- The 1099 penalty: three years, or forever
- When the IRS secures the returns itself
- Form 945: April 15, not January 31
- Unfiled returns: six years, no statute
- Where the penalty lives on the account
- Getting money back: the refund statute
- The two-year clock after a disallowance
- How long the IRS has to collect what it assessed
- All the clocks on one page
- Questions people ask
The 1099 penalty: three years, or forever
"Each information return 'stands alone' for the determination of penalties and the appropriate statute date" (IRM 4.23.9.13.6, Oct. 6, 2022). One late 1099 in a batch of a thousand has its own three-year clock, and one that was never filed has none.
The employment-tax penalty manual states the rule the examiners apply: "If the information return(s) subject to the proposed penalties have been timely filed, the statute date will be three years from the due date or, if late filed, three years from the actual date filed. ... If the information return(s) subject to the proposed penalties have not been filed, Alpha Statute 'EE', non-filed return, will be used for case file controls" (IRM 4.23.9.13.6, Oct. 6, 2022). "EE" is the IRS's internal marker for a statute that has not started.
"If the person required to make the return fails to file the return ... pursuant to IRC 6501(c)(3), the addition to the tax may be assessed at any time. If such person files the return after its due date (including any extension of time to file), the addition to the tax must be assessed within three years of filing the return. A statute extension secured on Form SS-10, Consent to Extend the Time to Assess Employment Taxes, does not extend the statute of limitations on these penalties" (Exhibit 4.23.9-1, Oct. 6, 2022).
Three consequences. A 972CG proposing penalties on the 1099s you filed on time for tax year 2023 (due January 31, 2024) must be assessed by January 31, 2027; one that arrives later is out of time, and the 972CG guide explains how to say so. A batch you filed in April 2024 is open until April 2027. And the 1099s you never filed for a contractor are open indefinitely, which is the arithmetic behind the advice to file late rather than not at all: filing starts a clock that otherwise does not exist. The IRS can extend the penalty statute by consent, but only with a specific agreement; the manual directs examiners to IRM 20.1.7.12.2.8 for that, and the employment-tax Form SS-10 you may sign in a Form 941 or 945 examination does not do it.
Examiners read the filing date from the Payer Master File: "PMFOLD will reflect a 'DTE RECD' under each Form 1096 ... transmittal record. This date is the actual date the Form(s) 1099 were processed and not necessarily the date they were filed. ... Examiners should consider information returns as being timely filed unless there is evidence of a late filing date" (IRM 4.23.9.13.6). Keep your own acceptance record from IRIS or FIRE; it is the evidence of your filing date when the processing date is later. W-2s show no received date on PMFOL at all because they go to SSA.
When the IRS secures the returns itself
An examiner who finds unfiled 1099s "should secure any delinquent Forms 1099 that were required to be filed during the audit years" and send them in under a Form 1096 marked "Delinquent Returns - Secured by Examination - Penalty Considered" (IRM 4.23.8.11.4, Apr. 17, 2024). That act starts the clock: "If delinquent information returns are secured prior to closing the information return penalty case file, the examiner must update the statute date" (IRM 4.23.9.13.6), and the penalty case file is updated "to 3 years from the date that the delinquent returns were secured" (IRM 4.23.8.12 Note). Where a year has both filed and unfiled returns, "the examiner must determine if the statute date on the filed documents is still open. If so, they must use and protect that date"; if it has expired, "the examiner may pursue penalties only on the non-filed documents" (IRM 4.23.9.13.6).
Form 945: April 15, not January 31
Form 945: "3 years from April 15 of the year following the year for which the return was due, or 3 years after the date the return was actually filed, whichever is later" (IRM 25.6.1, Exhibit 25.6.1-2 row 22, Aug. 28, 2026). "Form 945 ... submitted before April 15 of the succeeding year, is considered filed on April 15 of that succeeding year. IRC 6501(b)(2)" (IRM 25.6.1.9.3, Mar. 1, 2006).
The exhibit's worked line is a Form 945 for tax period 202312 with an assessment statute expiration date of April 15, 2027 (IRM 25.6.1, Exhibit 25.6.1-2, "943, 945 (same as 941 above)"). A payer that filed its 2023 Form 945 on January 31, 2024 is therefore open to a backup withholding assessment, whether from the campus compliance check or a field examination, until April 15, 2027. A payer that never filed a Form 945 for a year in which it should have withheld has no statute running for that year at all, and the IRS can prepare the return for it under IRC 6020(b).
