Form 1099 Penalties

A penalty will be charged if you fail to issue Form 1099 to the payee. The amount of the penalty is based on when you file the correct information return or furnish the correct payee statement. If you don’t file a correct Form 1099 with the IRS and don’t provide a correct Form 1099 statement to the payee, you may be subject to two separate penalties.

What Happens If you Don’t File 1099 Forms?

If you fail to file 1099 Forms by the deadline and cannot show reasonable cause, you may be subject to penalties. You may be penalized if you:

Fail to file by the deadline.
Fail to include all the required information to complete your 1099 Forms.
File with incorrect information.

File with paper forms when you’re required to e-file.
Report an incorrect TIN.
Forget to include a TIN, or
File paper 1099 Forms that are not machine-readable.

Penalties for Filing 1099 Forms Late

The IRS imposes penalties for the inability to distribute 1099 recipient copies by the deadline.

If you e-file your 1099 Forms you don’t need to include the Form 1096, Annual Summary and Transmittal form. However, if you paper file your 1099 Forms you may be penalized for failing to include your 1096 Form.

You may also face penalties for providing statements that are incomplete or inaccurate. You may be able to avoid penalties if you can show reasonable cause, which is either accepted or rejected by the IRS. If you fail to provide 1099-MISC statements to payees on time, you may also incur a separate penalty. The amount is based on when you furnish the correct statement.

Penalty Rates

Small Businesses With Gross Receipts Less Than or Equal to $5 Million

(Based on average annual gross receipts for the most recent 3 taxable years)

Time returns filed/furnished	Due 01-01-2011 through 12-31-2015	Due 01-01-18 through 12-31-2018 (inflation adjusted)
Not more than 30 days late	$30 per return/ $250,000 maximum	$50 per return/ $187,500 maximum
31 days late – August 1	$60 per return/ $500,000 maximum	$100 per return/ $536,000 maximum
After August 1 or Not At All	$100 per return/ $1,500,000 maximum	$260 per return/ $1,072,500 maximum
Intentional Disregard	$250 per return/ No limitation	$530 per return/ No maximum

Penalty Rates

Large Businesses With More Than $5 Million in Gross Receipts and Government Entities

(Based on average annual gross receipts for the most recent 3 taxable years)

Time returns filed/furnished	Due 01-01-2011 through 12-31-2015	Due 01-01-18 through 12-31-2018 (inflation adjusted)
No more than 30 days late	$30 per return/ $75,000 maximum	$50 per return/ $536,000 maximum
31 days late – August 1	$60 per return/ $200,000 maximum	$100 per return/ $1,609,000 maximum
After August 1 or Not At All	$100 per return/ $500,000 maximum	$260 per return/ $3,218,500 maximum
Intentional Disregard	$250 per return/ No limitation	$530 per return/ No maximum

Penalties for Filing Incorrect Returns

Failing to file by the deadline without showing reasonable cause.
Failing to report a Taxpayer Identification Number (TIN).
Reporting an incorrect TIN.

Penalties for not providing correct payee statements

Failing to provide a correct payee statement by the deadline without showing reasonable cause.
Failure to include all required information on the statement, or
Incorrect information is provided on the statement.

How and When Should Form 1099 Be Filed?

Form 1099 is a multi-part form which should be given to the following recipients:

Copy B and Copy 2 are for the recipient and must be provided no later than Jan. 31.
Copy A must be filed with the IRS no later than Feb. 28, or March 31 if you file electronically.

Copy 1 is for your state taxing authority if your state has a state income tax; the filing deadline for most states is Feb. 28, but some states require earlier filings; please check with the state tax department.
Copy C is for you-as-a payer to retain in your files.

A 30-day extension of time to file Form 1099 is available by filing IRS Form 8809, Extension of time to file Information Returns, and must include the reason why an extension is needed. This form must be filed with the IRS by Feb. 28. An extension of time to file is not granted automatically but only on extraordinary circumstances. The IRS will send you a letter approving or denying your request.