Avoid the 1099 Late Filing Penalty: Deadlines, Fees, & Solutions

The 1099 late filing penalty is enforced on individuals and businesses who fail to file their 1099 forms on or before the deadline. The penalty ranges from $60 to $330, depending on the time that has passed since they missed the filing deadline.

Understanding the possible repercussions of late penalties for 1099 filing mistakes keeps you from accumulating tax liabilities. Additionally, it also encourages you to stay organized and prepare the documents you need when filing your returns and taxes on time.

Keep reading to uncover the answer to the question, ‘What is the penalty for filing 1099 late?’ and stay on top of your tax filing responsibilities.

Key Takeaways

• The 1099 late filing penalty applies if you fail to file this form on or before the set deadline.
• You can request a 1099 extension to prepare and file your information returns. To do this, you must fill out Form 8809.
• The 1099 late filing penalties range from $60 to $330 per form, depending on how late taxpayers file their information returns.
• Small business owners may face between $232,500 and $1,329,000 in late filing penalties, while large businesses may be charged at least $664,500 to $3,987,000.

What Are 1099 Form Filing Deadlines?

The 1099 form filing deadlines may vary depending on the form variation you must submit.

There are different types of 1099 forms for small businesses and individuals you might have to file depending on the type of income. These include:

• 1099-DIV
• 1099-R
• 1099-B
• 1099-NEC
• 1099-MISC form

The table below shows the deadlines for furnishing the recipient copies of each 1099 form, as well as the due date for e-filing and paper filing the information returns:

Furnishing the recipient copy is the responsibility of business owners who made payments to an individual, who must also receive the 1099 form or payee statement. If the set deadlines fall on a weekend or a holiday, the due date is moved to the next business day.

What Is the 1099 Late Filing Penalty?

The 1099 late filing penalty is a punitive action imposed on taxpayers or businesses who fail to meet the filing deadline for this form. The penalties may vary depending on how late the information returns were filed or whether the correct 1099 form was chosen. Besides that, it’s also good to know that the IRS also charges interest on the late filing penalties.

How Much Is the 1099 Late Filing Penalty?

The 1099 late filing penalty is based on the time that has elapsed since the 1099 form was filed. It also depends on the number of information returns that were filed past the due date.

If You File 30 Days Past The Deadline

Filing your 1099 form 30 days after the set deadline makes you liable to pay $60 for each form you failed to submit on time.

Small businesses that filed 30 days late are also subject to a maximum penalty of $232,500. Meanwhile, large businesses that did not meet the 1099 filing deadline could potentially face up to $664,500 in 1099 late fee penalties.

If You File More Than 30 Days Late (But Not Later Than August 1)

If it took you 31 days or more after the due date but not later than August 1, the 1099 late filing penalty will be charged at $130 per form. On the other hand, large businesses must pay up to $1,993,500, while small companies could be fined up to $664,500.

If You File After August 1

If you submit your information return after August 1, you must pay a penalty of $330 for each 1099 form. The 1099 late fee penalty for small businesses could reach $1,329,000, while large businesses may be charged a maximum of $3,987,000.

Intentional Disregard

Taxpayers who deliberately disregard their tax filing obligations are bound to face penalties of up to $660 per form or return.

Still, if a taxpayer has valid reasons for missing the 1099 filing deadlines—such as an accident, family emergency, sickness, or the death of a loved one—the IRS may consider allowing a tax filing extension.

1099 Late Payment Penalty

The late payment penalty is set at 0.5% for each unpaid tax per month or part of the month that the taxes reported on your information return remain unsettled. This way, the penalty may reach a maximum of 25%.

On the other hand, if you filed your 1099 form on time but have an approved payment plan, your penalty will be reduced to 0.25%. Still, if you receive a notification from the IRS regarding your unpaid taxes and fail to settle your balance within 10 days, your penalty will increase to 1% per partial or full month.

Exceptions to the 1099 Late Filing Penalties

There are also exceptions to the 1099 late filing penalty, depending on whether you encountered an emergency or committed mistakes while filing your information return.

These include:

• Unforeseen or unexpected events. These include family emergencies, accidents, the death of a loved one, and any other events outside of your control.

• Errors in your information return. If you make a mistake while filling out your 1099 form, the IRS will still consider and accept your information return. However, you must still amend the errors on the forms that you initially submitted.

• De minimis rule for correcting errors on your 1099 forms. You can still attempt to waive the 1099 late filing penalties on your information returns, even if you do not have any reasonable cause for missing the due date. For instance, if your 1099 forms have missing information or corrections, you can waive ½ to 1% of the 1099 forms (or the first ten information returns) if you filed them before August 1.

How to Avoid 1099 Late Filing Penalties

Preparing all the necessary information and documents in advance is the key to avoiding possible 1099 late filing penalties. Additionally, marking the specific 1099 filing due dates on your calendar allows you to organize your schedule beforehand.

Taking note of the filing deadlines also helps you determine whether you need to follow up on business owners or institutions who still need to furnish your information return.

Below are a few more effective countermeasures to avoid a 1099 late filing penalty.

#1. Use a 1099 Generator

Filing your 1099 forms on time will be much easier if you make the form completion process simpler. An efficient way to do this is by using Paystub.org’s 1099 form generator.

This online tool helps you prepare your 1099 forms in a fast, secure, and easy way, as it provides a template with all the essential fields needed in a typical 1099 form. All you need to do is enter the basic information, and it will generate a ready-made document for you. The best part is that the entire process can be completed in a matter of minutes.

The generator also allows you to preview your 1099 form and download a PDF copy to print or file electronically.

