Sub Contractor's Payment compliance and income Reporting in Business Return ?
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Thanks for replies to my threads.
I am working as incorporated independent contractor(IIC) via own an S-corp for many years . I did provide services to Local Government and as tier-2 sub-contractors to Federal large Prime contractors .
Past many years when we provided services thru another business entity as incorporated independent contractor, they made payments to our business accounts and we filed 1120S.
We used to get 1099-NEC at the year end to show our annual receipts to report on our 1120S.
As we worked with another entity for 2023 receipts, they are challenging the above practice . They are saying there is no obligation to report the payment made to our S-Corp to IRS using 1099-NEC. In addition, they claim there is no filing requirement of 1099-NEC with IRS for payment made to us.
The above entity provided us 1099-NEC for 2022, so we filed our business return without any issues.
As a Federal Contractors have an obligation to follow tax reporting / compliance.
When contractor getting Federal $ for services, what are the filing/reporting requirement?
What are the checks and balances rules for federal sub contractors abide by ?
In addition, they claim they provided services to large corp, for which they are not receiving 1099/1099-NEC. It is puzzling me further.
Is this correct?
so, I IRS do not care, if business under report income. It looks like a big loophole for corp to hide receipts.
Is there a purpose of filing business return then?
After receiving payment, the business failed to file business return, how will IRS reconcile receipts/reporting ?
I see,
Instructions for Forms 1099-MISC and 1099-NEC (Rev. January 2024) state
What will be the position S-Corp owner act as incorporated Independent contractor and filing 1120S ?
Thanks for your guidance.