The same deemed-filing rule governs the refund side: returns reporting withholding "filed before April 15 of the succeeding calendar year are 'deemed filed' on April 15" for IRC 6513(c) purposes too, so the three years to claim a refund on a 945-X also run from April 15 (see the Form 945-X page).
Unfiled returns: six years of enforcement, no years of statute
How far back the IRS asks is policy; how far back it may assess is statute, and for an unfiled return the two differ. Revenue officers are told that "Enforcement of filing requirements will normally be pursued for a six year period. Always request all (non-fraudulent) unfiled returns," with more or fewer years needing managerial approval, and that one factor in the decision is "Whether the delinquency involves trust fund monies collected" (IRM 5.1.11.7.1, Aug. 14, 2025). For a Form 945 the IRS cannot shorten the wait by preparing the return itself: Form 945 is on neither the field nor the campus list of returns prepared under IRC 6020(b) (IRM 5.1.11.7.7, Apr. 23, 2014; 5.18.2.2.2, Jan. 2, 2020), and a substitute return would not have started the statute anyway (IRM 5.7.3.6). The assessment for an unfiled withholding year comes from Examination and the clock starts only when a return is filed; the unfiled Form 945 page covers the sequence.
Where the penalty lives on the account
Information-return penalties are not posted to a tax return. "Civil Penalties (CVPN) are assessed or abated, on Master File civil penalty modules (Master File Tax (MFT) 55 for Individual Master File (IMF) and MFT 13 for Business Master File (BMF)). A transaction code (TC) 150 (return filed) will never post to a civil penalty file" (IRM 25.6.1.9.13, Jan. 28, 2015). Each assessment posts as a TC 240 with a three-digit penalty reference number, each abatement as a TC 241 (IRM 25.6.1.9.13); the PRN decoder translates the numbers. Because the bar date "depends on action or non-action by the taxpayer," the statute function carries a "dummy" expiration date on these modules rather than a computed one (IRM 25.6.1.9.13). The practical point for a payer is that an account transcript for MFT 13 is where a 972CG that became a CP215 can be found, and that its statute is tracked by hand.
Getting money back: the refund statute
A refund claim has two prongs: "a date by which a claim must be filed with the IRS, and ... a limitation on the amount that may be claimed that is determined by 'looking back' from the date of the claim to an earlier payment date" (IRM 25.6.1.10.3.3, Feb. 3, 2026). Filed within three years of the return, the claim can reach "Tax paid during the period immediately preceding filing of claim equal to 3 years plus any extensions of time for filing"; filed later, only "Tax paid during the 2 years immediately preceding filing of claim" (IRC 6511(b)(2)(A)-(B)). For claims filed after December 26, 2025, "disaster postponements are treated as extensions of time for filing." An information-return penalty that was paid is claimed on Form 843 (IRM 25.6.1.10.3.2.2.2, July 5, 2024); a Form 945 overpayment on Form 945-X.
The rule most payers miss is in a note: "If the taxpayer requests an adjustment that does not create an overpayment, then IRC 6511 does not apply. This is considered a request for abatement of tax still owed" (IRM 25.6.1.10.3.3 Note). An unpaid 972CG penalty can be disputed at any time; the clock starts when you pay. The abatement-versus-claim page covers the difference.
The two-year clock after a disallowance
"The two-year period of limitations for filing a refund suit under IRC 6532(a) does not begin until the IRS sends a notice of claim disallowance unless the taxpayer executes and files a Form 2297," and the notice "must unequivocally state that the claim was disallowed. It also must be mailed by certified mail or registered mail" (IRM 25.6.1.10.3.1.3 and Note, July 5, 2024). "A math error notice is not a final notice of claim disallowance," and "a 'no consideration' letter is not a disallowance letter" (IRM 25.6.1.10.3.1.3, July 5, 2024). Letters 105C and 106C start the clock; Letter 916C does not.
Once it starts, nothing the IRS does later restarts it: "The IRS may reconsider a claim after issuing a final notice of claim disallowance. However, reconsideration does not extend the period for filing a refund suit," and a reconsideration still in IRS inventory when the two years run out "cannot be allowed" (IRM 25.6.1.10.3.1.5, Dec. 17, 2025). The only extension is by agreement on Form 907 before the period expires.
"The law does not allow the IRS to issue a refund once the limitation period has expired. This rule applies even if the taxpayer is correct and all parties agree that the refund should have been paid. There are no exceptions" (IRM 25.6.1.10.3.1.5, Dec. 17, 2025).
