The Internal Revenue Service considers failure to report income on your federal tax return an error punishable with a fine. Form 1099-B is used to show the sale of securities and is reported on Schedule D of tax Form 1040. A common error with reporting this income is the failure to report the transfer of monies from one mutual fund to another. If you catch the mistake, contact the IRS immediately to discuss your error.
Exploring Accidental Errors
If the error was accidental, don't panic. The IRS understands that mistakes do happen, so they offer methods for correcting errors. If you forgot to include Form 1099-B on your federal tax return, contact the IRS immediately. Discuss your options with an IRS agent and document all your phone calls and discussions. If the error was accidental, you could still be charged a fine, but your earnestness in attempting to correct the mistake is appreciated.by the IRS. According to the IRS, paying some or all of your taxes more than 60 days after the due date or extended due date could result in a late payment penalty of 0.5 percent of the amount you owe each month. The maximum penalty is 25 percent of your unpaid taxes.
IRS Audit Issues
If the IRS reports the missing Form 1099-B and issues an audit of your taxes, you must provide all receipts and documentation related to your federal tax return and your 1099-B transactions. The IRS will evaluate the error and instruct you on how to rectify the mistake. It is likely that the IRS will issue a fine for the error, and you are responsible for paying any additional tax related to Form 1099-B.
Complete an Amended Return
If your tax return is incorrect, you can file an amended tax return, Form 1040X, with the IRS. Along with the form, you must attach copies of all forms and schedules that change due to your forgotten Form 1099-B. You must also include Form 1099-B with the amended return. According to the IRS, you cannot file an amended tax return electronically and must file a paper copy through the mail. Processing time is usually eight to 12 weeks after the IRS receives your Form 1040X.
Paying the Fine
If you are fined for not submitting Form 1099-B, you must pay the fine, any additional tax due as a result of the form, and any interest assessed on your overdue taxes. The IRS sends a letter with an overdue notice stating the amount of time you have to pay the fine and additional tax without incurring further penalty. You must pay these expenses on time to avoid further complications with your tax filing.
As curriculum developer and educator, Kristine Tucker has enjoyed the plethora of English assignments she's read (and graded!) over the years. Her experiences as vice-president of an energy consulting firm have given her the opportunity to explore business writing and HR. Tucker has a BA and holds Ohio teaching credentials.