1099s

Who do you need to send a 1099 to?

The following list covers the majority of circumstances that require businesses to issue a 1099-Misc to an individual or business and the situations where 1099s are not required. Let’s start with a list of excluded transactions.

Excluded transactions include:

• Most payments to corporations (see exceptions below)
• Payments for merchandise
• Payments of rent to real-estate agents or corporations
• Business travel allowances paid to employees
• Wages paid to W-2 employees
• Payments to tax-exempt organizations

1099s are required for:

• Payment for services in excess of $600 paid during the year
• Rent payments exceeding $600 paid to individuals or businesses which are not incorporated
• Any fishing boat proceeds
• Medical and healthcare payments in excess of $600, including payments to a corporation
• Cash payments for fish (or other aquatic life) in excess of $600, including payment to a corporation
• Royalties or broker payments in excess of $10
• Gross proceeds to an attorney in excess of $600, including any law practices that are incorporated

When are they due?

Copy B and Copy 2 of Form 1099-MISC must be sent to the recipient by February 1st, 2011. The due date is extended to February 16, 2011, if you are reporting payments in boxes 8 or 14. File Copy A of the 1099-MISC with the IRS by March 1st (Extended to March 31st if you file electronically).

What are the penalties for non-compliance?

Failure to furnish correct payee statements can have large consequences. Fines start at $30 per information return if you correctly file within 30 days of the due date; $60 per return if more than 30 days late but before August 1; $100 per return after August 1 or if you don't file. Intentional disregard of the requirements raises the fine to $250 per return.

Additionally, failure to file may also put your deductions at risk.

Solutions

Something is wrong with our system.

Last night I got the privilege to listen to Van Jones speak here in Portland. It was an SRO crowd which was amazing given that his speech was at the exact same time as the State of the Union address by President Obama.

I arrived early and sat next to a black man about my same age. His name was Craig and we had a super conversation waiting for the program to start. Craig had come to hear Van talk about green jobs as he was desperately looking for work. Here was an American who wanted to contribute and yet, couldn't find any paid work.

Craig's pain was palpable. His pain is no different than millions and millions of other Americans, from every corner of our country.

Everywhere I look I see needs.

Our infrastructure is failing. Our bridges desperately need repair. Many here in Oregon won't withstand the next major earthquake we all know is coming. Our Sellwood Bridge has been closed to bus traffic for years and rates a 2 out of 100 possible points for structural integrity. You think we might be better off fixing it?

Schools, everywhere except newer suburban schools, are in need of significant improvements and upgrades. My daughter attends a Portland HS that is nearly 100 years old.

I'm guessing that more than 80 percent of our housing would benefit from energy efficiency improvements that would save money in the long run. We could put a million people to work within the next 12 months weatherizing homes using a revenue neutral model that is win/win/win for all.

We need more teachers and smaller class sizes. We need more opportunities for our youth and less prisons (American prisons now hold 1/4th of the world's prison population. Does that seem right in the Land of the Free?)

We need more caregivers and support for the caregivers we have.

We need programs for our returning veterans who come home from service with too few opportunities and too little support.

At the same time, everywhere I look I see people who need jobs and want to help.

It is a failure of our system and our imagination that we can't put these two needs together.

We are not some third world country without resources and imagination. We can fix this problem.

Jobs, Jobs, Jobs

Our culture has a strange obsession with work. I've written about this from a number of angles including our Culture of Insatiability, how a shorter work week would benefit us all , and the impact of this job preoccupation.

Daniel Quinn, one of my favorite authors, wrote Work, Work, Work, a children's book that follows a mole that spends his days digging. From sun up to sun down the mole digs holes, without any thought as to why he spends his life digging nor any appreciation of the fantastic world around him. All he cares about is his work - digging holes.

I bring this up since I was reading this morning's headline that the Tea Partiers would be looking at defense spending cuts as part of their deficit reduction plan. Clicking through to the story, I knew the article would mention the "jobs" trump card. (Our societal trump cards seem to be safety, security, children, and jobs. Just pull those into any discussion and they trump every other consideration.)

And there it was, in the second paragraph of the story:

"Cutting defense and canceling weapons could mean deep spending reductions and high marks from tea partiers as the nation wrestles with a $1.3 trillion deficit. Yet it also could jeopardize thousands of jobs when unemployment is running high."

These marginal defense jobs provide little societal value since we can't eat, wear or beneficially use the output. We'd be better off paying these displaced workers to do community volunteer work which would leave them gainfully employed, with income to spend, creating societal benefits that would be palpable.

If a job is a job is a job, why not pay these folks to dig holes? I suspect most people would see this as a waste of government resources and yet what about the hole digging jobs we'd lose as a result?

In the end, we all need to contribute to our society and there are many ways to do this beyond paid remuneration.

I hope you'll consider these ideas whenever you hear the "Jobs" trump card pulled out in a debate or discussion.

Values = Marketing

We've been in business a little over two years and have spent relatively small amounts on traditional marketing and advertising. Yet we are growing rapidly and are currently expanding our office.

How so?

We let our values lead. Of course, we do excellent work and have a compelling value proposition but like an ante, those are required to play. We are trying to move beyond that.

In our office expansion we've taken the following steps to walk our triple bottom line talk:

• We made sure we had a construction bid from a minority contractor (didn't win but that is business, at least we made the effort to reach out and be inclusive).
• We purchased Steelcase Think chairs made out of nearly 40% recycled materials and with Cradle-to-Cradle design, are over 90 percent recyclable at the end of their lives.
  
• We had made a custom built receptionist station built from locally sourced reclaimed wood, designed by a Meld-Design, a customer of ours.
• We had custom round meeting tables built from locally sourced reclaimed wood and designed by Endurawood, another customer of ours.
• Endurawood is also building us end tables and a coffee service table for our reception area, again from locally sourced reclaimed wood.

While we probably spent 10-20 percent more than we might have had we gone CHEAP and only considered short term costs, I believe these are great long-term investments due to the longevity and craftsmanship of the furniture, the comfort and pride my employees and customers have sitting in excellent chairs while meeting over handcrafted furniture, and the "marketing" story we have communicating our values to our target market.

Richard Seireeni coined the term the "Gort Cloud" which helps describe the network I feel we've tapped into.

Perhaps you could redirect your marketing and advertising budget towards authentic messages about who you are?