- $50 per information return if you correctly file within 30 days; maximum penalty $547,000 per year ($191,000 for small businesses)
- $100 per information return if you file correctly more than 30 days after the due date but by August 1; maximum penalty $1,641,000 per year ($547,000 for small businesses)
- $270 per information return if you file after August 1 or you do not file required information returns; maximum penalty $3,282,500 per year ($1,094,000 for small businesses)
According to the instructions, a church must "File Form 1099-MISC, Miscellaneous Income, for each person to whom you have paid during the year...at least $600 in rents (and other non-employee payments for services) and for whom you have withheld any federal income tax under the backup withholding rules regardless of the amount of the payment." More on backup withholding below.
Form 1099-MISC reporting only applies to payments that are made in the course of a trade or business. The IRS also instructs that "nonprofit organizations are considered to be engaged in a trade or business and are subject to these reporting requirements."
To assist in the compliance with these requirements, Form W-9 must be requested from payees. MinistryCPA advises that payments to independent contractors and landlords should not be made until a valid Form W-9 is received. Without this information, IRS backup withholding rules may apply that mandate 24 percent federal income tax withholding.
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