How long the IRS has to collect what it assessed
The clocks above end when the IRS may still assess. A second set starts when it does. "IRC 6502 provides that the length of the period for collection after assessment of a tax liability is 10 years. The collection statute expiration ends the government's right to pursue collection of a liability" (IRM 5.1.19.1.1, Dec. 18, 2023). The date is computed per assessment, not per year: "Certain transaction codes (TC) with specific reference numbers carry their own CSEDs," and the list includes "TC 240 Miscellaneous Civil Penalty," which is how a 972CG or CP215 penalty posts, as well as TC 180 and 186 deposit penalties and TC 290, 298 and 300 additional assessments such as a Form 945 compliance-check or examination assessment (IRM 5.1.19.2.1, May 5, 2026). A penalty assessed in 2026 on 2023 returns is collectible until 2036, whatever the tax year.
Several events suspend the ten years, and "Overlapping suspensions run concurrently; they are not cumulative" (IRM 5.1.19.3, May 5, 2026). A timely Collection Due Process hearing request suspends it "to the date the taxpayer withdraws their request for a CDP hearing or the date the determination from the Independent Office of Appeals (Appeals) becomes final, including any court appeals," with at least 90 days left afterwards; an equivalent hearing does not suspend it (IRM 5.1.19.3.3, Apr. 26, 2018). An instalment agreement suspends it while the request is pending, for 30 days after a rejection, during a timely appeal, and for 30 days after a termination, but "The CSED is not suspended while an installment agreement is in effect" (IRM 5.1.19.3.5, Dec. 18, 2023). An offer in compromise suspends it while pending plus 30 days and any appeal (IRM 5.1.19.3.4). A business paying a penalty over five years under an agreement is using up the ten, not pausing them.
All the clocks on one page
IRM 4.23.9.13.6 (Oct. 6, 2022); Exhibit 4.23.9-1; IRM 25.6.1.9.3 (Mar. 1, 2006); Exhibit 25.6.1-2.
| Event | Clock | Source |
|---|---|---|
| IRC 6721 penalty, 1099 filed on time | 3 years from the due date | IRM 4.23.9.13.6 |
| IRC 6721 penalty, 1099 filed late | 3 years from the actual filing date | IRM 4.23.9.13.6; Exhibit 4.23.9-1 |
| IRC 6721 penalty, 1099 never filed | No limit (IRC 6501(c)(3)); 3 years from the date the IRS secures it | Exhibit 4.23.9-1; IRM 4.23.8.12 |
| Form 945 assessment | 3 years from April 15 of the following year, or from a later actual filing | IRM 25.6.1.9.3; Exhibit 25.6.1-2 |
| Form 945 never filed | No limit until a signed return is filed | IRC 6501(c)(3) |
| Refund claim, filing deadline | 3 years from the return (945 deemed filed April 15) or 2 years from payment, whichever is later | IRM 25.6.1.10.3.3; IRC 6511(a) |
| Refund claim, amount | Paid in the 3 years (plus extensions) before the claim, or in the 2 years before it | IRC 6511(b)(2) |
| Abatement request on an unpaid penalty | No refund statute applies | IRM 25.6.1.10.3.3 Note |
| Suit after Letter 105C/106C | 2 years from the certified letter; Form 907 to extend; reconsideration does not | IRM 25.6.1.10.3.1.3, 25.6.1.10.3.1.5; IRC 6532(a) |
Questions people ask
A 972CG arrived for a year we filed on time more than three years ago. Is it too late for the IRS?
If every return on the notice was filed by its due date, the IRC 6721 penalty statute on those returns closed three years after that due date (IRM 4.23.9.13.6). Say so in the response, with your filing confirmation; the penalty unit's own instructions tell it to check the statute before assessing. Late-filed returns in the same year run from their filing dates.
We never filed 1099s for some contractors five years ago. Should we file them now?
Filing starts a three-year clock that is not running today, and the penalty for a late return is capped by tier while the penalty on a return the IRS secures itself can carry intentional-disregard arguments. The decision involves the amounts and whether reasonable cause exists; the intentional disregard guide covers how the IRS reads a long non-filing.
Does signing an extension in our 941 audit extend the 1099 penalty statute?
No. "A statute extension secured on Form SS-10 ... does not extend the statute of limitations on these penalties. The consent covers only those penalties that are directly connected to an employment tax adjustment" (Exhibit 4.23.9-1). A separate consent is needed for IRC 6721 and 6722.
We got a 105C two years ago, and the IRS has been "reconsidering" since. Can we still sue?
Only if the two years from the certified 105C have not run, or a Form 907 was signed before they did. Reconsideration "does not extend the period for filing a refund suit," and after it expires the IRS cannot refund "even if the taxpayer is correct" (IRM 25.6.1.10.3.1.5).