New 1099 Reporting Penalties

With the due date for preparing and filing Form 1099’s looming, we felt it prudent to re-send information we have provided previouely regarding a substantial increase in the penalties for failure to file 1099’s.  The Form deadline for providing 1099’s to payees and filing with the IRS is January 31.  Keep reading below for details regarding these penalties.

Congress stiffened the penalty for failure to file certain information returns, including Form 1099.  The penalties for failure to file the returns and/or provide them to payees can be extensive depending on the circumstances.  Form 1099’s are required to be provided to all non-corporate payees to whom a business pays $600 or more during a calendar year for services, rent, awards or other payments.  Form 1099’s must be provided to payees no later than January 31 of the year following the year in which the payments were made.

Beginning with 2015 Form 1099’s, the following penalties now apply.

Information return furnished

Previous Penalty Amount

 New Penalty Amount

Within 30 days of due date



Before August 2



After August 1



Penalty for Intentional Failure



Note that the above penalty applies both for the failure to file to the IRS and the failure to provide a copy to the service provider.  Thus, the actual penalty enforced for failure to file will be double the above amounts.  For example, if a business is required to issue three 1099’s and fails to file any, and the failure is deemed to be intentional, the total penalty would be $3,180.  Also, remember that income tax forms now specifically ask if a business is required to file Form 1099’s and if such 1099’s were indeed filed.  It certainly seems likely that with Congress increasing the penalty for failure to file 1099’s that they will expect the IRS to step up its compliance enforcement efforts.  This may be part of a strategy by Congress to raise more revenue from fines and penalties as opposed to tax increases

Stancil can prepare your 1099’s.  Please contact our Business Resource Group for assistance with this or questions you may have concerning the requirement to complete 1099’s.


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