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Posted By MichaelT21 on 05/12/2022 10:30 AM
The current IRS requires 1099s be issued to virtually all vendors of any type. I am not sure if there still is a threshold or not, but virtually every HOA vendor gets issued a 1099 per current law.
$600 is the general threshold. There are some exceptions if paid via credit card - I assume that is data the IRS already gets is why it is an exception.
The Board has been told repeatedly to do, usually at every annual meeting. The Yahoos opine they do not. Their reasoning spreads from being a non-profit to revenues under $50K. I and others have shown IRS publications refuting every excuses that clearly shows the Association needs to issue. The Board will then say it does not agree or just shrug shoulders type responses.
It can get very expensive. The minimum penalty is $200 per missed 1099 and it can be higher if the IRS deems it a larger problem or done intentionally - being told repeatedly, if the IRS learned, might cause the later view. There is no cap to how high it can be other than total penalty cannot exceed $500K in a year. Also, if no tax identification information from a contractor, you are supposed to with hold 24% for taxes. When a company does not issue a 1099 and does not obtain tax information, the IRS can imply the withholding was done and bill the company for that amount plus interest. So say you paid $5K to a contractor, issued no 1099 and obtained no tax information from that contractor. The IRS can deem the services were really $6578.95, implying $1578.95 was withheld which the Association owes plus interest.
So the longer it goes the bigger the fallout could be. But again, the response is "no we do not have to do that." I was hoping a management company would force the Boards hand but does not look like the case, therefore wondering if this loss every happens, can the Association recoup anything from the management company.