From:  Patti
Date:  Mon, 2 Aug 2010

Is there a penalty if a company does not issue its 1099s by the January deadline?

Answer

Date:  11 Aug 2010

Hello Patti,

This question opens a can of worms. For example, Forms 1099-B, 1099-S and certain 1099-MISC aren’t required to be provided until February 15.

There are two dates that apply for annual information returns, each with its own penalty. Those are the dates the forms should be provided to recipients and the dates the forms should be submitted to the IRS.

The penalty for failure to furnish and failure to file are each $50 (potential total of $100) to a maximum of $100,000 (potential total of $200,000).

Since the information provider is giving helpful information for tax compliance, the IRS is fairly relaxed in imposing these penalties.

The IRS routinely asks for the information returns in an audit of business taxable income, and will routinely propose to disallow deductions when a required information return hasn’t been issued.

The IRS loves information returns as a way of identifying unreported income.

Congress recently enacted legislation extending information reporting to payments for all goods and services by businesses, including payments to corporations, effective starting in 2012. These rules threaten to eradicate the forests of the Earth. We should all ask our representatives in Congress to support repealing the new requirements before they become effective.

Good luck!

Mike Gray

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