Businesses use the 1099-MISC form to report certain nonemployee payments such as royalties or attorney fees. One copy goes to the payee, the other to the Internal Revenue Service. The payee is entitled to receive her form by the end of January. The IRS form should arrive by Feb. 28 for a hard copy or March 31 if you file electronically. The IRS can fine companies that submit forms late or don't fill them out accurately.
You can request an extension for filing with the IRS, but there's no extension for sending the 1099-MISC to the payee. If your company files its 1099-MISC no more than 30 days late, the cost is $30 per return. If the 1099-MISC is filed later than 30 days, the fine is $60 per return; after Aug.1, it's $100 per 1099. Even if you send out lots of 1099-MISCs and they're all late, the most you can pay is $1.5 million per year, or $500,000 if you qualify as a small business.
If you can show the late filing resulted from a reasonable cause and that you did the best you could to meet the deadline, the IRS may waive the penalty. If you file an incorrect return but the error is minor, the IRS may decide the return is acceptable. Getting the payee's last name or the dollar amount wrong is never minor. Even if the returns have significant errors, though, you can avoid a penalty by filing corrected returns by Aug. 1. You can only use this third defense for a limited number of returns each year.