Category Archives: Business Tax

1099 Reporting in Wisconsin – Updated for 2017 Reporting Forms

For everyone in a Wisconsin trade or business, who pays (by check or cash, NOT by credit card) an unincorporated business or individual, $600 or more for services in the calendar year, you must file a Form 1099-MISC with the IRS and the State of Wisconsin.

If you pay for services by credit card, you are not to file a 1099-MISC for those payments because the credit card companies will be reporting those payments on a 1099-K.

Here are the procedures for reporting 1099-MISC payments in Wisconsin.  The Wisconsin Department of Revenue provides Publication 117 to show you which forms they want, and to what address you mail the forms and the due dates by type of form filed: Wisconsin Publication 117

NEW FOR 2017:  If you prepare 10 or more Forms 1099-MISC, 1099-R, or W-2, you MUST FILE THESE ELECTRONICALLY WITH WISCONSIN.  QuickBooks charges $2.90 to electronically file EACH 1099 form and you could very well be assessed a $10 penalty on top of that per form by the Wisconsin Department of Revenue.  See below (*).

EFFECTIVE SINCE 2014:  YOU MUST SHOW THE WISCONSIN WITHHOLDING TAX NUMBER IN BOX 17 OF FORM 1099-MISC OR YOU WILL BE NOTIFIED TO CORRECT AND RESEND YOUR 1099-MISC FORMS!  This is true even if there is no Wisconsin withholding.  If you don’t have a Wisconsin withholding number, you must use this number 036888888888801 (yes, that’s 10 number 8’s in the middle) in Box 17.

(*) PROBLEMQuickBooks can NOT print the State identification numbers in their Forms 1099-MISC:   So if you used QuickBooks to prepare your Forms 1099-MISC, you will need to manually print or type the Wisconsin withholding tax identification number on each Form 1099-MISC in Box 17.  Intuit (QuickBooks) has refused to fix this issue after multiple contacts from the Wisconsin Department of Revenue.  QuickBooks says they will pay the $10 penalty per form for failure to put the Wisconsin identification number on the electronically filed forms 1099-MISC.  QuickBooks could change their penalty reimbursement policy at any time, but in the meantime, you can go here to request your refund:

QuickBooks Wisconsin Penalty Reimbursement request

Note:  Effective for 2013 and forward, the Department changed their requirements and no longer grants a blanket waiver for businesses that file 1099-MISC forms with the IRS.  You need to provide the Wisconsin Department of Revenue with the State Copy of any 1099-MISC forms that you file with the IRS, unless you already do so electronically under the Combined Federal and State Filing Program: .

Mail Wisconsin’s “Copy 1” of the 1099-MISC to this address,

Wisconsin Department of Revenue 

P O Box 8920,

Madison WI 53708-8920

All 1099 forms are required to be printed on “red” forms for the Internal Revenue Service, and be accompanied by a summary transmittal Form 1096, also printed in red.  The IRS, and NEW FOR 2017, ALSO THE WISCONSIN DEPARTMENT OF REVENUE requires its copy by January 31, 2017 for all nonemployee compensation 1099’s (Box 7).  THIS IS A NEW, EARLIER FILING DATE THAN PRIOR YEARS!

Payee/recipient copies are supposed to be in the hands of the payees by January 31st. In order to prepare the forms, you need each payee’s name, address and taxpayer identification number.  The IRS provides form W-9 on which this information can be collected from each payee.  I strongly suggest before making any payments throughout the year to unincorporated payees for services or rents of $600 or more, that you obtain a completed W-9.

The W-9 instructions explain which taxpayer identification number is used for the various forms of business entities.  The most confusing is the single member LLC.  This kind of entity, when a single member “look thru” entity, is treated and reported as a sole proprietorship on the Form W-9, if the LLC is not incorporated.  Read the instructions carefully!  If the LLC is treated as a sole proprietorship, you will need to use the Social Security Number of the LLC owner.  You will not use the LLC number!   The reason for this “glitch” is that the sole member LLC does not file a tax return separate from its owner, and therefore, the payments made to a sole member LLC in the LLC’s identity are not traceable for the IRS taxpayer identification number matching program.

Pages 24 through 26 on this link to the IRS instructions provides a handy table of the types of payments and dollar thresholds for reporting 1099-MISC payments: The biggest question I get asked is what to do when total payments to an unincorporated service vendor include payments for merchandise along with the services provided.  Considering the penalties now in effect for filing an incorrect 1099-MISC, I’d rather err on the side of caution and report the full payment.  In the IRS instructions specific to the 1099-MISC for “nonemployee compensation”, the IRS provides a repair example, saying that the parts are incidental to the repair service, and are therefore reportable.  Look at the example at the bottom of page 7 on the instructions:

To save cost when purchasing forms, you can photocopy the red printed copies for the recipient.  In that way, you only need purchase the “red” forms.  QuickBooks does not print the form pages; it only prints the data that goes on the Forms 1099 that you need to purchase. To sum up, you will need to produce:

