Please provide guidance on how best to process 1099-MISC forms that we failed to issue to the taxpayer, IRS and Massachusetts Department of Revenue...


Q. (cont.) These forms are for CY2015. Do we need to correct combined filing with the state and the IRS, or is this a separate reporting/filing? Could you also indicate what penalties we may be facing for this late filing?

A.  We understand you to mean you did not file some 1099s at all (as opposed to having errors that require you to file corrections). If this is incorrect, let us know.

You need to go ahead and issue the 1099-MISC forms to the vendors, to the IRS and the State. File the 1099s with the IRS accompanied by a new 1096 – the 1096 should cover just this filing.

You want to issue the 1099s as soon as you can – you can be penalized for failing to issue 1099s by the due date unless you can show reasonable cause, in which case the penalties may be abated – but the penalties increase depending on when you file. Please refer to the IRS 2016 General Instructions for Certain Information Returns, section O.  At this point, the possible IRS penalty per return IF you file before August 1 is $100 per return; it increases if you don’t file the 1099s until August 1 or after, to $260 per 1099.

How many late 1099s do you have?  (If it’s very few, you might not see a penalty notice.) On the AP&P2P Network, see the section on Penalties in Form 1099-Misc Filing Basics; and also see Responding to a 972CG Penalty Notice.

As to the State of Massachusetts, it requires that 1099s be filed directly with the Department of Revenue, regardless of the Combined Filing Program. You may wish to contact them directly for information about how to file your corrected return, and with regard to penalties for late filing; their number is 617.887.6367.

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