1099 Filing

Great American Title Company of Green County, Inc v. US, 2006 U.S. Dist. LEXIS 72672 (W.D. MO, 2006).

"Magnetic" Does Not Mean "Electronic"

The Federal District Court for the Western District of Missouri recently affirmed a $25,000 penalty against a title company for failing to timely file its 1099-S returns. The firm had filed its information returns between the middle and end of March 2003, using 3½-inch computer diskettes. The deadline for filing information returns electronically is March 31, but the deadline for filing via magnetic media is February 28. 26 CFR § 1.6045-4(j). Magnetic media is defined as "any media permitted under applicable regulations, revenue procedures, or publications ... includ[ing] magnetic tape, tape cartridge, and diskette, as well as other media (such as electronic filing)." 26 CFR § 301.6011-2(a)(1).

The Court held that Publication 1220 specifies the filing requirements for Form 1099. In that publication, electronic filing is accomplished through the IRS's FIRE (Filing Information Returns Electronically) System, which is a method of online, Internet-based filing. That same publication describes electronic filing as "an alternative to magnetic media (tape cartridge or diskette) or paper filing."

Since it is clear from the publication that electronic filing does not include filing by computer diskettes, there was no waiver of the penalty allowed under Section 6724(a) for failure to timely file that is due to "reasonable cause and not to willful neglect."

© ATG atgc0701vol31
 

Print this page