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.

(*) PROBLEM:  QuickBooks can NOT print the State identification numbers in their Forms 1099-MISC: https://community.intuit.com/articles/1467592-what-do-i-need-to-know-if-i-file-1099-state-taxes-for-wisconsin   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: http://www.irs.gov/taxtopics/tc804.html .

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. http://www.irs.gov/pub/irs-pdf/fw9.pdf?portlet=103

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: http://www.irs.gov/pub/irs-pdf/i1099gi.pdf 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:  http://www.irs.gov/pub/irs-pdf/i1099msc.pdf

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.