Penalties Companies Face for Not Filing or Late Filing 1099s
IRS Company Penalties for
Not Filing 1099s
The Resourceful CEOTM: 1099 Video Series
Companies must file 1099s by deadlines.
Penalties for nonfiling or late filings can be harsh.
Harsher for deliberate nonfiling.
Harsher for larger corporations than small businesses.
However, due to size, penalties have high impact on small
Best way to avoid penalties? File correct Form1099s by due dates.
Companies must mail out nearly all 1099s by
Includes Form 1099-MISC.
Lone exception: Form 1099-C. Mailing
date for this form: February 15.
Companies must file 1099s with the IRS:
By February 28 if filing by paper.
By March 31 if e-filing.
Errors / Omissions That Lead to Penalties
The IRS levies penalties for various 1099 infractions:
Failure to include required information
Providing incorrect information
Neglecting to report a TIN
Filing an incorrect TIN
Paper forms not machine readable
Penalty - Amounts
IRS penalty assessment amount based on filing date of correct
File within 30 days of due
Penalty is $30 per incorrect / missing
Maximum penalty for small
businesses - $75,000 per year.
File after 30 days but by
Penalty is $60 per incorrect / missing
Maximum penalty for small
businesses - $200,000 per year.
File after August 1 or never
• Penalty is $100 per incorrect /
• Maximum penalty for small
businesses - $500,000 per year.
Classification and Minor Errors
IRS small business classification:
Business generated <=$5 million in
average annual sales over the prior
three tax years.
In general, the IRS can process minor errors and
Minor errors and omissions do not count as a failure.
IRS perspective: If your business operates responsibly
and acts to comply, your firm can claim it acted in good
Exception to Failure to
Don’t sweat it! You
still have options!
Cannot demonstrate reasonable
IRS may exempt the greater of ten
1099s or 1/2 percent of the total
1099s you must file.
Must have filed the 1099s but omitted all
the required information or had incorrect
Must file corrections by August 1.
Unintentional Mistake Treatment/Example
No penalty if you
demonstrate that error or
omission was due to a
reasonable cause, not
Simple forgetfulness - not
a good reason.
Must show omission was
due to unforeseen events /
Must provide an
explanation or supporting
When you realize you
forgot a 1099, send it
If missed paper filing
deadline, file electronically.
You mistakenly thought a
company was a
corporation and therefore
not 1099 eligible.
Document this reason.
You thought you paid a
contractor $500 but paid
$700, document this.
For more information and additional videos,
visit Cash for Impact:
IRS: General Instructions for Certain Information