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Penalties Pop-Quiz

How much do you know about penalties for 1099 forms? Test your knowledge on these true and false questions. If you’re not in the mood, don’t worry – the answer key is just below.

1. True or False:
If George filed an incorrect form and the filing deadline has past, he should take no further action. Doing nothing is the best way to minimize penalties.

2. True or False:
The IRS considers most form errors to be “inconsequential.” The important thing is filing a return. Whatever the error Andrea made, the IRS will most likely let her error slide.

3. True or False:
Elizabeth forgot about the new 1/31/2017 deadline for Box 7 1099-MISC forms. To escape penalties, she shouldn’t file at all.

How did you do?

Taking no action after filing an incorrect form could result in a $260 penalty per return.

Here it is, straight from the IRS:
“If you do not file corrections and you do not meet any of the exceptions to the penalty… the penalty is $260 per information return” (Section 6721).

The longer you wait before correcting filed error(s), the higher the penalty could be.

  • File a corrected form within 30 days for a $50 penalty
  • File before August 1st for a $100 penalty
  • If you file a corrected form after August 1st, or not at all, the penalty is $260

The following are errors the IRS penalizes:

  • Failing to include all required information
  • Reporting an incorrect TIN
  • Failing to file electronically, when required to do so

Here it is, straight from the IRS.

Fun fact: The IRS can penalize you for filing paper forms that are not machine readable. This isn’t a fun fact if you paper-filed your forms. If you used, we’ve got you covered – we send your forms electronically.


3. Well…You should file. It’s the law.

Intentionally disregarding a filing requirement can cost $520 per form in penalties. While it’s possible that you could “get away” with not filing, the IRS is on the lookout for those who do not file. In our opinion, it’s not worth the risk. The later your filing, the higher the penalty.

  • File within 30 days for a $50 penalty per return
  • File before August 1st for a $100 penalty per return
  • If you file after August 1st, or don’t file at all, the penalty is $260 per return
  • If you intentionally disregard the filing requirement, the penalty is $520

Here it is, straight from the IRS.

Short Answer:

If you haven’t filed, don’t delay. If you filed an incorrect form, file a corrected form as soon as possible.