Penalties Related to Form 1042-S
The following penalties apply to the person required to file Form 1042-S. The penalties apply to both paper filers and to electronic/magnetic media filers.
Late Filing of Correct Form 1042-S with IRS
A penalty may be imposed for failure to file each correct and complete Form 1042-S when due (including extensions), unless you can show that the failure was due to reasonable cause and not willful neglect. The penalty, based on when you file a correct Form 1042-S, is:
- $15 per Form 1042-S if you correctly file within 30 days; maximum penalty $75,000 per year ($25,000 for a small business). A small business, for this purpose, is defined as having average annual gross receipts of $5 million or less for the 3 most recent tax years (or for the period of its existence, if shorter) ending before the calendar year in which the Forms 1042-S are due.
- $30 per Form 1042-S if you correctly file more than 30 days after the due date but by August 1; maximum penalty $150,000 per year ($50,000 for a small business).
- $50 per Form 1042-S if you file after August 1 or you do not file correct Forms 1042-S; maximum penalty $250,000 per year ($100,000 for a small business).
If you intentionally disregard the requirement to report correct information, the penalty per Form 1042-S is increased to $100 or, if greater, 10% of the total amount of items required to be reported, with no maximum penalty.
Failure to Furnish Correct Form 1042-S to Recipient
If you fail to provide correct statements to recipients and cannot show reasonable cause, a penalty of $50 may be imposed for each failure to furnish Form 1042-S to the recipient when due. The penalty may also be imposed for failure to include all required information or for furnishing incorrect information on Form 1042-S. The maximum penalty is $100,000 for all failures to furnish correct recipient statements during a calendar year. If you intentionally disregard the requirement to report correct information, each $50 penalty is increased to $100 or, if greater, 10% of the total amount of items required to be reported, and the $100,000 maximum does not apply.
Failure to File on Electronic/Magnetic Media
If you are required to file on electronic/magnetic media but fail to do so, and you do not have an approved waiver on record, you may be subject to a $50 penalty per return for failure to file information returns on electronic/magnetic media unless you establish reasonable cause. The penalty applies separately to original returns and corrected returns.