Preparing for 1099 Processing

To meet the deadlines imposed by the IRS, 1099 processing requires the efforts of many employees in a company and should begin several months before the end of the calendar year to allow ample time for researching and updating information.

The following list contains some of the tasks for preparing for 1099 processing. This list is not exhaustive and should be used to promote discussion among the employees who are responsible for preparing 1099s at your company.

• Decide which method or combination of methods you want to use to process your 1099 forms and prepare your system accordingly.

• Ensure that the address book information for your 1099 suppliers is in a format acceptable to the IRS.

• Verify the value of the person/corporation code for each of your suppliers. All suppliers that should receive a 1099 form must have a code of either P (individual) or N (non-corporate entity).

• Ensure that you have a Tax Identification Number (TIN) for each of your suppliers that receive a 1099 form. The IRS could impose penalties or fines for each missing or incorrect tax ID on 1099 returns that you submit.

• Assemble IRS publications and forms for the current 1099 reporting year.

Use Checklist for 1099 Processing to use as a guideline for processing 1099 returns.