Avoid the penalty, 1099-MISC due dates for 2020

1099-MISC due dates

Importance of filing timely

The IRS has gotten serious about 1099-MISC due dates.  Penalties have risen significantly and they apply separately to copies sent to recipients and the IRS.  Companies can face penalties for late filing that can be as high as $540 for each 1099-MISC sent late to a recipient PLUS another $540 for each form not filed timely with the IRS.

RECIPIENT 1099-MISC due dates

You can avoid these late filing penalties by furnishing 1099s to your recipients (i.e vendors) timely.  The deadline to send Forms 1099-MISC for payments made in 2019 is January 31, 2020, if you are reporting non-employee compensation (NEC) in box 7.  This applies to both paper or electronic filing procedures.  For all other reported payments, send Form 1099-MISC by February 28, 2020, if you file on paper, or March 31, 2020, if you file electronically.

1/31/20 – Furnish Copy B of Form 1099-MISC to recipients if you are reporting NEC in box 7.

2/28/20 – Furnish Copy B of Form 1099-MISC to recipients if you are not reporting NEC in box 7 and you file on paper.

3/31/20 – Furnish Copy B of Form 1099-MISC to recipients if you are not reporting NEC in box 7 and you file electronically.  

Most payments made by companies are reportable in box 7.  Therefore, a best practice followed by many companies is to simply mail out all 1099-MISC forms on January 31st.  Be certain that you properly address and mail out forms on or before the due date.  If you are filing electronic statements be certain to post the forms to a website on or before the due date.  Also, note that companies with 250 or more information returns are required by the IRS to file them electronically.  This rule applies separately to each type of form. 

IRS 1099-MISC due dates

Forms 1099-MISC be filed with the IRS on or before January 31, 2020 when you are reporting nonemployee compensation (NEC) in box 7.  The due date for Forms 1099-MISC without NEC is February 28, 2020 if filing by paper, or March 31, 2020 if filing electronically.  In practice, most companies file all Forms 1099-MISC on January 31st.

1/31/20 – File Form 1096 and Copy A of 1099-MISC forms that report NEC in box 7.  Due date applies to both paper and electronic filing.

2/28/20 – Paper filing of Form 1096 and Copy A for all other 1099-MISC forms without NEC in box 7.

3/31/20 – Electronic filing of Form 1096 and Copy A for all other 1099-MISC forms without NEC in box 7.

Filing Form 1099-MISC with NEC after 1/31/20

If any of your Forms 1099-MISC reporting NEC will be filed after January 31, 2020, file them in a separate transmission from your Forms 1099-MISC without NEC (due March 31, 2019). Filers should anticipate that if transmissions sent after January 31, 2020, include both Forms 1099-MISC reporting NEC and Forms 1099-MISC that do not report NEC in a single transmission (on paper with a single Form 1096 or electronically through FIRE with a single payer “A” record), the IRS will treat every form in the single transmission as if it is subject to the section 6721 penalty for failure to file by January 31, 2020. The IRS may send you a Notice 972CG, A Penalty Is Proposed for Your Information Returns, to which you may respond and clarify the content of the submission, indicating the number of Forms 1099-MISC that did not report NEC.

Filing an extension

You can request a 30-day extension to furnish Form 1099 to your recipients by sending a letter to the IRS.  Be sure to mail your request by the due date of the form.  For more information see the section, Extension of time to furnish statements to recipients, in the General Instructions for Certain Information Returns.  In addition, you can also request an automatic 30-day filing extension with the IRS by completing Form 8809.

Where to file

All paper information returns will be filed with only two IRS centers.  One is in Austin, TX, and the other is in Kansas City, MO.  See part D of the General Instructions for Certain Information Returns and Form 1096 for more information.  We recommend filing electronically with an online provider like tax1099.com or directly with the IRS using the FIRE system.

State filing

Finally, note that the information above only relates to filing with the IRS.  You may also need to file an information return with your state government.  The state filing requirements may be satisfied with the Combined Federal/State Filing Program.  Through this program the IRS will forward information returns like the 1099-MISC to participating states.  You must file electronically to participate in this program. See Part A. Sec. 11 of IRS Publication 1220 for a list of participating states.  Contact your state for requirements if they are not a participating state.

Disclaimer – Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.