There are penalties for not filing the forms when required. Any service fees you paid for that was related to your business activity would require 1099-NECs to be issued. As a tax professional the advice can only follow the law. There are penalties for not filing the forms so you must decide if you are going to file the forms for 2022. It's clear they are required to be filed if you meet the criteria.
You are required to complete and send a 1099-NEC form to any independent contractors or businesses to whom you paid $600 or more in fees, commissions, prizes, awards, or other forms of compensation for services performed for your business.
However, there are some exceptions to who needs to receive one of these forms. You are not required to issue a 1099-NEC to individuals and/or business:
- If you paid for physical products or goods — not services — then this form should not be issued.
- If the business you paid is a C corporation or S Corporation, then a 1099-NEC need not be issued unless you paid the business for medical or health care payments or attorney services. Additionally, the IRS outlines some other specific circumstances where a 1099-NEC should or should not be issued to a corporation.
Another important note is that you should send a 1099-NEC to any business that is an LLC if it is a sole proprietorship. If you’re not sure how a business is classified, you refer to the Form W-9 you should have received from the vendor when you started working with them.
@chunhuach
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