IRS Penalty Guide
Information Return Penalty
IRC §6721/§6722
This guide explains the Information Return Penalty, how the IRS calculates it, and what relief options are available — including First Time Abate and reasonable cause.
Penalty Rate
$60 per return (within 30 days), $130 per return (by Aug 1), $330 per return (after Aug 1 or not filed). Amounts adjusted annually for inflation.
Maximum: $660,500/year (within 30 days), $1,981,500/year (by Aug 1), $3,963,000/year (after Aug 1). Reduced caps for small businesses.
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Relief Options for This Penalty
Reasonable Cause (IRC 6724)
Most CommonDe Minimis Exception (up to the greater of 10 or 0.5% of total returns with minor errors)
Correction within 30 days of due date (reduced penalty)
How This Penalty Is Calculated
Example Calculation
A business files 50 Form 1099-NEC returns 45 days late. Penalty: 50 × $130 = $6,500 (assuming correction by August 1). If not corrected, penalty rises to 50 × $330 = $16,500.
Most taxpayers facing the Information Return Penalty qualify for at least one relief program. Upload your notice to see which options apply to your specific situation.
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“Had incorrect TINs on several 1099s. Got the penalty notice and corrected everything within 30 days. The reduced penalty rate saved us thousands compared to what it would have been.”
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Frequently Asked Questions
What information returns are subject to these penalties?
W-2, 1099 series (1099-NEC, 1099-MISC, 1099-INT, 1099-DIV, etc.), 1098 series, W-2G, 1095 series, and other information returns required by the IRS.
Is the information return penalty eligible for First Time Abate?
No. First Time Abate applies only to failure to file, failure to pay, and failure to deposit penalties. Information return penalties require reasonable cause under IRC 6724 for relief.
What is the de minimis exception?
If you correct failures within 30 days and the number of failures is the greater of 10 or 0.5% of total returns filed, those corrected returns are treated as timely filed and no penalty applies.
Facing the Information Return Penalty? Check your eligibility for relief.
Are there reduced penalties for small businesses?
Yes. Businesses with average annual gross receipts of $5 million or less have reduced annual maximum caps: $220,500 (within 30 days), $660,500 (by Aug 1), and $1,321,000 (after Aug 1).
What is reasonable cause for information return penalties?
Under IRC 6724, reasonable cause requires showing significant mitigating factors or events beyond your control, and that you acted in a responsible manner both before and after the failure.
Does intentional disregard increase the penalty?
Yes. If the failure is due to intentional disregard of the filing requirement, the penalty increases to $660 per return (or 10% of the amount required to be reported, if greater) with no annual cap.
IRS penalties add up fast
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