question if I knew that the taxpayer should have issued the 1099's.

I would question the client and if he says no, I would question the "Contract Labor", or "Rent", or "Repairs" on the return.

He may have used only corporations and may not have to issue 1099's.

My questionnaire has that question. If the client says "NO", and I am satisfied with his explanation, and I make note of it, that I am in the clear.

If the client answers "YES" and then "NO", that is his problem and that is what I was referring to.