The federal government uses a wide range of forms to collect data on the various types of payment-generating transactions in which taxpayers regularly engage. The IRS has 17 variations of Form 1099, each of which reports specific types of payments and transactions. If you must file a Form 1099, you should be aware of the IRS filing deadlines and the penalties for failing to fulfill your obligations.
Who Files 1099s
Individuals, corporations, partnerships, estates and trusts that engage in a reportable transaction and make the payment that’s subject to reporting are responsible for filing the relevant Form 1099. These individuals and entities are held accountable for the accuracy of the information reported on each form. In any year that you or the entity you represent must issue 250 or more Forms 1099, the IRS requires that all filings be made electronically.
Types of 1099s
Each of the 17 variations of Form 1099 have names that identify the type of transactions that are reportable on them. One of the most common is Form 1099-MISC, which is frequently used to report nonemployee compensation payments to self-employed individuals. When financial institutions and other creditors decide to cancel an outstanding debt because of unsuccessful collection efforts, they must file Form 1099-C to report the amount of debt canceled since it may be taxable income for the debtor. For banks that offer customers interest-bearing accounts, a Form 1099-INT must be filed to report the interest earnings of each account holder.
1099 Filing Deadlines
When filing a Form 1099 on paper, the IRS considers it to be filed on time if postmarked on or before the deadline, which generally falls on the last day of February. In years that the filing deadline falls on a weekend or holiday, placing it in the mail on the next business day is sufficient. If you prefer to file a Form 1099 electronically, in most cases the IRS provides you with more time by extending the deadline to the first business day in April of each year. Filers of Forms 1099 must also ensure that a second copy is furnished to each payment recipient so that they can use the information to prepare their tax returns. Most Forms 1099 must be sent to payment recipients no later than the middle of February, though some 1099s such as the 1099-C and 1099-R, have earlier deadlines.
Information Return Penalties
Individuals and entities that fail to file a 1099 by the deadline without reasonable cause are subject to penalty charges by the IRS. The longer the 1099 remains unfiled, the higher the penalty will be. For example, if you file a 1099-MISC late, but within 30 days of the deadline, the penalty is less than if you take more than 30 days to file it with the IRS. There are also separate penalties for failing to send a copy of a 1099 to the payment recipient. Keep in mind, however, that a penalty is imposed for each 1099 you fail to file with the IRS or send to the recipient.
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