  • Form 1096 red transmittal cover form with each group of 1099-MISC to the IRS by January 31st
  • Form 1099’s to the individual payees (recipient copy) by January 31st
  • Form 1099’s Copy 1 (or a photocopy of the IRS copy) with Box 17 completed to the Wisconsin Department of Revenue by January 31st (assuming no extension has been requested and obtained)

Keep a copy for yourself, and note the dates mailed.  With the penalties of up to $500,000 now for failure to file, you need to take this seriously. Note for owners of rental properties:  Remember that the rule to report 1099-MISC payments was repealed for you.  Per the IRS instructions for 2011 reporting, “The requirement described in the 2011 instructions for persons receiving rental income from real estate to report payments for certain rental property expenses on Form 1099-MISC was repealed by Congress.   You do not have to report those payments on Form 1099-MISC.”  This HAS NOT CHANGED FOR 2017 reporting.

Year End Reporting 2012

When we prepare business income tax returns, we like to know we have correct and complete numbers.   This helps us to find all the deductions to which you are entitled, and to produce a tax return that will pass examination by the taxing authorities.

Some tax return preparers will not ask questions and can blindly accept whatever information you provide them.  This can cost you a lot in paying extra income taxes for missed deductions.  It can also lead to an audit examination if the relationship of the numbers creates a red flag to isolate your return for audit, and if the numbers can’t be proven to be accurate, you could be subject to more income taxes, interest, and negligence penalties for not maintaining accurate books and records.  

So below is what we ask of you to substantiate your business books and records at year end.   We have more detailed check lists for our healthcare clients where statistical data is also required for third-party reimbursement reporting.


1.  If you use QuickBooks, provide us with the Accountant’s Copy, otherwise we need the cash receipts and disbursements history for the whole year.  Provide a computer printout of all transactions by account to show where all the money came from and how it was spent.  We call the totals from all of these accounts a trial balance

 2.  December 31, 2012 bank statements;  also copies of reconciliation’s of all cash and investment accounts if not done in QuickBooks.

 3.  Any 1099 interest or dividend forms received from cash or investment accounts; any K-1’s from investment in other companies.

 4.  End of year statement from any investments, which show the December 31 market value of the investment and dividend income for the year.

 5.  All quarterly and annual 2012 payroll tax report copies (Quarterly 941 or 944 annual, 940,  WT-7, W-3), or if all the wages are outsourced to a management company, a year end wage and benefits summary in total and a total compensation amount for each officer of the company.

 6.  Final itemization of insurance for 2012 calendar year.  (Worker’s compensation, Property, Liability, and Automobile).  Include copies of latest policy face sheet showing the premium billed.  Have any insurance premiums been paid ahead of the period to which they are to apply?  If so, we need a copy of the insurance billing which is being prepaid, either in part or in total.

 7.  Copies of invoices for any furniture, fixtures or equipment purchased throughout the year, and especially in the last month of the year, but not being paid until a later date.  We will need copies of the invoices if we don’t already have them.  Copies of closing statements for real estate transactions.

 8.  Accounts payable at December 31, 2012.  (These would be 2012 bills paid in January 2013 or later, plus copies of the invoices still not paid for 2012 when you send us the information.  If you are using the bill paying function of QuickBooks, this information will be part of your QuickBooks data file)

 9.  The most recent renewal copy of any notes or loans payable to any banks or other financial institutions.  (This will confirm in whose name the loans appear, the loan’s beginning balance, the interest rates and any other relevant terms).  Also need proof of year ending balance of principal owed and interest paid for 2012; an amortization schedule is ideal.

10.  Real estate and personal property tax bill copies paid or payable by the company for 2012.

 11. Copy of sales and use tax forms for 2012 sales or use tax purchases (Monthly, quarterly or annual).

 12. Any sales of equipment during the year including trade-ins?  Let us know date and amount and item.

 13. On new construction that has been completed, but not yet billed as of December 31, 2012: Please make sure you get a billing from the contractor for all work completed in 2012.  Send us a copy of anything that is billed with a December date, but not yet paid.  You can include it with accounts payable.

 14. A listing of accounts receivable at the end of the year, by customer name so that it can be traced in the event of a question as to what comprises the accounts receivable balance.  A listing of any bad debts which should be written off.  Let us know if these accounts are included in the listing of accounts receivable also.

15. A copy of the final, end of year, physical inventory counts if you maintain any inventories in your company.

 16.  Any changes in name, address, or company ownership (change in number of shares or owners of stock)

Buried in the Health Care Reform….

The Patient Protection and Affordable Care Act (H.R. 3590) Implementation Timeline FINAL

Inside the pdf above is a time line of the various major provisions contained in the “health care reform”, officially known as the “PPACA”.  The biggest surprise is the requirement to file 1099-MISC for payments to EVERYONE and EVERY ENTITY when payments exceed $600, beginning with calendar year 2012.  Congress wants to close the “tax gap” and feels that if everyone reports on everyone else, they will collect more tax revenues to pay for this “health care reform”.