ANSWERS: 1
  • Businesses often forget to file a 1099 because it is not meant for employees but those who do contract work. While the penalty for not filing a single 1099 seems nominal, it can add up to thousands for businesses with many contract workers.

    Types

    There are two major penalties for not filing the 1099: One for a late filing and one for purposely not filing the form, according to the Internal Revenue Service.

    Late Filing Penalty

    A $15 penalty per 1099 is assessed for businesses that do not furnish a 1099 by March 31 of the tax year, with a total maximum penalty of $75,000. This goes up to $30 with a $150,000 maximum after March 31 and $50 with a $250,000 maximum after August.

    Intentional Disregard

    If the IRS can prove outright neglect of a business to send out 1099s, then the penalty raises to $100 per form with no ceiling.

    Considerations

    Filing an incorrect 1099 or omitting key information also earns a $50 penalty. The IRS does not apply this penalty for filing late or improperly if one can show honest ignorance or furnish a legitimate reason.

    Warning

    Make sure to file the 1099 using the method requested by the IRS. Never print off and file the 1099 from the IRS website as it is not "scannable" and will incur a $50 penalty.

    Source:

    Internal Revenue Service

    1099 Form

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