What Happens if I Don’t Send a 1099 Form to a Vendor? (2024)

FAQs

What Happens if I Don’t Send a 1099 Form to a Vendor? ›

You could incur penalties from the IRS

If a business intentionally disregards the requirement to provide a correct Form 1099-NEC or Form 1099-MISC, it's subject to a minimum penalty of $630 per form (tax year 2023) or 10% of the income reported on the form, with no maximum.

If you have not received an expected 1099 by a few days after that, contact the payer. If you still do not get the form by February 15, call the IRS for help at 1-800- 829-1040. In some cases, you may obtain the information that would be on the 1099 from other sources.

The IRS may impose penalties based on the number of forms not filed and the duration past the deadline. The penalties range from $60 – $310 per form (tax year 2023), depending on lateness. Timely filing or seeking an extension is crucial to avoid potential penalties.

Actually, you'll likely need to submit two extension requests: one for sending your 1099-MISCs to contractors and one for your IRS filing. Your letter has to be postmarked by January 31^st. If approved, you won't get much more time—no more than 30 days—but it should be enough.

You could incur penalties from the IRS

However, if you intentionally disregard the requirement to provide a correct 1099, it's subject to a minimum penalty of $630 per form or 10% of the income reported with no maximum.

Businesses that send you a Form 1099 are also required to send the same information to the IRS. So, if you don't include reportable income on your tax return, the system that matches tax returns to the information in the IRS systems will likely flag your tax return for further evaluation.

The IRS employs various methods to detect discrepancies in tax reporting, including the absence of 1099 forms. While the IRS does not catch every missing 1099 immediately, their sophisticated systems and data-matching capabilities make it likely that discrepancies will be identified over time.

What If You Don't Get All Your 1099s? The taxpayer might be able to report it under miscellaneous income if they haven't received the expected 1099 for income earned even if the business didn't file the 1099 form.

Generally, a 1099 is not required to be issued for international vendors who are foreign vendors.

How late can a 1099 be issued? ›

The deadline for furnishing recipient copies of 2023 Forms 1099-NEC to recipients is Jan. 31, 2024, while the deadline for furnishing recipient copies of Forms 1099-B, and 1099-S, and 1099-MISC (if amounts are reported in boxes 8 or 10) is Feb. 15, 2024.

If you paid someone for services (other than employees) you must issue them a 1099 by January 31 of the following year.

In most cases the 1099 statute of limitations is three years. Those three years begin on the due date of the return or the date on which it was filed – whichever is later.

That being said, if you do not receive a 1099 form, you should not panic. You can easily file the tax return for that income with only the information that you know. As long as you know the amount you need to file for and don't file for a lower amount, you should be fine.

If they don't receive the missing or corrected form from their employer or payer by the end of February, they may call the IRS at 800-829-1040 for help. They'll need to provide their name, address, phone number, Social Security number and dates of employment.

If you paid someone who is not your employee, such as a subcontractor, attorney or accountant $600 or more for services provided during the year, a Form 1099-NEC needs to be completed, and a copy of Form 1099-NEC must be provided to the independent contractor by January 31 of the year following payment.

You'll also need to issue a 1099 to each vendor, who'll include the 1099 in their tax returns. Your accounting software can track contractor payments, but you'll have to set up a special category or tag for those types of payments to keep them separate from the rest of your payments.