Dear TaxGuru,

I have a unincorporated IT consulting firm in NJ/NY area and am wondering what are my filing responsiblities to the IRS for paying my outside consultants not on my payroll?

1. What are the minimum amounts that need to be reported for 2006?

2. What forms need to be sent to IRS to report these payments?

3. What are the statutory due dates for filing these forms?

4. Where do I have to mail these forms to the IRS?

Thanks in advance for your help.

Love those tax downloads!!

Dear Kyle,

1. Minimum amounts reportable to IRS for payment to non-employee
The minimum amounts that need to be reported for non-employee compensation sometimes referred to as outside contractors or consultants is $600 for 2006. Your IT company is responsible for reporting to the IRS all consultants making more than $600 for tax year 2006. This is a requirement whether or not you are a incorporated corporation, partnership or sole proprietorship.


2. What Forms are needed to be sent to IRS to report these forms?
The forms that are sent to the IRS are a combination of 1099-Misc (Red copy) along with a Form 1096 Annual transmittal letter.

3. What are the filing due dates for Form 1096 and 1099-Misc?
The IRS due date is February 28, 2007. However, the IRS requires that the employees generally receive these forms by January 31, 2007!

4. The IRS filing address for forms 1096.
The filing addresses depends on the geographic region that you are based. Here is a link to a PDF document that would provide you with the exact address based on your region.

http://www.irs.gov/pub/irs-pdf/f1096.pdf

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