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):

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
Time returns filed/furnished Not more than 30 days late 31 days late – August 1 After August 1 or Not at All Intentional Disregard
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).

Small Businesses with Gross Receipts $5 Million or Less
(*Average annual gross receipts for the most recent 3 taxable years) IRC 6721 & IRC 6722
Time returns filed/furnished

Not more than 30 days late

31 days late – August 1 After August 1 or Not at All Intentional Disregard
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) PDF and General Instructions for Forms W-2 and W-3 (PDF) PDF.

The due date for Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, whether filed with the IRS on paper or electronically, remains March 15. Also, the requirement to furnish Form 1042-S to the recipient of the income remains due March 15.  For more information on the penalties applicable for not filing a correct Form 1042-S, and /or for not providing the correct payee statement, refer to Penalties Related to Form 1042-S.

References

Public Law (P.L.) 113-295, Section 208

Public Law (P.L.) 114-27 Section 806 (PDF) PDF

Rev. Proc. 2016-11 PDF
Rev. Proc. 2015-53
Rev. Proc. 2016-55

Rev. Proc. 2018-18
Rev. Proc. 2018-57