Avoid Getting Sacked by Preparer Penalties!

It's that time of year again football and taxes. As the January 31st deadline for W-2 and certain 1099 forms approaches, so do the penalties.

Avoid Getting Sacked by Preparer Penalties!

All in an effort to minimize filing fraudsters, the IRS has accelerated major information form filing deadlines. We've got the information you need to stay in the pocket and prevent yourself from getting sacked by the IRS as they have drastically increased preparer penalties for untimely or inaccurate 1099, 1098, W-2, and W-2G form filing.

The amount of the penalty is based on when you file the correct information return or furnish the correct payee statement. 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 you don't provide a correct Form 1099-MISC statement to the payee, you may be subject to two separate penalties. The idea is similar to a football team that gets flagged for holding and pass interference on the same play.

All in an effort to minimize filing fraudsters, the IRS has accelerated major information form filing deadlines. We've got the information you need to stay in the pocket and prevent yourself from getting sacked by the IRS as they have drastically increased preparer penalties for untimely or inaccurate 1099, 1098, W-2, and W-2G form filing.

The amount of the penalty is based on when you file the correct information return or furnish the correct payee statement. 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 you don't provide a correct Form 1099-MISC statement to the payee, you may be subject to two separate penalties. The idea is similar to a football team that gets flagged for holding and pass interference on the same play.

Prior to the changes that took place in 2016, businesses, including tax-exempt and government entities, had to 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 had to (and still must) file electronically unless granted a waiver by the IRS.

  • Employers must now 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 filings.

    2017 Tax Season Deadline: January 31, 2018

  • Employers must furnish Copy B and any other applicable copies of information returns to the employee by January 31 of the following year.

    2017 Tax Season Deadline: January 31, 2018

  • 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 nonemployee compensation payments in Box 7

      2017 Tax Season Deadline: January 31, 2018

    • February 28 if filing by paper or electronically when you're NOT reporting nonemployee compensation in Box 7

      2017 Tax Season Deadline: February 28, 2018

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It's good to be aware of the actions that would cause a penalty flag to be thrown this tax season. If you run any of the plays below, you may find yourself getting penalized for not filing correct information returns or for not providing correct payee statements

Incorrect Information Returns
  • NOT filing a correct information return by the due date and reasonable cause is NOT shown
  • Filing on paper when you were required to file electronically
  • NOT reporting a Taxpayer Identification Number (TIN)
  • Reporting an incorrect TIN
  • Filing paper forms that are NOT machine-readable
Incorrect Payee Statements
  • NOT providing a correct payee statement by the due date and a reasonable cause is NOT shown
  • Missing required information on the statement
  • Reporting incorrect information on the statement.

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):

Government Entities and Large Businesses with Gross Receipts of More Than $5 Million
Small Businesses with Gross Receipts $5 Million or Less
Government Entities and Large Businesses with Gross Receipts of More Than $5 Million
How late is the form?
(Date range if deadline is Jan. 31st)
Penalty Rates & Maximums
Filed 1-30 days late
(Feb. 1st - Mar. 2nd)
$50 per return/
$536,000* maximum
Filed 31-152 days late
(Mar. 3rd - Aug. 1st)
$100 per return/
$1,609,000* maximum
Filed 153+ days late
(Aug. 2nd - Not at all)
$260 per return/
$3,218,500* maximum
Intentional Disregard $530* per return/
No limitation
Small Businesses with Gross Receipts $5 Million or Less
How late is the form?
(Date range if deadline is Jan. 31st)
Penalty Rates & Maximums
Filed 1-30 days late
(Feb. 1st - Mar. 2nd)
$50 per return/
$187,500* maximum
Filed 31-152 days late
(Mar. 3rd - Aug. 1st)
$100 per return/
$536,000* maximum
Filed 153+ days late
(Aug. 2nd - Not at all)
$260 per return/
$1,072,500* maximum
Intentional Disregard $530* per return/
No limitation

Penalty information comes from the IRS published 2017 General Instructions for Certain Information Returns

Download the January 31st Deadline Penalty calendar

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Suddenly there's a lot more on the goal line when filing these forms and with no room for error preparers are choosing their filing solutions carefully. As a result, this industry has seen a huge shift from desktop and paper to online filing as a faster and simpler solution to filing more accurate information returns. You can get started in a snap!

Eagleview Filing Solutions from Tenenz, Inc. is a good example of an online 1099/W-2 filing application you may want to tackle. The first step is to create a free account on EagleViewFiling.com. After you're signed in you can add in payer and payee information with an easy import feature. Now you're ready to kickoff your 1099, W-2 and other information return e-filing season which officially opened November 1st, 2017. Did we mention that Eagle View can also print and mail for you? Score the extra point this season by choosing to e-file instead of filing by paper. You'll never need to buy, print or mail a form again, if you go with an all-in-one online filing solution like Eagle View.

An e-file solution is also there to help keep you out of penalty trouble. It uses regular email correspondence to:

  • Remind preparers when to file

  • Let preparers know where in the process their filings are

  • Send any notices if there are issues with their filings.

Let's get you into the end zone penalty-free so we can both yell "TOUCHDOWN!"

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