State 1099 Filing Requirements for Total Tax-Reporting Compliance

Understand Your 1099 State Reporting Requirements

1. Your state participates in the Combined Federal/State Filing (CF/SF) program.

Most states participate in this program, which is a major convenience for employers. Under this program, the IRS shares 1099* data with the appropriate states — automatically. That way, you’re saved the extra step of state filing.

These are the states that participate in the CF/SF program: AL, AR, AZ, CA, CO, CT, DE, GA, HI, ID, IN, KS, LA, ME, MD, MA, MI, MN, MS, MO, MT, NE, NJ, NM, NC, ND, OH, OK, SC, VT, WI.

2. Your state doesn’t participate in the CF/SF program, so you must file directly.

If a state isn’t part of the combined program and the state requires you to submit the form, then it’s your responsibility to file the 1099-MISC directly with that state. It’s two separate returns and two separate processes.

These states require direct filing: IA, Il, KY, NY, OR, PA, RI, UT, VA, WV.

3. Your state doesn’t have a state income tax, so you only have to file federal returns:

If you’re an employer filing in one of these states, you’re required to report 1099* data with the federal government only.

These states are: AK, FL, NV, NH, SD, TN, TX, WA, WY.

*This information refers to these forms that are available for e-filing:

1099-MISC
1099-B
1099-DIV
1099-INT
1099-R

Protect Your Business from Hefty Filing Penalties

When it comes to filing taxes, whether at the federal or state level, you want to be certain you’re accurate and on time. Late filing of mandatory 1099s could lead to penalties ranging from $50 to $260 per 1099, with a maximum of $1,064,000 a year for your small business.* The amount of the penalty is based on when you file the correct information return and/or furnish a correct payee statement, as follows:

  • $50 per 1099, if you file within 30 days of due date; maximum penalty of $186,000
  • $100 per 1099, if you file more than 30 days after the due date but by August 1; maximum penalty of $532,000
  • $260 per 1099, if you file after August 1; maximum penalty of $1,064,000
  • Intentional disregard of either requirement carries a penalty of $530 per return, with no limit to the total penalty.

Penalties for not filing correct information returns apply if you:

  • Don’t file a correct information return by the due date and a reasonable cause isn’t given
  • File on paper if you’re required to file electronically
  • Don’t report a Taxpayer Identification Number (TIN)
  • Report an incorrect TIN
  • Don’t file paper forms that are machine-readable

Penalties for not furnishing correct payee statements apply if you:

  • Don’t provide a correct payee copy by the due date and a reasonable cause isn’t given
  • Don’t show all required information on the statement
  • Provide incorrect information on the statement

Keep in mind that the penalty to file a correct information return is separate from the penalty for not furnishing the correct payee statement. Because of this, you could incur two separate penalties.

*In all cases, the IRS considers you to be a small business if you’ve earned an average of $5 million or less in annual revenue for the past three tax years.