how long can one company pay a 1099 private contracter without getting in trouble with irs?

Answer 1

No time restrictions, as long as the definitions of "private contractor"or"independent contractor" are met.

Answer 2

the IRS trusts that the company paying someone and reporting on 1099 is doing this in a legal way.

Answer 3

I don't see how you can get into trouble with the IRS. A 1099 is simply a record of a service transaction. The IRS does not care about anything else except for the reporting of income for individuals and companies.

Answer 4

1099 is meant for temporary employees and was created specifically for workers performing a short term (usually days) service. Do you not have an accountant? I understand what you are likely trying to accomplish by repeatedly paying someone 1099 but there are better ways to achieve it. Even an HR Block could give you a clue in.

There are specific definitions for what workers can qualify as an independent contractor; as long as that definition is met you should be fine. However, paying someone 1099 on the 1st and 15th of the month every month for a long period of time will likely mean they will not fall within that definition any longer. Just ask a professional, you'll likely be able to get free advice but even if it costs you a hundred dollars it will be a huge savings over a business audit.

Answer 5

Forever and a day. (That final day is when you're dead and the estate transfers...)

As long as they are an independent contractor by the IRS definition, there will never be a penalty.

For example, if you manage to keep your business for 75 years, and you die and leave the business to your son, and he keeps it for 75 years and the business passes to your grandson, you could potentially use the same plumber, phone company, auto repair, and copy paper supplier for all 225 years, and there's no need for you to fear penalty for doing it.

It's just business.

The only thing you have to watch is that they are truly an independent contractor, and not an employee. If you're in doubt, e-mail me. I can give you some clues that the IRS uses to determine the difference.