I'm a little behind on answering questions for our School of Tax Strategy folks. Jeff in Boston asked the following:

When is it that we are required to issue a 1099MISC to service suppliers? When do we need to get them to fill out a W9? If the check always goes to a company name, (like ABC software or Software Technology Corp) does that by itself protect us from the need to produce a 1099 or do we need to require them to do a W-9 also? If it is to an individual and the amount is less that $600 should we send one anyway?

The rule is that 1099's have to be sent to any service provider who is not incorporated if the amount paid to that provider during the year was $600 or more. Jeff raises a dilemma that is encountered by most businesses, i.e., what if you don't know if they are incorporated? The safe answer is to issue a 1099 to all service providers you pay $600 or more during the year. Even if there is an "Inc." at the end of their name, this does not guarantee they are incorporated. I have seen this designation erroneously applied to LLC's and even to sole proprietorships. There is no reason you would need to issue a 1099 to suppliers you paid less than $600 during the year.

Warmest regards,

Tom