Information return penalty calculator: IRC 6721 and 6722

How the IRS Computes the Penalty

You owe two penalties when both copies fail. A Form 1099 that reaches neither the IRS nor the payee on time draws two penalties, one under each section, and the IRS penalty page says it charges them separately. Each section also has its own annual maximum, so the two never share one limit.

The amount per return turns on when you file a correct return. For returns due in 2026, the General Instructions for Certain Information Returns (2025) set $60 per return when you file within 30 days of the due date, $130 when you file after that but by August 1, and $340 when you file after August 1 or never file. Filing by August 1 costs far less than not filing: a return you correct by August 1 costs $130 instead of $340.

Each tier has an annual maximum. For returns due in 2026, the same instructions set $683,000, $2,049,000 and $4,098,500 for a large business, and $239,000, $683,000 and $1,366,000 for a small business. The small-business test looks at average annual gross receipts for the three most recent tax years before the year the returns were due. The calculator applies the maximum for each section on its own.

Treas. Reg. §301.6721-1(f)(2) calls a failure intentional disregard when it is a knowing or willful failure to file on time or to include correct information. The instructions set at least $680 per return for 2026, and the IRS penalty page says: "There is no maximum penalty for intentional disregard." IRC §6721(e)(2) can set a higher amount per return, such as 10 percent of the dollar amounts the return should have reported. The calculator shows the minimum.

Relief: Reasonable Cause and the Correction Rules

IRC §6724(a) waives the penalty for a failure due to reasonable cause and not willful neglect. The General Instructions ask you to show an event beyond your control or significant mitigating factors, and that you acted responsibly before and after the failure and took steps to avoid it. Notice 972CG arrives before the IRS assesses the penalty. If you have reasonable cause and received Notice 972CG, the IRS penalty page says to "respond within 45 days (60 days if you're a foreign filer)" before it assesses the penalty. The penalty relief router sorts the relief options, and the penalty abatement letter builder drafts the request.

Two rules can remove the penalty for small errors. Under the de minimis rule, for returns you filed on time with missing or wrong information, the General Instructions exempt "the greater of 10 information returns or ½ of 1% (0.005)" of the returns you must file for the year, if you correct them by August 1. Under the safe harbor for small dollar errors, the same instructions excuse an amount off by "no more than $100" when the tax withheld is off by "no more than $25." The safe harbor does not apply when the payee asks for a corrected statement.

The General Instructions also forgive an inconsequential error, one that does not prevent or hinder the IRS or the payee from using the form. On a return filed with the IRS, three errors never qualify: a taxpayer identification number (TIN), the payee’s surname, and any money amount outside the safe harbor. On a payee statement, a dollar amount outside the safe harbor, a significant item in the payee’s address, the form used and the delivery method never qualify.

What This Calculator Does Not Do

It adds no interest. Interest runs on an unpaid penalty, and the IRS penalty page says the law lets it reduce that interest only when it removes or reduces the penalty. The calculator leaves out the late partnership and S corporation return penalties under IRC §6698 and §6699, the IRC §6652 penalties and every state penalty. It gives an estimate, and the IRS notice states the amount the IRS charges.

Common Questions