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George Saenz, the Bankrate.com Tax Talk columnistShould church send guest speaker a 1099 form?

Dear Tax Talk,
I currently serve as a trustee at my church. When we have guest speakers for special religious services, should we issue him a 1099 when we give him an honorarium of $100 or more?
-- Stanley

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Dear Stanley,
The IRS requires that a business report payments for services performed by independent contractors when the contractor receives $600 or more in a calendar year.

Form 1099-MISC, Miscellaneous Income, is used to report payments you make in your business. These 1099 forms are due to the recipients by Jan. 31 following the year of payment and to the IRS by Feb. 28. Generally an independent contractor is a person over whom you do not exercise financial and behavioral control.

Typically an occasional speaker at a religious service would be considered a contractor, as would an accountant or an attorney.

Federal tax law provides tax benefits to nonprofit organizations, such as a church, recognized as exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code.

Although Congress has imposed special limitations (found in IRC section 7611) on how and when the IRS may conduct civil tax inquiries and examinations of churches, the law requires that most tax-exempt organizations must comply with federal tax law to maintain that status and avoid penalties.

A church is considered a business for information-reporting purposes and, accordingly, is required to file form 1099-Misc when appropriate.

Use Form W-9 to request that an independent contractor provide you with his or her name, address and tax identification number for purposes of completing Form 1099-Misc.

To ask a question on Tax Talk, go to the "Ask the Experts" page, and select "taxes" as the topic.

Bankrate.com's corrections policy -- Posted: Feb. 16, 2006
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