Under §6721 of the Internal Revenue Code (IRC), penalties may be assessed for failure to file correct information returns by the due date, without reasonable cause. This includes Form 1099-MISC. The penalty may also apply if you show incomplete or incorrect information, or file on paper when you were required to file electronically, or fail to file machine readable paper forms.
Under IRC §6722, the penalty for failure to furnish complete and correct payee statements increases to $100 per return. The maximum penalty under this provision is $1,500,000 per year. For small businesses, the maximum penalty is $500,000 per year.
Warning: Not including the correct payee TIN on Form 1099-MISC is a failure subject to §6721 and §6722 penalties.
In an effort to help filers comply, the Internal Revenue Service’s TIN Matching Program was established. Prior to filing Form 1099-MISC, a Program participant may check the TIN furnished by the payee against the name/TIN combination contained in the Internal Revenue Service database.
The IRS Office of Electronic Tax Administration offers two TIN Matching options:
Interactive TIN Matching: This process accepts up to 25 input name/TIN combination requests online. Results are returned to the user in real time.
Bulk TIN Matching: This process accepts electronic transmittal files containing up to 100,000 name/TIN combinations for matching. Results are returned in electronic response files.
Integrated Data Management Systems, Inc. (IDMS), a leading provider of 1099 and W-2 software considers Bulk TIN Matching to be an integral component of its Account Ability Tax Form Preparation software, which is why they have included it for free. Jeff Goldstein, IDMS’s president, added “In an effort to help filers avoid penalties pursuant to IRC §6721 and §6722, free Bulk TIN Matching should be an integral part of every 1099 preparation package.”
Drew University, an Account Ability user, stated, "I just used your TIN matching program and it's wonderful. Your IT department thought of everything and I am so impressed. It's a wonderful tool that eliminated a lot of the stress and guess work regarding the 1099 process."
Account Ability is a robust network ready software package which, together with its entire database, resides on your computer, not that of some online service. Therefore, users can enter as many returns as desired without ever incurring extra charges, as is common with most online processing systems. In addition to Bulk TIN Matching, Account Ability also includes electronic reporting (eFile), electronic delivery (eDeliver) and plain paper filing for the entire family of information returns (1098, 1099, 3921, 3922, 5498, W-2G) and annual wage reports (W-2, W-2C).
Southern Payrolls Inc, another Account Ability client, had this to say: "I just wanted to take a minute to thank you for all of the assistance you have provided since last August when we began testing Account Ability. Having completed our busy season of W-2 and 1099 processing, I can conclusively say you have a great product, and my only regret is that we didn't discover you earlier."
About IDMS (http://www.idmsinc.com):
During the past 25 years, more than 100,000 tax professionals have used Account Ability to file their information returns (1098, 1099, 3921, 3922, 5498, W-2G) and annual wage reports (W-2, W-2C).
As its motto states: "We are known by the companies we keep." Its client roster includes: American Express; University of Notre Dame; Sunsweet; H&R Block; New York State Comptroller's Office; Salvation Army; Virgin Atlantic; Lockheed Martin; Northrop Grumman; D.F.A.S.; NAACP; and many more.
Watch our 2 minute presentation on YouTube to learn more about Account Ability
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Account Ability prepares information returns (1098, 1099, 3921, 3922, 5498, W2G) and annual wage reports (W2, W2C) electronically, on laser, inkjet, and generic dot matrix printers. Electronic filing and IRS TIN Matching are included at no extra charge.