Monthly Archives: March 2013

What are the Penalties Imposed by IRS for Failure to File 1099 Forms?

In general, there are two types of penalties associated with 1099-MISC forms. The first concerns those who are required to issue the forms; the second concerns those who receive the forms. Let’s take a look at both.

For those who are required to send out 1099-MISC forms, there are penalties for not issuing Form 1099-MISC. It does not matter if you are a company or a person, if you are required to give someone who worked for you a Form 1099-MISC, you must do to. Generally, you have to give it to the person by the end of February of the year that follows the tax year that the income was paid.

In the event the Form 1099-MISC is not sent out on time, the company may be fined a penalty that can range from $30 to $100 (for each form), with a penalty maximum of $500,000 per year. This will depend on just how overdue the company has missed the deadline in issuing the form. Keep in mind, that if someone intentionally ignores the legal requirement to provide a timely and correct Form 1099-MISC statement, that company may be subject to a $250 minimum penalty per statement, and there is no maximum limit associated with in this case.

Some taxpayers wonder if they should be getting a Form 1099-MISC. The most common reason for someone to send you a Form 1099-MISC is that you did work for that person or company as an independent contractor. Do not confuse this with normal earned wages or salaries which you may have received from a job in which taxes were withheld from you by the employer.

The pay that is reported on your 1099-MISC is normally subject to both federal income tax and as well as state income tax. It is the responsibility of the one who paid you those monies to send you a copies of your Form 1099-MISC. You must then report these earnings on your tax returns.

What Income Can Go On Form 1099-MISC?

The answer is there are many types of income which can be reported using the 1099-MISC. This might include rents, non-employee compensation, most types of royalties and charter bus or even fishing boat proceeds. However, most often, the reason for getting a Form 1099-MISC for someone is that you worked as an independent contractor at some point during the year. An independent contractor is NOT considered an employee and therefore the company or person you worked for is not responsible for withholding taxes on you.

If you do not include the 1099-MISC income on your tax return, you may be penalized. In some cases, such as you underpay your tax, the IRS can charge you as much as 20 percent of the underpayment. For instance, if you underpaid (because you ignored your Form 1099-MISC, by, say, $500, the penalty could be $100 (which is $500 x .20 = $100). You can avoid these problems by making sure you include all of your miscellaneous income. If you are not sure about any of this, contact a professional for advice.

Article Title 1 What is the Deadline to file 1099s and What Happens If I Miss It?

Millions of Americans will receive one or more 1099-MISC forms this year. In order for taxpayers to file their taxes on time, they need to have these forms delivered to them by a certain deadline which is established by the IRS. Failure to provide the forms to those who are entitled to them can bring about serious consequences. Here are the deadlines for submitting 1099s for 2012.

1099-MISC Deadline:

You must send Copy B as well as Copy 2 of the 1099-MISC to the person or company no later than January 31, 2013. However, payments reported in box 8 or 14, the due date is extended to February 15, 2013. In addition, you must also send Copy A to the IRS. This must be done by February 28, 2013.

For those who file electronically, the deadline is April 1, 2013. It is important to understand that to file electronically it is required that you have software that is able to generate a file that is in accordance with the specifications outlined in Pub. 1220. For those that are required to file electronically (and fail to do so) there can be a $50 penalty for each return that was not filed. There are, however, waivers which can be applied for, but you just show reasonable cause.

1099 Deadline Penalty:

Those who do not file within the deadlines (and do not have a good reason) may be subject to penalties. Persons may face penalties if they: fail to file timely; if they fail to list all the required information on the 1099; if they include information that is not correct on the return. You should double check all of this information.

There can also be penalties for those who file on paper if there are required to file electronically; if they report a Tax Identification Number that is not correct, or if they fail to report a TIN altogether. For those facing a penalty, the 1099 deadline penalty is based on when the corrected version is filed. Generally, the penalty is:

An amount of $15 per return if the corrected form is filed within 30 days or by 30 March if the deadline date is February 28. There is a maximum penalty of $75,000 per year for large businesses and $25,000 for small businesses.

A penalty of $30 for each return if the corrected form is filed more than 30 days after it is due but before August 1. The maximum penalty is $150,000 per year; $50,000 for small businesses.

An amount of $50 per return for those who file after 1 August, or do not file required forms at all. The maximum penalty is $250,000 per year; $100,000 for small businesses.

As you can see, failing to file your 1099s on time can lead to expensive fines. If you are required to send out these forms to those that may have worked for you during 2012 make getting forms completed and send out a priority. It can save you a lot of money and stress.