The Small Business Jobs Act of 2010 has substantially increased the penalties for failing to timely file 1099 information returns for payments made in 2010. If you intentionally disregard sending these forms to vendors and the IRS, the penalty can be $500 per form. If you make an attempt by sending 1099’s and you miss some, the penalty goes down to $200 per form. Therefore, we strongly urge you to go through your vendor list and issue 1099s to the following types of vendors:
1. Vendors who provide you business professional services such as but not limited to accounting, bookkeeping, janitorial, IT consulting and who are not incorporated. Vendors in this category will include most businesses who are LLCs and LLPs as most of these entities are taxed as partnerships.
2. All payments to attorneys both incorporated and those not incorporated.
The due date for providing the payee Form 1099 is January 31, 2011.
The due date for providing the IRS Form 1099 is February 28, 2011.
Here is the link to the IRS From W-9 , Request for Taxpayer Identification Number and Certification, to aid you in gathering the required information from your vendors.