#2. Consider Electronic Filing

A 1099 e-filing is a more convenient way to submit your information returns to the IRS. However, the electronic filing feature applies if you are filing ten or more 1099 forms.

If you have third-party software or service, the IRS lets you e-file your 1099 forms using either the IRS Taxpayer Portal or the IRIS Application to Application (IRIS A2A).

The IRIS Taxpayer Portal is a free-to-use web-based filing system. You can e-file up to 100 returns at a time using the portal, download payee copies, and manually input information on each return or by uploading a .csv file.

In contrast, if you want to use the IRS A2A, you must first apply for an IRIS A2A TCC (Transmitter Control Code). Next, you must acquire an API Client ID and a schema package and submit the IRIS ATS (Assurance Testing System) transmissions.

#3. Use Form 1040 Schedule C

At times, you may not receive a 1099 form because your income did not meet the minimum requirements for furnishing the appropriate information return. On the bright side, you can still report your self-employment income without it.

To do this, you must file Form 1040 Schedule C to report all your non-employee or self-employed earnings for the year. Additionally, you must also file Form 1040-SE to assess your estimated tax payments.

#4. Apply for a Payment Plan

The IRS offers payment plans or installment agreements to help taxpayers pay their outstanding tax balances within an extended period.

Requesting a payment plan is recommended if you are sure you cannot pay your taxes on or before the set deadline.

When an installment agreement request is pending, the IRS’ tax collection time is automatically suspended. If your request for a payment plan is rejected, the collection period of your tax balance is suspended or postponed for 30 days.

What Happens if You File 1099 With Incorrect Information?

If you file a 1099 form with incorrect information, you must amend these mistakes depending on the type of error you incurred. There are two categories used to identify specific 1099 form errors:

Type 1 Error

Type 1 errors include:

• Inputting the wrong income or money amount
• Providing or using the incorrect codes
• Inputting the wrong name or address
• Marking the wrong checkboxes
• Paper-filing a form when you should not

You can correct a Type 1 error by filling out a new 1099 form with the correct and complete information and checking the box labeled CORRECTED on the information return.

Next, fill out Form 1096, Annual Summary and Transmittal of U.S. Information Returns. You’ll submit this form along with Copy A of the corrected 1099 form to the IRS.

Finally, you must also send the corrected form to the recipient and state tax agency (if applicable).

Type 2 Error

Type 2 errors in filling out 1099 forms include:

• Incorrect TIN and payee information
• Incorrect TIN and payer information
• Supplying the wrong 1099 form

To correct a Type 2 error, you must file two 1099 forms. On the first one, you’ll input the same erroneous information contained on the information return you initially filed. You must also check the box labeled CORRECTED and input $0.00 or 0 on all fields requiring a monetary amount.

On the second 1099 form, you also fill out and check the CORRECTED box, but this time, you must provide the correct information on the return.

Then, fill out a new Form 1096 and send it along with Copy A of the 1099 form to the IRS. Don’t forget to send the corrected copy to the recipient.

Aside from knowing how to correct a Type 1 or Type 2 error, it is also important to know the basics of how to fill out a 1099 form. Doing so effectively reduces instances of committing mistakes when filing your Form 1099.

How to Request a 1099 Extension

To request a 1099 extension, you must file Form 8809, also called Application for Extension of Time to File Information Returns.

The instances wherein you may request a 1099 extension include the following situations:

• You need more time to organize all your tax receipts and provide 1099 copies to all recipients.

• You are in the process of validating all information on your recipients’ W-9 forms.

• You are a 1099 form recipient, and you have yet to receive your information returned from your client, bank, or financial institution.

• You had to address a family emergency or suffered from an illness.

Once your request for a 1099 extension is approved, you will be granted an additional 30 days to file your 1099 forms.

If you need more time on top of the 30-day extension, you may request an additional extension. However, the additional extension is not guaranteed to be granted immediately.

Filing for a 1099 extension allows you to submit your information returns without incurring 1099 late filing penalties from the IRS. It is also important to note that requesting it is different from filing a tax extension.

The 1099 extension means requesting more time to prepare and file your 1099 forms. On the other hand, a tax extension refers to the additional time granted to taxpayers who are unable to pay or file their taxes on or before the set deadline.

Final Thoughts

Addressing a 1099 late filing penalty is manageable if you know the appropriate countermeasures you can take if you cannot meet the filing deadlines.

Rather than avoiding your responsibilities, it is best to contact the IRS in advance or provide complete documentation to show that you are unable to meet the deadlines due to unforeseen circumstances. This way, you show transparency and increase your chances of tackling the matter in the best way possible.

1099 Late Filing Penalty FAQ

#1. What if I forgot to report a small income on my 1099 form?

If you forgot to report a small amount of income on your 1099 tax return, you can correct the missing information by filing Form 1040-X, Amended U.S. Individual Tax Return.

You must report all types of income you earned within the tax year to avoid possible penalties, an IRS audit, or extra steps in your tax filing process to amend the errors in your initially submitted tax return.

#2. How to pay a late filing penalty?

You can pay a late filing penalty partially or entirely by using your debit or credit card or a digital wallet. Additionally, it’s also possible to use the IRS’ direct pay option to send your 1099 late filing penalty payment through your bank account.

#3. Can the 1099 late filing penalty be waived?

Yes, the 1099 late filing penalty can be waived or reduced if you provide reasonable cause for failing to meet the set filing deadline.

#4. What is the IRS 972CG Notice?

The IRS 972CG Notice, or ‘Notice of Proposed Civil Penalty,’ is sent to tax filers who fail to comply with the IRS’s information reporting requirements.

Recipients of the IRS 972CG notice must provide reasonable cause to forfeit or waive the possible penalties that come with their alleged non-compliance.