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WHAT ARE 1099s?
Forms 1099 are a reporting tool used by the IRS to ensure that payments
made to vendors are properly reported as income on their tax return each
year. If a business (or landlord) deducts payments to a third party as a
business expense, the IRS wants to verify that the same amounts are reported
as taxable income on the vendor's return. The Form 1099 works in much the
same way as a W-2. It reports both business related payments made to the
vendor and any taxes that were withheld and remitted to the government on
the vendor's behalf.
Please note that the submission of 1099s is not voluntary and penalties can
be imposed for lack of compliance.
