Information Returns If you make or receive payments in your business, you may have toreport them to the IRS on information returns. The IRS compares thepayments shown on the information returns with each person's incometax return to see if the payments were included in income. You mustgive a copy of each information return you are required to file to therecipient or payer. In addition to the forms described below, you mayhave to use other returns to report certain kinds of payments ortransactions. For more details on information returns and when youhave to file them, see the Instructions for Forms 1099, 1098,5498, and W-2G. Form 1099-MISC.You use Form 1099-MISC, Miscellaneous Income, toreport certain payments you make in your business. These paymentsinclude the following items. Payments of $600 or more for services performed for yourbusiness by people not treated as your employees, such as fees tosubcontractors, attorneys, accountants, or directors. Rent payments of $600 or more, other than rents paid to realestate agents. Prizes and awards of $600 or more that are not for services,such as winnings on TV or radio shows. Royalty payments of $10 or more. Payments to certain crew members by operators of fishingboats. You also use Form 1099-MISC to report sales by you of$5,000 or more of consumer goods to a person for resale anywhere otherthan in a permanent retail establishment. Form W-2.You must file Form W-2, Wage and Tax Statement, toreport payments to your employees, such as wages, tips, and othercompensation, withheld income, social security, and Medicare taxes,and advance earned income credit (EIC) payments. For more informationon what to report on Form W-2, see the Instructions forForms W-2 and W-3. Penalties.The law provides for the following penalties if you do not fileForm 1099-MISC or Form W-2 or do not correctly report theinformation. For more information, see the Instructions for Forms1099, 1098, 5498, and W-2G. Failure to file information returns. Apenalty applies if you do not file information returns by the duedate, if you do not include all required information, or if you reportincorrect information. Failure to furnish correct payee statements. A penalty applies if you do not furnish arequired statement to a payee by the required date, if you do notinclude all required information, or if you report incorrectinformation. Waiver of penalty.A penalty will not apply if you can show that the failure was dueto reasonable cause and not willful neglect. In addition, there is no penalty for failure to include all therequired information, or for including incorrect information, on ade minimis (small) number of information returns if youcorrect the errors by August 1 of the year the returns are due. (A deminimis number of returns is the greater of 10 or 1/2 of1% of the total number of returns you are required to file for theyear.) Form 8300.You must file Form 8300, Report of Cash Payments Over $10,000Received in a Trade or Business, if you receive more than$10,000 in cash in one transaction, or two or more related businesstransactions. Cash includes U.S. and foreign coin and currency. Italso includes certain monetary instruments such as cashier's andtraveler's checks and money orders. For more information, seePublication 1544,Reporting Cash Payments of Over $10,000(Received in a Trade or Business). Penalties.There are civil and criminal penalties, including up to 5 years inprison, for not filing Form 8300 or for filing (or causing the filing)of a false or fraudulent form, or for structuring a transaction toevade reporting requirements.