Will the IRS Find a Missing 1099? A Quick Guide for Busy Payers

Will the IRS catch a missing 1099? How does it check 1099s? What are the consequences? Don’t sweat it. In this blog, we break down everything for you with easy-to-follow tips to stay ahead of penalties and notices.

Will the IRS Catch a Missing 1099?

Yes, there is no doubt about that! The IRS validates information returns and runs Name/TIN matching on every 1099. If your filed 1099 has a missing/incorrect TIN, be prepared for a CP2100/CP2100A notice. If a required 1099 is missing/late or you filed on paper when you should e-file? That triggers penalties via Letter 972CG.

What if the system can’t find a matching return, or sees income on a payee’s tax return without a required form from the payer? It gets flagged for review.

This is usually the time you get the letters:

CP2100/CP2100A: Generally, in April and again in September-October for the prior filing season.

Letter 972CG: Penalty proposals often arrive the following year, frequently in the fall.

Here’s a tip for the payers: Follow CP2100/CP2100A B-notice/ 24% backup-withholding steps if you filed with a TIN issue. Also, respond promptly to any Letter 972CG to sort things out.

How the IRS Checks 1099s

Payers have easy 1099 e-file options. You can use IRIS (the IRS’s new, free portal) or FIRE (the older system still in use). Once you’re done filing, the IRS matches each 1099 against:

• Taxpayer records (W-9 details, TIN, name)
• IRS’s own income database

Suppose there’s something’s wrong, like a wrong TIN, missing form, or mismatched income, the return gets flagged for review.

These mismatches end up on a “follow-up list” where the IRS staff decide whether to send notices or open audits.

Common Triggers for a Missing 1099

• Income mismatch – If the payee reports income (like freelance work or a prize), but there’s no matching 1099 from the payer.
• Failure to e-file – Less than 10 returns? Paper-filing will do. But if you have 10 or more total forms, e-filing is a must. If you don’t, the IRS will flag the return.
• Backup withholding error – If you withheld taxes (via Form 945), but did not file a supporting 1099, or the numbers don’t add up, the IRS will notice.
• External red flags – Audits, whistleblower reports, or data-sharing programs (state + IRS + financial systems) catch missing 1099s.

Bottom line: Most 1099 headaches are from mismatches, missing filings, or ignoring e-filing rules.

IRS Letters: Order and Action for Payers

The IRS sends you letters if something’s wrong with your 1099s. In the following table, CP2100 letter is explained as well as other letters. It also touches upon the actions you must take to correct 1099 fast.

*Timing varies with IRS backlog, but the sequence is consistent.

1099 Penalties You Must Know

The following are the late 1099 penalties for returns due in 2025 (e.g., TY2024 forms):

Note:

There are annual caps for penalties. Always check IRS instructions for details.

If you paper-file when e-filing is required, that’s a separate failure-to-file-correctly issue (often counted as not filed). It could mean another $330 penalty per form for 2025 and $340 for 2026.

Avoid 1099 Penalties in 5 Easy Steps

• Gather a signed W-9 before you make any payment.
• Use the IRS matching system every week for free via IRS e-Services. Catch those mismatches in TIN/name early!
• Flag vendors who are about to hit the $600 threshold.
• If you’re filing 10 or more total information returns (all types combined), make sure to e-file. If you paper file when e-filing is mandated, penalties are inevitable.
• Always save the PDFs you get, like W-9s, e-file receipts, recipient copies, etc. You will thank us later!

Fixing a Missed 1099 Form Quickly

Will the IRS catch a missing 1099? Absolutely. We’ve explained in detail how this is certain. So, how do you fix a missed 1099 without any hassle?

• First, e-file it as soon as possible, and only mark “CORRECTED” if you already sent the wrong one.
• Next, send the payee a copy with a short note, saying “Filed late, no action needed.”
• If the IRS sends a penalty letter, add a one-page “reasonable-cause” note with an explanation. For example, a disaster, serious illness, system failure, etc., along with evidence.
• In case of backup withholding errors, you can refund before deposit. If you already deposited, correct it by sending Form 945-X. Otherwise, the payee claims the withheld amount as a credit on their tax return.
• Remember this as a rule, generally. Keep all your copies and supporting documents for at least three years, and four years if backup withholding was imposed.

Annual Checklist

If you don’t want to scramble at the last minute and avoid late 1099 penalty, here’s an easy checklist for you to always fall back on.

• Mid-January: You must review your vendor totals and make sure nobody is missing.
• January 31: It’s time to send those recipient copies and file 1099-NEC with the IRS. Whether you’re paper filing or e-filing, both are due on January 31.
• March 31: E-file most other 1099s (like 1099-MISC) with the IRS by now.
• Quarterly: Do a quick TIN Match and confirm backup withholding deposits.
• December: This is your final lap. Run your year-end 1099 report and schedule bulk uploads. You’re all set!

Real-Life Scenarios

FAQs

1. When does the IRS matching begin?

CP2100 or CP2100A notices come in April and again between September and October. Penalty letters (972CG) usually arrive the following fall.

2. If payments are under $600, are they checked?

Generally, no. Form 1099-MISC/NEC is required if payments are more than $600. But if you backup withhold any amount, you must file a 1099 regardless of the amount.

3. Is it possible to get rid of penalties by fixing forms quickly?

You could request a reasonable-cause relief under the IRS rules. But heads up, “First-Time Abate” does not apply to information return penalties.

4. What is backup withholding?

It’s a flat 24% tax the payer must hold back when a payee’s TIN is missing/incorrect (or other IRS notices apply). Follow the B-notice rules and deposit via Form 945.

5. Do states use the same data?

Many states get the 1099 data through the IRS Combined Federal/State Filing (CF/SF) program. But some forms or states still require direct state filing.

6. What is the fastest way to correct a missed 1099?

E-file the form and send the payee copy the same day. Keep timestamps and your e-file acknowledgement as proof, to be safe.

7. Does the IRS compare 1099-K and 1099-NEC totals?

Yes. Payments by card or third-party network are reportable on 1099-K by the payment settlement entity. It should not be duplicated on 1099-NEC/MISC. Just focus on reporting the correct form by payment method.