Navigating Delinquent Information Return Procedures: What You Need to Know

Navigating Delinquent Information Return Procedures: What You Need to Know

As a business owner or financial manager, you are likely aware of the importance of timely information return filings. However, sometimes those deadlines can be missed, leading to a situation where you now have to navigate delinquent information return procedures. This can be a nerve-wracking process, so it’s important to understand what is expected of you and what steps you should take to minimize any negative impact on your business.

What Are Delinquent Information Return Procedures?

Before we delve into the steps you should take once you find yourself in this situation, let’s define what delinquent information return procedures are. Essentially, if you miss a deadline for filing an information return – such as a W-2 or 1099 form – the IRS will send you a notice that you are delinquent. This notice will describe the applicable penalty and will request that you file the return, or show reasonable cause for your failure to file.

Step One: File the Return

Assuming you have received a notice from the IRS, your first step should be to file the return. This may seem like a no-brainer, but it’s worth mentioning that the longer you wait after receiving a notice, the higher the penalty will be.

Step Two: Calculate and Pay Any Applicable Penalties

The IRS will calculate any applicable penalties based on the amount of time that has passed since the filing deadline. You’ll want to be sure to pay these penalties promptly, as they will continue to accrue interest until they are paid in full.

Step Three: Request a Penalty Abatement

In some cases, you may be able to request a penalty abatement – essentially, a reduction or elimination of the penalties assessed by the IRS. There are a few situations where the IRS may be willing to consider a penalty abatement, such as if you had reasonable cause for missing the filing deadline or if there were extenuating circumstances that made it difficult to file the return. If you believe you qualify for a penalty abatement, you’ll need to submit a written request to the IRS and provide any supporting documentation that backs up your claim.

Step Four: Implement Processes to Prevent Future Delinquencies

Even if you are able to successfully navigate delinquent information return procedures this time, you’ll want to take steps to prevent it from happening again in the future. Implementing processes and procedures to ensure that all information returns are filed accurately and on time is key. You might consider creating a calendar of filing deadlines, designating specific employees to handle filings, or using software solutions to streamline the process.

Conclusion

Navigating delinquent information return procedures can be stressful, but by understanding the steps you need to take and implementing processes to prevent future delinquencies, you can minimize any potential negative impact on your business. Remember, the most important thing is to file the return – and any applicable penalties – as soon as possible after receiving a notice from the IRS. With a little bit of effort, you can get back on track and avoid any future bumps in the road.

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