January 03, 2011

Form 1099 for Payments to Other Ministries

Question:

A church supports various ministries. If a check is written to a ministry (a tax-exempt organization), does a church issue a Form 1099-MISC to that ministry. The church leaders understand that it is to issue Form 1099’s when it compensates individuals in a ministry.

The posted question concludes: "The only thing we can find is that in general we do not have to issue a Form 1099 to a corporation."

Answer:

One of the exceptions to required reporting of payments listed in the 2010 instructions for Form 1099-MISC is "payments to tax-exempt organizations." Therefore, payments to a ministry are not reportable.

Churches that pay rent, services, etc. to individuals who are not employees (they receive Form W-2) must file Form 1099-MISC.

Thanks to the Patient Protection and Affordable Care Act of 2010...
Regarding the last sentence in the above Question, beginning with payments in 2012, for-profit corporations that are paid by the church for rent, services, etc. must also receive Form 1099-MISC from it.

The penalties for non-filing and for failure to withhold Backup Withholding, when required, are steep and will increase in 2012.

3 comments:

  1. For the new law to issue 1099s to corporations, is that just for services rendered and rent or would it also include stores we purchased products from? i.e. every week we purchase office supplies and are invoiced for it

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  2. In early February, Congress rescinded the complex and burdensome Form 1099 rules that many were dreading.

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  3. Our church rents space from a non-profit organization and the organization happens to be a tax exempt corporation. Do we need to issue them a 1099 for rent more than $600?

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