Lynda ArtesaniLegal Accountant and Data Migration Specialist at The Proper Trust

The Costly Tax Mistake You Must Avoid 🚨

8 Nov 2024 · 1 min

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In this segment, the speaker warns businesses about the severe consequences of deliberately failing to file 1099 forms. He explains that intentional disregard of filing obligations can trigger hefty penalties, and the IRS only permits retroactive filing for up to three years, meaning older omissions cannot be corrected. He also highlights a common compliance failure: submitting 1099s without Taxpayer Identification Numbers (TINs). When a large share of filings lack TINs—illustrated by a case where 80% of 1099s were missing TINs—the IRS will reject the submissions, creating additional compliance headaches. The overall message is a cautionary call to ensure timely, complete 1099 filings with proper TINs to avoid penalties and rejections.

Chapters

The worst mistake you can make is, is, is intentionally not sending them. We've had people who came to us after an intentional disregard penalty and said, hey, you know, I need to do tax— I need to do 1099s from 2020. Oh, wow. We got a 2020 request for this year. Well, the IRS only takes them for 3 years. So that, that, that, you know, that ship has left. But yeah, you get situations like that. That's the thing you really, you know, you really don't want to do. And I'm not going to name any names. I had a conversation with an accounting department 2 weeks ago where they were saying, hey, you know, we don't have a TIN and we don't have a reasonable expectation to get a TIN. We want to file— they filed 80% of their 1099s with no TINs. Oh. The IRS rejects those if there's that proportion of being— if it's that wrong.