1099-misc filing requirements.

[ATSMAN]

Cya

Unless you want to be thrown under the bus, please make sure your engagement letter has the necessary wording:

If you are required under law to issue tax documents such as W2, or 1099 to your employees and sub contractors you must do so within the prescribed timetable. There are significant penalties for failure to follow the law.

In my opinion Roofers and Landscapers are the worst offenders when it comes to issuing 1099 for their subs. They will typically hire by the job and not even bother to get a W9.

I have a landscaper client who also does snowplowing with his brother during the winter months. I have to constantly remind him.

[JohnH]

I'm not saying ignore the 1099 rules. I also would be reluctant to deduct cash payments to I/C's without some reliable documentation. But to refuse to deduct legitimate payments just because they failed to send out 1099's is silly. Provided, of course, they are willing to answer the 1099 questions honestly. That's why the questions are in there...

[ATSMAN]

I agree with you, if there is documentation to back up the deduction you are being reasonable and have a basis to deduct.

However if the taxpayer is audited and you have a bigger headache!

I just want to avoid that headache by giving my client fair warning!

[Justataxguy]

My engagement letter is customized for each business client and I use the TTB template.

Where does one find such templates?

[ATSMAN]

Where does one find such templates?

From the Web Library. You need a subscription.

http://thetaxbook.net/update-service/2013_Engagement_Letter

[taxea]

So if you claim the IC expenses without the required 1099 what you effectively do is create penalty, interest and additional tax when the IRS denies the expense on audit. Oh...wait....you get to charge the client additional fees to handle the audit. Nice work. I do give the client all the facts and by the time I am done explaining the consequences....it is the client who makes the choice not to claim the expense.