Are there any penalties associated with Form 1099-C?

Last modified 3/29/2023 8:03:40 AM EST

Yes, the IRS will impose penalties under section 6721 for filing 1099-C Forms for the following reasons:

• Not filing by the due date
• Not filing a proper 1099 paper form that's machine-readable
• Using the form for the wrong year
• Not using the right copy of Form 1099-C
• Filing with Incorrect or missing TIN
• Filing with incorrect information

The penalty amount depends on how late the form is filed and the size of the organization:

• $60 per form if filed within 30 days of the due date, with a maximum penalty of $232,500 per year.
• $130 per form if filed more than 30 days after the due date but by August 1st, with a maximum penalty of $664,500  per year.
• $330 per form if filed after August 1st or not filed at all, with a maximum penalty of $1,329,000 per year.

In addition, if you intentionally disregard the requirement to file Form 1099-C or intentionally file a form with incorrect information, the penalty is the greater of $660 per form or 10% of the amount you were required to report on the form.

Therefore, it's important to file Form 1099-C correctly and on time to avoid penalties. If you have any difficulty filing Form 1099-C, get in touch with TaxBandits. We help you e-file your form 1099-C accurately with the federal and distribute form copies to your recipients on time.