Increase in Information Return Penalties

Notification

New January 31 due date for Form W-2, Form W-3 and Certain Forms 1099-MISC

Effective with returns due after January 1, 2016, penalties for not filing correct information returns and/or not furnishing correct payee statements have increased and are now subject to inflationary adjustments.

Examples of affected forms include: Forms 1098, 1099, W-2G and W-2.

The amount of the penalty is based on when you file the correct information return (IRC 6721) or furnish the correct payee statement (IRC 6722). The penalty for not filing a correct information return is separate from the penalty for not providing the correct payee statement. For example, if you don’t file a correct Form 1099-MISC with the IRS and don’t provide a correct Form 1099-MISC statement to the payee, you may be subject to two separate penalties.

To Avoid Penalties

Beginning with the 2016 tax year:

Employers must send Copy A of Forms W-2 and W-3 to the Social Security Administration by January 31 of the following year for both paper and electronic forms.

Employers must furnish Copy B and any other applicable copies of information returns to the employee by January 31 of the following year.

Businesses, including tax exempt and government entities, must send Copy A of Form 1099-MISC to the IRS by:

January 31 of the following year when you’re reporting non-employee compensation payments in Box 7 (paper and electronic);
The last day of February of the following year if filing by paper when you’re NOT reporting non-employee compensation in Box 7; or
March 31 if filing electronically when you’re NOT reporting non-employee compensation in Box 7.

In years prior to the 2016 tax year:

Businesses, including tax exempt and government entities, must send Copy A of Forms 1098, 1099, W-2G and other information returns to the Internal Revenue Service with transmittal Form 1096 by:

The last day of February of the following year if filing by paper; or
March 31 if filing electronically.

Employers were also required to send Copy A of Form W-2 to the Social Security Administration with transmittal Form W-3 by:

The last day of February of the following year if filing by paper; or
March 31 if filing electronically.

In addition, employers filing 250 or more information returns must file electronically unless granted a waiver by the IRS.

Penalty Rates

The penalty rates and maximums for not filing correct information returns and/or not furnishing correct payee statements, including inflationary adjustments if applicable, are reflected in the following table (*-as adjusted for inflation):

Time returns filed/furnished	Not more than 30 days late	31 days late – August 1	After August 1 or Not at All	Intentional Disregard
Large Businesses with Gross Receipts of More Than $5 Million *(Average annual gross receipts for the most recent 3 taxable years) and Government Entities (Other than Federal entities) IRC 6721 & IRC 6722**
Due 01-01-2020 thru 12-31-2020	$50 per return or statement - $556,500* maximum	$110* per return or statement - $1,669,500* maximum	$270* per return or statement - $3,339,000* maximum	$550 per return or statement - No limitation
Due 01-01-2019 thru 12-31-2019	$50 per return or statement - $545,500* maximum	$100 per return or statement - $1,637,500* maximum	$270* per return or statement - $3,275,500* maximum	$540* per return or statement - No limitation
Due 01-01-2018 thru 12-31-2018	$50 per return or statement - $536,000* maximum	$100 per return or statement - $1,609,000* maximum	$260* per return or statement - $3,218,500* maximum	$530* per return or statement - No limitation
Due 01-01-2017 thru 12-31-2017	$50 per return or statement - $532,000* maximum	$100 per return or statement - $1,596,500* maximum	$260* per return or statement - $3,193,000* maximum	$530* per return or statement No limitation
Due 01-01-2016 thru 12-31-2016	$50 per return or statement - $529,500* maximum	$100 per return or statement - $1,589,000* maximum	$260* per return or statement - $3,178,500* maximum	$520* per return or statement - No limitation
Due 01-01-2011 thru 12-31-2015	$30 per return or statement - $250,000 maximum	$60 per return or statement - $500,000 maximum	$100 per return or statement - $1,500,000 maximum	$250 per return or statement - No limitation

Note: Increased penalty amounts may apply for certain failures in the case of intentional disregard. See IRC 6721(e)(2) and IRC 6722(e)(2).

Time returns filed/furnished	Not more than 30 days late	31 days late – August 1	After August 1 or Not at All	Intentional Disregard
Small Businesses with Gross Receipts $5 Million or Less (*Average annual gross receipts for the most recent 3 taxable years) IRC 6721 & IRC 6722
Due 01-01-2020 thru 12-31-2020	$50 per return or statement - $194,500* maximum	$110 per return or statement - $556,500 maximum	$270* per return or statement - $1,113,000* maximum	$550* per return or statement - No limitation
Due 01-01-2019 thru 12-31-2019	$50 per return or statement - $191,000* maximum	$100 per return or statement - $545,500* maximum	$270* per return or statement - $1,091,500* maximum	$540* per return or statement - No limitation
Due 01-01-2018 thru 12-31-2018	$50 per return or statement - $187,500* maximum	$100 per return or statement - $536,000* maximum	$260* per return or statement - $1,072,500* maximum	$530* per return or statement - No limitation
Due 01-01-2017 thru 12-31-2017	$50 per return or statement - $186,000* maximum	$100 per return or statement - $532,000* maximum	$260* per return or statement - $1,064,000* maximum	$530* per return or statement - No limitation
Due 01-01-2016 thru 12-31-2016	$50 per return or statement - $185,000* maximum	$100 per return or statement - $529,500* maximum	$260* per return or statement - $1,059,500* maximum	$520* per return or statement - No limitation
Due 01-01-2011 thru 12-31-2015	$30 per return or statement - $75,000 maximum	$60 per return or statement - $200,000 maximum	$100 per return or statement - $500,000 maximum	$250 per return or statement - No limitation

Penalties for not filing correct information returns (Code Section 6721) may apply if you:

Don’t file a correct information return by the due date and a reasonable cause is not shown;
File on paper when you were required to file electronically;
Don’t report a Taxpayer Identification Number (TIN);
Report an incorrect TIN; or
Don’t file paper forms that are machine readable.

Penalties for not providing correct payee statements (Code Section 6722) may apply if:

You don’t provide a correct payee statement by the applicable date and a reasonable cause isn’t shown;
All required information isn’t shown on the statement; or
Incorrect information is included on the statement.

For more information on penalties, information returns and payee statements, see General Instructions for Certain Information Returns (PDF) and General Instructions for Forms W-2 and W-3 (PDF).