IRS Regulations

The IRS has laid out the required steps and activities to avoid/or have penalties waived by the IRS for TIN mismatches on 1099 filings. There are several targets to look at as a payor in getting your 1099 filing to the IRS’ liking.

  • > Avoid TIN Mismatches before the 1099 is printed through W9 requests and updates
  • > For the TIN mismatched penalties that you do incur, establish reasonable cause as defined by the IRS below:
  • > The penalty for filing information returns with missing TINs or incorrect name/TIN combinations may be waived by showing that the failure was due to reasonable cause and not to willful neglect. The filer must establish that s/he acted in a responsible manner* both before and after the failure occurred, and that:
  • > There were significant mitigating factors (for example, an established history of filing information returns with correct TINs), or
  • > The failure was due to events beyond the filer’s control (for example, a payee did not provide a correct name/TIN in response to a request for the corrected information).

*Acting in a responsible manner includes making an initial solicitation (request) for the payee’s name and TIN and, if required, an annual solicitation. Upon receipt of this information, it must be used on any future information returns filed.

If reasonable cause is not established then get corrected information from TIN mismatches in a timely manner to reduce fees as the IRS describes below. The penalty may be reduced to:

  • > $30 per return if the error or omission is corrected within 30 days of the required filing date, or
  • > $60 if corrected after the 30-day period, but by August 1 of the year the return is required to be filed.

The IRS excerpts listed on this page can be found in IRS Publication 1586 (Rev. 06-2012)Catalog Number 13597U

Download the Publication here.