# The 1099 late filing penalty: Tiers, caps, and the clock

Michel Myara, Co-founder & Product Designer · August 26th 2026
Canonical: https://looch.money/blog/1099-late-filing-penalty

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<p><em>Updated August 2026</em></p>

## The 1099 late filing penalty is per form, per tier, and it can charge twice

File a 1099 late and the penalty depends on how late, charged per form, not per filing. For tax year 2026 forms, due in the 2027 season, the amounts come from Rev. Proc. 2025-32, the annual IRS inflation adjustment:

| How late | Penalty per form | Small-business maximum |
| --- | --- | --- |
| Up to 30 days | $60 | $244,500 |
| 31 days late through August 1 | $130 | $698,500 |
| After August 1, or not filed | $340 | $1,397,000 |
| Intentional disregard | $690 | No maximum |

Two things multiply these numbers. Filing with the IRS and furnishing the recipient copy are two separate duties under two separate code sections, each with its own penalty on this same schedule, so a 1099 that does neither can be charged twice. And the tiers reset per form: Ten contractors filed after August 1 is $3,400 before the recipient-copy side is counted.

*Last verified: August 26th, 2026.*

Who has to file, the deadlines, and what filing costs are in our guide to [filing 1099s](/blog/filing-1099s), and which form a payment belongs on in [1099-NEC vs 1099-MISC](/blog/1099-nec-vs-1099-misc). This page covers what lateness costs and the paths back out.

## The tiers, and the season that governs them

The penalty amounts are inflation-adjusted every year and keyed to the year the return is due, not the year you paid anyone. Returns due in 2026, meaning tax year 2025 forms, carry $60, $130, and $340 tiers with $680 for intentional disregard, per the IRS information return penalties page. Returns due in 2027, meaning the tax year 2026 forms filed in 2027, the 1099-NEC among them due Monday, February 1st, 2027, keep the same $60, $130, and $340 tiers, and intentional disregard rises to $690.

One sourcing note, because it trips people up: The IRS penalties page’s year-by-year table currently stops at returns due in 2026. The 2027 amounts are published, but in [Rev. Proc. 2025-32](https://www.irs.gov/pub/irs-drop/rp-25-32.pdf), the annual inflation adjustment, which is where every figure in the table above comes from.

The clock is measured from the due date. Up to 30 days late is the $60 tier. From day 31 through August 1 is the $130 tier. After August 1, or never filed at all, is the $340 tier. Filing something wrong counts too: A return with an incorrect taxpayer ID or wrong amounts sits in the same schedule until corrected, which is why a stale W-9 is a penalty risk and not just a paperwork nuisance.

## It is two penalties, not one

Section 6721 penalizes the return you did not file with the IRS. Section 6722 penalizes the statement you did not furnish to the payee. The IRS charges them separately, on identical schedules, and both can apply to the same missed 1099.

The worst common case makes the math concrete: One contractor, one 1099-NEC, never filed and never furnished. That is $340 under section 6721 plus $340 under section 6722, $680 for one form, and $690 plus $690, $1,380, if the IRS finds the failure intentional. Multiply by a contractor list and the number moves fast.

## The maximums, and who counts as a small business

The per-form penalties accumulate up to an annual cap, and the cap depends on your size. A business with average annual gross receipts of $5,000,000 or less over the most recent three tax years gets the small-business maximums in the table above: $244,500 at the $60 tier, $698,500 at the $130 tier, $1,397,000 at the $340 tier, per section 6721 for the 2027 season. Larger filers face caps of $698,500, $2,095,500, and $4,191,500. Section 6722 carries its own identical set of caps, so the theoretical exposure doubles again.

Intentional disregard has no cap at all, and the per-form amount is actually a floor: The penalty is the greater of $690 or 10% of the amounts that should have been reported. Ignore a large filing obligation on purpose and the percentage takes over.

## Reasonable cause, the 45-day window, and interest

The penalty is not always final. The IRS may remove or reduce it for reasonable cause: You acted in good faith, acted responsibly before and after the failure, and can show significant reasons or circumstances beyond your control. A missing W-9 you genuinely chased, a disaster, a death, a system failure outside your control are the shape of the argument; forgetting January is not.

The mechanics have a deadline of their own. Penalty assessments arrive on Notice 972CG, and you have 45 days to respond, 60 if you are a foreign filer, before the penalty is assessed. Respond inside the window with the reasonable-cause facts rather than paying first and arguing later.

Interest runs on assessed penalties monthly until paid, and the IRS cannot remove interest unless the penalty itself is removed or reduced. A penalty ignored is a penalty growing.

## The cheapest fix is filing, even late

Every tier in the table rewards speed: Filing 29 days late costs $60 per form instead of $340, an 82% discount for acting inside a month. If you are reading this in February with unfiled 1099s, the move is to file now, not to wait for a notice.

The cheaper fix is not being late at all, and the economics are lopsided. With looch, [filing a 1099 costs $2](/pricing), and looch AI makes the determination from your actual transactions, identifies which payments are reportable, and files instantly at tax season. One form that slides past August 1 costs 170 times that before the recipient-copy penalty is counted. What accountants and software subscriptions charge for the same job is in [the cost section of our filing guide](/blog/filing-1099s).

A penalty already assessed, a Notice 972CG on your desk, or a prior year of unfiled forms is professional territory: A CPA or enrolled agent should make the reasonable-cause argument, not a blog post.

Sources: [IRS information return penalties](https://www.irs.gov/payments/information-return-penalties) for the returns-due-in-2026 amounts, the two-penalty structure, reasonable cause, and interest; [Rev. Proc. 2025-32](https://www.irs.gov/pub/irs-drop/rp-25-32.pdf) sections 4.57 and 4.58 for every returns-due-in-2027 figure. Verified August 26th, 2026.