If you forgot to file a 1099, file it now. The IRS charges $60 per return when you correct the failure within 30 days of the original due date, $130 per return if you file by August 1, and $340 per return after that, so every week of delay costs real money.1Internal Revenue Service. Information Return Penalties Those amounts apply separately to each form you missed, and a matching penalty can be charged for failing to send the recipient their copy. Penalty relief is available in some situations, but it depends on how quickly you act and whether you have a defensible reason for the lapse.
First, Confirm You Actually Had to File
Before you do anything else, check whether the payment triggered a filing obligation. For 2025 payments (returns due in early 2026), the long-standing $600 threshold for nonemployee compensation on Form 1099-NEC still applies. If you paid a contractor $600 or more during 2025 for services, you were required to file.
Starting with tax year 2026, the threshold for Form 1099-NEC jumps from $600 to $2,000, and the same $2,000 figure applies to several other information return types going forward. The IRS will adjust it for inflation beginning in 2027.2Internal Revenue Service. 2026 Publication 1099 (Draft)3Internal Revenue Service. Form 1099-NEC and Independent Contractors So a $1,500 payment made in 2026 no longer needs a 1099-NEC, but a $1,500 payment made in 2025 did.
Also check the deadline you missed. Form 1099-NEC is due to both the recipient and the IRS by January 31, with no extra time for e-filing. Form 1099-MISC is due to the recipient by January 31, to the IRS on paper by February 28, and to the IRS electronically by March 31.4Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC The penalty clock runs from those dates.
What the Penalty Will Be
The IRS charges two separate penalties for each form: one for not filing with the IRS on time, and one for not furnishing the payee statement to the recipient on time. They are the same dollar amount, but they stack, so a single 1099 you never filed and never sent to the contractor can generate two penalties.1Internal Revenue Service. Information Return Penalties
For returns due in 2026, the per-return amounts are:
- Filed within 30 days of the due date: $60
- Filed after 30 days but by August 1: $130
- Filed after August 1, or never filed: $340
The gap between the first and last tier is nearly six to one. If it’s February and you just realized you missed the January 31 deadline for a 1099-NEC, filing this week versus filing in September changes a $60 problem into a $340 problem, per form.
Don’t Let the IRS Call It Intentional
If the IRS decides you deliberately ignored the filing requirement rather than simply forgetting, the penalty structure changes entirely. The minimum is $680 per return for returns due in 2026, with no annual cap.1Internal Revenue Service. Information Return Penalties For most 1099 types, the actual penalty is the greater of that flat amount or 10% of the total income that should have been reported.5Office of the Law Revision Counsel. 26 U.S. Code 6721 – Failure to File Correct Information Returns Filing voluntarily, as soon as you notice, is the single strongest argument against a finding of intentional disregard.
How to File the Missing 1099
Use the form for the year the payments were made, not the current year’s form. If you paid the contractor in 2025, use the 2025 version of the 1099. Do not check the “CORRECTED” box; that box is only for fixing a return you already submitted. A late original filing is still an original return.
Electronic filing goes through the IRS Information Returns Intake System (IRIS). It’s free, doesn’t require special software, and handles up to 100 forms at a time for tax years 2022 and later.6Internal Revenue Service. E-file Information Returns with IRIS First-time users need to apply for a Transmitter Control Code through the system, so build in a few days for account setup. The older FIRE system still works, but the IRS has targeted filing season 2027 (tax year 2026 returns) as its last season, with IRIS becoming the sole electronic intake platform after that.7Internal Revenue Service. Filing Information Returns Electronically (FIRE)
Note that if you file 10 or more information returns of any type in a calendar year (W-2s and all 1099 varieties count together), you’re required to file electronically. Filing on paper when you should have e-filed is itself a penalty trigger.8Internal Revenue Service. Topic No. 801, Who Must File Information Returns Electronically
If you file fewer than 10 information returns and want to submit on paper, send Copy A of each 1099 along with Form 1096, the transmittal summary. Use a separate Form 1096 for each type of 1099 you’re submitting.9Internal Revenue Service. About Form 1096, Annual Summary and Transmittal of U.S. Information Returns
Whatever you do, send the recipient their copy too. The penalty for failing to furnish a payee statement runs on its own track from the penalty for failing to file with the IRS, and it’s just as expensive. Many states also want a copy; check whether yours participates in the Combined Federal/State Filing Program.
Asking the IRS to Reduce or Remove the Penalty
Once the late return is filed, you can request penalty relief. Information return penalties are harder to get waived than standard income tax penalties, so how you make the request matters.
Reasonable Cause
The main basis for relief is “reasonable cause” under Section 6724. You have to show two things: that events beyond your control (or significant mitigating factors) caused the failure, and that you acted responsibly both before and after the failure.10eCFR. 26 CFR 301.6724-1 – Reasonable Cause Acting responsibly means you took reasonable care to determine your obligations, tried to prevent the failure, and corrected it as soon as you discovered it. The IRS generally treats correction within 30 days of discovery as prompt.
Circumstances the IRS recognizes include fires and natural disasters, death or serious illness of the person responsible for filing, and inability to obtain records needed to complete the form. Forgetting, being busy, or not knowing about the requirement generally will not qualify on their own. Mitigating factors that can help include being a first-time filer of that particular form, a strong prior compliance history, or economic hardship that prevented electronic filing.11Internal Revenue Service. Penalty Relief for Reasonable Cause
How to Ask
Start with a phone call to the number on your penalty notice, with your documentation in front of you. The IRS can reduce or remove some information return penalties over the phone.12Internal Revenue Service. Penalty Relief During the call, the agent may also check whether you qualify for First Time Abate relief based on a clean compliance record for the three prior tax years, which can apply even when you called to argue reasonable cause.13Internal Revenue Service. Administrative Penalty Relief
If the phone call doesn’t resolve it, submit a written request on Form 843 (Claim for Refund and Request for Abatement).11Internal Revenue Service. Penalty Relief for Reasonable Cause Write a clear timeline: what happened, when you discovered the failure, what steps you took to fix it, and why the circumstances qualify. Attach supporting documents, such as medical records, insurance claims, or correspondence showing you tried to obtain missing information. A vague one-paragraph letter rarely succeeds. A dated narrative with evidence does the work.
If You Never Got the Contractor’s TIN
A common reason people fail to file a 1099 is that they never collected a Taxpayer Identification Number from the payee, usually because no W-9 was ever signed. This creates a separate problem beyond the late filing.
Payors who don’t have a payee’s TIN at the time of payment are required to withhold 24% of the payment as backup withholding.14Internal Revenue Service. Backup Withholding Due to Missing Payee TIN If you didn’t, you may owe that amount to the IRS yourself, even though you never actually deducted it from the contractor’s check. Backup withholding is treated as a tax, not a penalty, so the liability exists regardless of whether the funds were ever set aside. If the IRS spots the gap, expect a notice telling you to file Form 945 (Annual Return of Withheld Federal Income Tax) and remit the amount that should have been withheld. Getting a signed W-9 from the payee now will not undo the past obligation, but it stops the same problem from repeating on future payments.