The IRS has increased enforcement for information returns, which means businesses that file 1099s late or with errors face real financial risk. UnderstandingĀ 1099 penaltiesĀ helps you plan ahead, correct issues early, and avoid the highest per-form fines.
This guide explains how IRS 1099 penalties work, how corrections are treated, and what you can do to reduce exposure.
Types of 1099 Penalties
There are multiple categories of IRS 1099 penalties, depending on what went wrong. The most common penalty types include:
- Failure-to-file penaltiesĀ for not filing with the IRS on time
- Failure-to-furnish penaltiesĀ for not providing recipient copies by the deadline
- Incorrect 1099 penaltiesĀ for wrong names, TINs, or dollar amounts
- Intentional disregard penaltiesĀ for willful noncompliance
Each category has its own rules, but most penalties are assessedĀ per form, not per batch.
Penalty Amounts by Filing Delay
Late filing penalties increase based on how long after the deadline the forms or corrections are submitted.
For tax yearĀ 2025, the standard penalty tiers are:
| Timing of Filing or Correction | Penalty Tier | Penalty Amount per Form |
| Filed within 30 days of original deadline | Lowest tier | $60 |
| 31 days late through August 1 | Mid tier | $130 |
| Filed after August 1 or not filed | Highest tier | $340 |
| Intentional disregard | Maximum penalty | $680 |
TheseĀ per-form finesĀ apply to both original filings and corrections.
Tier 1: Filed Within 30 Days
Filing within 30 days after the deadline results in the lowest penalty.
Example: A business files 25 late 1099-NEC forms on February 20th.
- Penalty: 25 Ć $60 =Ā $1,500
This tier exists because the IRS views early corrections as having minimal impact on tax administration.
Tier 2: Filed by August 1
Forms or corrections filed after 30 days but before August 1 fall into the mid-level tier.
Example: Five 1099-NEC forms are corrected on June 10th due to incorrect dollar amounts.
- Penalty: 5 Ć $130 =Ā $650
This window allows time to identify errors, validate TINs, and submit corrections.
Tier 3: Filed After August 1
Forms filed or corrected after August 1 receive the highest penalty amount besides intentional disregard.
Example: Four Name/TIN mismatches are corrected in September after a CP2100 notice.
- Penalty: 4 Ć $340 =Ā $1,360
Many filers are surprised by this tier because the errors were eventually corrected, just not in time.
Penalties for Incorrect Information
Incorrect information is penalized if it remains unresolved after August 1.
Common causes include:
- Name and TIN mismatches
- Incorrect payment amounts
- Wrong form or box reporting
TheseĀ incorrect 1099 penaltiesĀ often stem from data collection issues early in the year.
Why Name and TIN Mismatches Fall into the Highest Tier
Many businesses first learn about mismatches through aĀ CP2100 or CP2100A notice, also called a B-Notice, issued by theĀ Internal Revenue Service.
Important clarification:
- A Name/TIN mismatch doesĀ notĀ immediately trigger a penalty on August 1
- August 1 determines which records remain unresolved in the IRS matching system
What actually happens:
- You file 1099s with mismatched Name/TIN data.
- Errors remain uncorrected after August 1.
- The IRS issues a CP2100 or CP2100A notice.
- You must follow IRS solicitation rules to request corrected information.
- No penalty is assessed at this stage.
- One year later, the IRS issuesĀ Notice 972CGĀ proposing a penalty.
That proposed penalty isĀ $340 per form, matching the highest standard tier.
Intentional Disregard Penalties
Intentional disregard penalties apply when a payer knowingly ignores filing requirements.
- Bypasses timing tiers entirely
- Applies to willful failure to file or furnish correct information
- IsĀ $680 per formĀ for 2026 filings
TheĀ intentional disregard penaltyĀ is reserved for cases of deliberate noncompliance.
How to Reduce or Avoid Penalties
Early validation and fast corrections are the most effective ways to reduce 1099 penalties.
Best practices include:
- Collect accurate W-9s from all vendors and payees
- Validate TINs before payment is made to payee
- Validate TINs again before filing using an IRS-approved verification service
- Correct errors and submit updatesĀ before August 1
- Maintain audit trails and error tracking for penalty abatement requests
Following these steps can supportĀ penalty reductionĀ orĀ penalty abatementĀ if a notice is issued.
The Bottom Line
1099 penaltiesĀ are driven by timing, accuracy, and follow-through. The August 1 cutoff is critical because unresolved errors after that date often lead to the highest per-form fines, especially Ā Name/TIN mismatches identified through CP2100 notices.
Understanding the penalty tiers and correcting issues early protects your business from unnecessary costs and increased IRS scrutiny.
FAQs
How much is the IRS 1099 penalty?
For 2026 (tax year 2025 filings), penalties range fromĀ $60 to $340 per form, depending on how late the filing or correction is. Intentional disregard penalties areĀ $680 per form.
Are penalties per form or per batch?
Penalties are assessedĀ per form, not per batch. High-volume filers face greater exposure.
What is intentional disregard?
Intentional disregard occurs when a payer knowingly fails to file or furnish correct 1099 information. It carries the highest penalties.
Can penalties be waived?
Yes. Businesses may requestĀ penalty abatementĀ by demonstrating reasonable cause and proper due diligence, including required solicitations.
How do corrections affect penalties?
Corrections filed early fall into lower tiers. Corrections submitted after August 1 typically qualify for the highest non-intentional penalty tier.
Additional Resources:
- What Happens If I Miss the Filing Deadline?
- 1099 Deadlines for 2026
- Correcting a 1099 After the Deadline
- IRS guidance on information return penalties
Ready to file and correct 1099s with confidence?
File and correct 1099s now to avoid unnecessary IRS penalties.