The IRS charges late filing penalties when businesses miss deadlines for information returns such as 1099s. However, you can take several steps to reduce these penalties, correct errors quickly, and stay compliant. Acting promptly not only saves money but also reduces the risk of further IRS notices.
1. File As Soon As Possible
The IRS uses a tiered penalty system based on how late your filing is. Filing within 30 days of the due date significantly lowers the penalty (for example, $60 vs. $310 per form).
👉 You can use the FIRE System to transmit forms even after the deadline. It remains open year-round for late or corrected filings.
2. Submit a Reasonable Cause Letter
If your late filing was due to circumstances beyond your control, you may request penalty abatement. Valid reasons include:
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Natural disasters
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Death or serious illness
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Software or transmission issues
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Undue hardship
Submit a written statement explaining the reasonable cause and provide supporting documentation to the IRS Service Center after filing.
3. File Corrections Promptly
If errors delayed your submission, correct the form quickly using the FIRE System. The IRS often reduces penalties when corrections are made before they identify the problem.
4. Use IRS Form 8809 (Extension Request)
To avoid missing deadlines in the future, consider filing IRS Form 8809. This form grants a 30-day automatic extension for most 1099s and 1042-S forms.
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Must be submitted before the original due date
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Can be filed electronically through the FIRE System
5. Consult a Software Vendor
Specialized vendors like 1099FIRE understand IRS formatting and electronic filing requirements. They can help:
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Prevent duplicate or rejected submissions
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Automate corrections and extensions
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Reduce administrative burden while ensuring compliance
Final Thoughts
Late filings can result in costly IRS penalties, but quick action makes a big difference. File as soon as possible, request abatement if you qualify, and submit corrections without delay. Using IRS-approved tools like the FIRE System and relying on professional 1099 software ensures smoother filing and fewer risks in the future.