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New 1099 Penalty Rules for Not Filing 1099’s and 1095 Forms

                                                                                                                                                                                                                                                                Don’t Fall Victim to new 1099 Penalties

This past summer, Congress passed a bill that substantially increased the penalties for failure to file information returns of the Form 1099’s and 1095’s.  The penalty for not filing a 1099 is $250 per form not filed.  We’ve answered a few questions to help you be more prepared.

Q: Who has to file a 1099?

A: The IRS requires every business (including landlords) who pays $600 or more to an unincorporated entity to issue and file Form 1099 to their payees.    Individuals, sole proprietorships, partnerships and LLC’s are considered un-incorporated entities. Any business that does not file these forms, missed filing one or more, or filed an incorrect form is subject to penalty.

Q: When is it due?

A: Form 1099 must be provided to the recipient by the end of January and filed with the IRS by end of February.   You get an extra month to file if you file your 1099’s electronically.

Q: What are the penalties for not filing these forms?

A: The penalty for failing to issue a 1099 is now $250 per form. The penalty for not issuing a Form 1099 is $250 per 1099.  If you file 1099’s late the penalty is $50 or $100 per 1099 depending on how late they are filed.  

Example:   If you have paid 10 unincorporated businesses more than $600 in 2015 and don’t file the required 1099’s, the IRS can access a whopping penalty of $2,500.

                                                                                                                                                                                                                                                                Introducing The 1095

Under The Affordable Care Act, almost all Americans are required to have health insurance.  As a way to ensure this, the IRS has created Form 1095 to give proof of that.  There are 3 versions 1095-A, 1095-B, and 1095-C.  Although the serve the same purpose, it is important to know how they are different and which form applies to you.  These forms will be filed by your coverage provider and mailed to you. 

Insurance purchased through the governmental marketplace (Form 1095-A)

1095-A applies to individuals who bought health insurance from the marketplace in 2015 and the form will be sent to you by the insurance company participating in the health care exchange.  It will include information such as your name, amount of coverage, tax credits and usage, and the amount paid for coverage.

Small Employers and private health insurance plans (Form 1095-B)

1095-B applies to individuals who bought insurance through a health insurance company other than the marketplace, or those that participated in a coverage program with a company consisting of less than 50 full time employees. It will include information about the type of coverage you had, the coverage of your dependents, as well as the period the coverage lasted.

Large Employers (Form 1095-C)

1095-C applies to individuals who work for a large group employer, and participated in their health care coverage offered.  This form shows the coverage offered to you by the employer, and whether you chose to participate in it or not. 


The penalties for not filing 1095’s are the same as 1099’s which are outlined above.

The content of this transmission does not constitute a professional service nor does it constitute a tax opinion under IRS Circular 230. Always consult with a competent professional service provider for advice on tax, accounting, and other financial matters specific to your situation. If you wish to engage our firm for this purpose, please contact our office.

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