Whether it’s Form 1099-MISC or some other type of 1099/Certain Information Return, the penalties are pretty much the same. In fact, the 1099 late filing penalty is applicable in any number of circumstances. In addition to filing after the due date, the same penalty structure is typically assessed if the 1099 form is:
- A) Filed with incorrect information in essential fields,
- B) Filed on paper when required to be filed electronically, or
- C) Filed on paper or electronically in an improper way that prevents the forms from being processed.
Will I Get a 1099 Late Filing Penalty?
As you might imagine, things aren’t quite so simple. There are also a number of circumstances in a penalty may be increased, reduced or removed altogether. Like most any type of IRS form filing, exemptions may be granted for reasonable cause and first-time mistakes. There are also certain types of exemptions and penalty reductions that specifically apply to 1099 Information Returns. You can find more information in Section O – Penalties of the General Instructions for Certain Information Returns, but here are some of the highlights:
- Don’t Miss the Deadline. Improper filing of any kind can result in penalties, but if you file on-time, you’ll likely have more options for reducing penalties. So long as you also correct the information by August 1st and aren’t found to have intentionally disregarding the filing rules, you can severely curb the number of penalties you may be facing. There’s also a “safe harbor” provision for small dollar amount corrections in which you don’t need to file a correction at all.
- Look to Avoid Double Penalties for Late 1099 Filings. It’s also critical that you understand that the penalties apply to each return and that both the IRS Copy A and the Recipient Copy B each count as a separate return. The statutory penalties are administered by Section 6722 and Section 6723 of the Internal Revenue Code. In other words, much of the time, if you’re filing late, you’re facing two penalties per form—one for each copy. But this also means that if you notice the error right away, you may be to contact the recipient(s) and furnish them with the correct form information as soon as possible.
- How Much is the 1099 Late Filing Penalty? Assuming we’re talking about 2016 or 2017 tax years, the 1099 late filing penalty is somewhere between $50-$260 per return, unless you’re found to have shown intentional disregard in which case you may be assessed a penalty of $530 per return. The different penalty levels are determined by the size of your business and how long it takes you to correct the returns. The IRS provides a chart for these penalties here.
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