Filing Requirements
E-File Mandate
Filers with 250 or more 1099s reporting are mandated to file electronically
which means if you file more than 250 1099s, you must transmit an electronic file to the government
or face penalties up to $100 per return. Tax1099.com offers easy
to use error free e-filing solution for all 1099 filers.
The regulations under section 6011(e)(2)(A) of the Internal Revenue Code provides that any person,
including a corporation, partnership, individual, estate, and trust,
who is required to file 250 or more information returns must file such returns electronically.
The 250 or more requirement applies separately for each type of return and separately to each
type of corrected return. Even though filers can transmit their returns less than 250 through paper filing,
however IRS encourages every filer to use electronic filing rather than paper filing as it is fast, easy and secure.
E-Filing Waiver
If the IRS has made it mandatory for you to file your return electronically but you are
unable to do so for any reason, then in that case you can request for a
waiver from filing your returns electronically. ,
To request for a waiver, you must apply 45 days before the due date of the return using
Internal Revenue Service Form 8508 (Request for Waiver from Filing Information Returns Electronically).
If your waiver is approved, it will provide exemption from the electronic filing for the current tax year only.
You cannot apply for a waiver for more than one tax year at a time. If you need to apply
for a waiver for more than one tax year, then you must reapply at the appropriate time each year.
If you receive an approved waiver, do not send a copy of it to the service center where you
file your paper returns. Keep the waiver for your records only.
Penalty Associated with the 1099 Filing
If you fail to file a correct 1099 by the due date, and cannot show reasonable cause, you may be subject to a penalty that broadly falls under categories listed below:
- Failing to file by the due date and you don’t furnish reasonable cause to justify the delay
- Failing to file paper forms that are machine readable
- Failing to include all required information
- Failing to meet electronic filing requirements
- Failing to include information that is correct
- Or failing to report TIN or reporting an incorrect TIN
The amount of the penalty is based on when the correct 1099 is filed:
- $30 per information return if you correctly file within 30 days of the due date
(by March 30 if the due date is February 28).
The maximum penalty is $250,000 per year ($75,000 for small businesses).
- $60 per information return if you correctly file more than 30 days
after the due date but by August 1; maximum penalty $500,000
per year ($200,000 for small businesses).
- $100 per information return if you file after August 1 or you do
not file required information returns. In this case the maximum penalty is
$1,500,000 per year ($500,000 for small businesses).
If you do not file corrections and you do not meet any of the exceptions
to the penalty described above, the penalty is $100 per information return.
Exceptions to the penalty
The following are exceptions to the failure to file penalty.
- The penalty will not apply to any failure where you can furnish a
reasonable cause to prove that it was not a wilful neglect.
In other words, you must be able to show that your failure was
due to an event beyond your control or due to significant mitigating factors.
You must also be able to show that you acted in a responsible manner
and took steps to avoid the failure.
- An insignificant error or omission is not considered a failure to include correct information.
An insignificant error or omission does not stop the IRS from processing the return,
from correlating the information required to be shown on the return with the
information shown on the payee's tax return, or from putting the return to its actual use.
Errors and omissions that are not considered as insignifant are those that are related to
(a) a TIN, (b) a payee's surname, and (c) any money amount.
- De minimis rule for corrections. Even though you cannot show reasonable cause,
the penalty for failure to file correct information returns will not
apply to a certain number of returns if you:
- a. Filed those information returns,
- b. Either failed to include all the information required on a return or included incorrect information, and
- c. Filed corrections by August 1.
If you meet all the conditions in a, b, and c above, the penalty for filing incorrect returns
(but not for filing late) will not apply to more than 10 information returns or ½ of 1% of the total
number of information returns you are required to file for the calendar year.
Intentional disregard of filing requirements. If any failure to file a correct
information return is due to intentional disregard of the filing or correct information requirements,
the penalty is at least $250 per information return with no maximum penalty
Business Owners – For further assistance
call: 410-878-2324