Three Myths About Form 1099 That May Affect You

By Raul Rivera

This past week, an unusually large number of pastors and church treasurers were confused about the 1099 form.  The confusion was quite extensive from thinking that the 1099 form was only for big churches while others thought it was optional.   Today, I want to dispel the three most common myths I heard in recent days.

1.     I thought the 1099 law was repealed?  It has not been repealed.  Section 6041 was amended by the Healthcare Act to make the requirements of the 1099 form as strict and difficult as they have ever been.  Thankfully, Congress heard the cries of the people and decided to put the law back to where it was before the Healthcare Act was passed.  This does not mean that the 1099 law was repealed.  It was simply amended.

2.     I thought churches were exempt from having to issue 1099 forms.  There are many church leaders that believe churches are exempt from having to issue 1099 forms to their guest speakers.  I do not know why, but many church treasurers also believe that their church is exempt from having to file this form with the IRS each year.  Section 6041a makes it clear that if the church, engaged in its normal trade or business, makes any payment to a person then it shall "render a true and accurate return to the Secretary, under such regulations and in such form and manner and to such extent as may be prescribed by the Secretary, setting forth the amount of such gains, profits, and income, and the name and address of the recipient of such payment."

3.     I thought churches were supposed to give 1099 forms to pastors? The church should give its pastor a W-2 for any salaries, love offerings, gifts or other items of value that it gives to its pastor.  Reporting it correctly can be tricky because the church is not allowed to withhold any FICA or Medicare either.  I encourage you to attend our Church Compliance and Ministry Empowerment Conference.  I guarantee you that after attending, you will sleep better.  You will no longer feel lost and confused over the ministry's compliance with the law.

There are other myths and misunderstandings that exist concerning the 1099 form.  One of them is the due date of these forms.  Some say January 31st, others say February 28th while some say April 1st.  Which is correct?  They all are correct because each date has significance depending on whether the church/ministry is giving the form to the vendor or the IRS, or filing electronically.  We teach which date applies to your ministry and cover other issues at all of our conferences.

Avoid the confusion

At StartCHURCH, our passion is to help churches and ministries get it right with God and man. When it comes to getting your 1099's done right, we want to help you get them done quickly and accurately. In addition to our conferences, we have developed an easy to use software program for just that process!  It is the W-2 and 1099-Kit.  It will take the confusion out of the compliance with the law.