Avoiding Information Return Penalties

Avoiding Information Return

Key Takeaways

  • You must pay close attention to the accurate and punctual filing of information returns.
  • Failure to file information returns correctly can result in significant penalties.
  • An experienced advisor can ensure proper handling of information returns.

Information returns, such as W-2s and 1099s, are a crucial aspect of year-end planning. Accurate and timely filing of these forms is essential to ensure your organization's compliance with tax regulations. Failure to file these forms correctly can result in significant penalties, which encompass late submissions, missed deadlines, as well as inaccuracies in the information provided or the missing information.

Ensuring the proper completion and submission of these forms is not only a matter of regulatory compliance but also plays a vital role in preventing potential financial setbacks for your organization. To navigate the intricate landscape of year-end planning effectively, it is imperative to pay close attention to the accurate and punctual filing of these information returns.

Types of Information Return Penalties

There are two separate penalties your business can face for information returns.

1. Penalty for not filing correct information returns

This penalty may apply to you if you:

  • Didn’t file by the necessary due date and you don’t show reasonable cause for why your return was late
  • Were supposed to file electronically, but you filed on paper instead
  • Didn’t report a Tax Identification Number (TIN) or reported an incorrect TIN
  • Filed paper forms that weren’t machine readable

2. Penalty for not providing correct payee statements

This penalty may apply to you if you:

  • Didn’t provide correct payee statements by the necessary date and don’t show reasonable cause for why you missed the deadline
  • Didn’t provide all the necessary information on the statement
  • Provided incorrect information on the statement

While No Tax is Due, Information Return Penalties Can Be Significant

Information return penalties will vary depending on when the return was due, how late it was filed, and if you intentionally did not file a form.

Charges for Each Information Return or Payee Statement

Year Due

Up to 30 Days Late

31 Days Late Through August 1

After August 1 or Not Filed

Intentional Disregard

2024 $60 $120 $310 $630

Check out this infographic to learn more about how much these penalties will cost you.

Filing Requirements You Should Know About

There are several types of information returns that may be required to be filed by your business. Filling out the correct information takes time. Be sure to walk through each form and box to confirm you have the correct information listed for that specific section.

Here are the different filing requirements for some common forms:

W-2 and W-3
Employers must send Copy A of Forms W-2 and W-3 to the Social Security Administration by January 31, 2024 – this is for both paper and electronic forms. Employers must give Copy B and any other applicable copies to the employee by January 31, 2024.

Businesses must send Copy A of Form 1099-NEC to the IRS and Copy B and any other applicable copies to the recipient by January 31, 2024.

Businesses must send Copy A of Form 1099-MISC to the IRS by February 28, 2024, if filing by paper and March 31, 2024, if filing electronically. Payers must provide Copy B and any other applicable copies to the recipient by January 31, 2024.

Avoid Information Return Penalties with Effective Year-End Planning

Information return penalties are not to be taken lightly. Their importance lies in the meticulous nature of form completion, the potential financial consequences of non-compliance, and the need for strict adherence to submission deadlines to avoid penalties and other complications.

Properly handling these information returns is a fundamental component of effective year-end planning and maintaining the financial health of your organization. If you need help, Eide Bailly’s experienced advisors can offer the support you need to prepare for year-end and avoid costly information return penalties.

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