No one likes having to pay additional fines or fees, especially when they are avoidable. This tax season, you can take active measures to avoid potential penalties by planning ahead, verifying information, and distributing forms in a timely manner.
Penalties are charged for failure to timely file tax or information returns, or for filing incorrect returns. They vary depending on the type of return.
Penalties for Tax Year 2017 ACA Reporting
According to the IRS instructions for Forms 1094-C and 1095-C, the following penalties will apply for returns due for Tax Year 2017.
The penalty for failure to file a correct information return is $260 for each return for which the failure occurs, with the total penalty for a calendar year not to exceed $3,218,500.
The penalty for failure to provide a correct payee statement is $260 for each statement for which the failure occurs, with the total penalty for a calendar year not to exceed $3,218,500.
Special rules apply that increase the per-statement and total penalties if there is intentional disregard of the requirement to file the returns and furnish the required statements.
Penalties for Tax Year 2017 1099 Reporting
The IRS announced that penalties for not filing correct information returns and/or failing to provide correct payee statements have increased for returns due after January 1, 2016. The penalty amount is based on when the correct information return or payee statement is submitted.
The following is a table provided by the IRS regarding penalties for Large Businesses with Gross Receipts of More Than $5 Million and Government Entities.
The following is a table provided by the IRS regarding penalties for Small Businesses with Gross Receipts $5 Million or Less.
What Causes Penalties?
You may incur a penalty if any of your filings include any of the following:
- Failure to provide by due date with no reasonable cause provided;
- Do not report a Taxpayer Identification Number (TIN);
- Report an incorrect TIN;
- Do not report all required information;
- Report incorrect information;
- Filing on paper when you are required to file electronically;
- Paper filings that are not readable by machines.
It should be further noted that the penalties for failure to file with the IRS and failure to distribute payee statements are separate.
If you file with the IRS but neglect to furnish payee statements or vice versa, you will still incur fines for failure to provide.
If you fail to both file with the IRS and distribute payee statements, you will be fined for each.
Filing Your ACA and 1099 Reporting with BoomTax
When you use BoomTax to complete your ACA and/or 1099-MISC, 1099-INT and 1099-DIV reporting, we’ll help you prepare your filings so that they have minimized chances of being rejected by the IRS and incurring fines.
BoomTax allows you to electronically file your returns directly with the IRS and applicable state agencies.* When you import your payee data, our software will let you know if any required information is missing. Once your data is processed, our review screen will allow you to look over your information for any errors before you submit it to the IRS.
BoomTax offers an optional Print & Mail service for payee statements. For a nominal fee, we will print, stuff, post, and mail your recipient copies for you, saving you time and cost on office supplies, and ensuring that your payees receive their copies by the IRS deadline.
We also created TINCorrect to help you with verifying payer and payee TIN information. TINCorrect will compare any name and EIN, SSN or ITIN combination provided with what is on record with the IRS to let you know if they match. Sign up with TINCorrect today and receive 10 free searches.
Ready to Get Started?
- Dealing with B and P Notices
- What is Employer Shared Responsibility?
- ACA Draft Instructions
- Self Insured Plans
- ACA Compliance Requirements
- What is a Full-Time Employee?
- Common Law Employees
- ACA Reporting Deadlines
- Prepare for ACA Reporting
- Secure Access – New IRS Login Portal for e-Services
- Information Returns Guides – Part 1 and Part 2
*For 1099 reporting in states that participate in the Combined Federal and State Filing Program only.
BoomTax, The Boom Post, and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors prior to engaging in any transaction.