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), $340 per return (after Aug 1 or not filed) for returns required to be filed in 2026. Amounts adjusted annually for inflation.
Maximum: Subject to a maximum annual cap that differs for large and small businesses (≤$5M average gross receipts) and is indexed annually for inflation; there is no annual cap for intentional disregard. See IRS Publication 1099 for the current year's cap amounts.
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Relief Options for This Penalty
Reasonable Cause (IRC 6724)
De 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 × $340 = $17,000.
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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.
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Are there reduced penalties for small businesses?
Yes. Businesses with average annual gross receipts of $5 million or less have lower annual maximum caps than large businesses for each tier. The exact caps are indexed annually for inflation — see IRS Publication 1099 for the current figures.
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 $680 per return (or 10% of the amount required to be reported, if greater) with no annual cap.
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