How to correct a 1099: Type 1 vs Type 2, wrong TIN, wrong name, deadlines

Type 1 or Type 2?

Type 1: one step

1. Prepare the same form type for the same payee with all the boxes filled in correctly, not just the one that changed.
2. Check the CORRECTED box.
3. File it the way you file originals (IRIS, or paper with a new Form 1096 if you are under the 10-return threshold), and furnish the corrected copy to the payee.

Type 2: two steps

1. Cancel the original. File a return that repeats the payee name and TIN exactly as they appeared on the wrong original, with every dollar amount set to zero and the CORRECTED box checked. This tells the IRS the original was not a valid return.
2. File a new original. A second return with the correct name and TIN and the correct amounts, with the CORRECTED box not checked. It is an original as far as the IRS is concerned.
3. Furnish the payee a copy of the new original. The zeroed return does not go to the payee unless they were the wrong person entirely.

Deadlines and the penalty tiers

There is no separate due date for corrections; the rule is that the penalty for a return filed with an error depends on when it is corrected, using the same tiers as late filing.

Inconsequential errors do not need correcting and are not penalized: an error that does not prevent the IRS from processing the return or matching it to the payee. A wrong TIN, a wrong name, a wrong amount and a wrong payee address are never inconsequential.

After a CP2100: do you correct?

A CP2100 is not a demand for corrected returns. Publication 1281 tells you to send B-Notices and, if no valid TIN comes back, to begin backup withholding; it does not tell you to refile last year’s 1099s. Most payers do not, and simply use the corrected TIN on the next return.

There are two reasons to correct anyway. If the payee has already given you a corrected TIN and it is still before August 1, a Type 2 correction moves the eventual 972CG penalty for that return from $340 to $130, and a correction filed within 30 days of the original due date takes it to $60. And if the original was wrong because of your own data entry (a transposed digit, a name pasted from the wrong row), correcting it is part of showing ordinary business care. A correction does not replace the solicitation record; the solicitation schedule is what the waiver depends on.

Filing the correction

• Electronic. Corrections are filed in IRIS (from the 2027 season, the only electronic route) with the correction type indicated in the submission. If you are at or above the 10-return e-file threshold, corrections must be electronic too, even if the original was on paper.
• Paper. Under the threshold, a corrected form goes to the IRS with a new Form 1096 covering only the corrected returns. Never send a copy of the original 1096.
• State copies. If the state received the original through Combined Federal/State Filing, the correction flows the same way; direct-filing states need their own corrected copy. See state requirements.
• Payee copy. Furnish it as soon as the correction is filed; the payee may have already filed their return on the wrong figures.

Questions people ask