Information Return Penalties May be Up to $580 per Return
There are over 40 different information returns, ranging from Forms W-2, Wage and Tax Statement, to less well-known ones such as Form 8937, Report of Organizational Actions Affecting Basis of Securities, are required to be filed by the Internal Revenue Code.
Because receiving correct and timely information returns is essential to tax compliance, the penalties imposed for failing to file correct or timely returns are severe, with higher penalties charged for taxpayers that do not promptly correct a failure to file returns or provide payee statements. There is no maximum cap on the penalties under Secs. 6721 and 6722 when the failure is intentional or willful.
For detail information about the penalties, please visit the IRS website. The following link will direct you to the appropriate page of the IRS website. We recommend you copy and paste the following link to your internet browser instead of clicking the link itself.
https://www.irs.gov/payments/information-return-penalties
AM I SUBJECT TO 1099-REPORTING REQUIREMENTS & WHAT PAYMENTS ARE SUBJECT TO REPORTING?
You may refer to the following IRS webpage to find out the details.
https://www.irs.gov/businesses/small-businesses-self-employed/am-i-required-to-file-a-form-1099-or-other-information-return
Compliance is key
Information returns are an important IRS tool to promote compliance in a self-reporting tax system. The penalties applicable to failure to timely file correct information returns are among the harshest penalties in the Code. Taxpayers should take care to ensure they have well-thought-out and tested systems in place to ensure compliance with information return requirements.
When Information Return is Due
Information Return is generally due on January 31st following the close of the calendar year.