Reported on Form 3949-A for not filing 1099s: how the IRS screens the tip, and the one record that decides it

What Form 3949-A is

"The Form 3949-A, Information Referral is used to voluntarily report suspected tax law violations by a person, a business, or both. The informants identity can remain confidential to the IRS" (IRM 3.28.2.3, Jan. 1, 2025). The form's own categories include "Failure to Withhold Tax," "Failure to File Return," "False/Altered Documents" and "Unreported Income," and the manual's examples under false documents are "Form W-2 or Form 1099's." It is not a whistleblower claim; a person seeking an award files Form 211 instead, and the two are routed differently.

The form "does not have to be included when reporting a tax violation": a letter is screened the same way. Submissions are worked by tax examiners at the Ogden Submission Processing Center "reviewing Section B 3 'Alleged Violation' and/or keywords/key phrases in Section B 5" (IRM 3.28.2.3.1, Jan. 1, 2025). Nothing in the chapter provides for a reply to the person who filed it, and the screener's job is routing, not investigation.

The path a referral takes

Each business operating division sets its own acceptance criteria, and the screener applies them in order: identify the taxpayer, validate the tax year and any dollar tolerance, then decide between a division and the retention file. "If verification of the taxpayer, business or allegation cannot be made, no other issues are listed in the information referral, and/or the criteria is not met, route the case to retention" (IRM 3.28.2.3.5, Jan. 1, 2025). The retention reasons are four: "No TIN located (Must research IDRS)," "Child Support," "No tax issues," and "Tolerance Not Met (Must research IDRS)."

The screening rules

The first gate is identity. "Using IDRS, confirm the taxpayer or business matches the Form 3949-A ... If a TIN identification cannot be made, route it to retention" (IRM 3.28.2.3.5). The screener will look for your EIN if the informant did not supply it; a referral that names a business the IRS can find on its own files is not stopped by a missing EIN.

The second gate is plausibility against what was filed. For unreported income allegations the screener compares the claim to the return: "If the allegation says that the taxpayer did not report a business run under the name of XYZ Landscaping and the Form 1040 reflects a Schedule C for XYZ Landscaping, then the allegation is clearly invalid" (IRM 3.28.2.7, Jan. 1, 2025). Allegations that a business is "paying employees improperly, not withholding payroll taxes, or not filing W-2s or Forms 1099" are sent to the employment tax sort, where the test is the payer master file.

Some thresholds are redacted. The dollar tolerance below which an unreported income allegation is retained is marked official use only in the published manual, as are several employment tax criteria; this page states only what the IRS has made public.

The PMFOL test for 1099 and W-2 allegations

PMFOL is the payer master file, the IRS's record of every information return filed under an EIN, described on what the IRS sees about you on PMFOL. The test is binary. The routing table sends a referral forward only when "PMFOLS 'MISC' AND 'NEC' rows reflect '00' in the 'Documents' column," that is, when no 1099-MISC and no 1099-NEC at all were filed for the year (IRM 3.28.2.10.1). A business that filed even one is, for screening purposes, a 1099 filer, and an allegation that it "is not issuing a Form 1099 or issuing an inaccurate Form 1099" is marked invalid and retained.

Two consequences follow. First, the screen does not measure completeness. A payer that filed 1099s for three vendors and skipped thirty passes the screen; the thirty are a matter for an audit's required filing check, not for the referral process. Second, a payer that files no 1099s because it believes none are due (every vendor is a corporation, say) has nothing on PMFOL to show it, and a referral against it goes forward on the informant's word. The manual gives the screener no step for weighing that explanation.

Where a valid referral goes

The employment tax sort routes to a single address: SB/SE Specialty Examination at 7940 Kentucky Drive, Mail Stop 5702T, Florence, Kentucky, the workload selection function for employment tax. The referral categories that go there are (IRM 3.28.2.10.1, Jan. 1, 2025):

Routing is not an audit. Florence classifies the referral against its own selection rules, which are not public, and most referrals end there. What a selected case looks like is the subject of the backup withholding examination and section 530 pages. The manual's own description of what examiners see when a case does open is on IRS asking about a payee.

Worker classification referrals

An allegation that a business is "failing to properly classify a worker as an employee or self-employed/independent contractor (issuance of W-2 versus Form 1099)" has no screening condition at all. It is routed to Florence as received, whatever PMFOL shows (IRM 3.28.2.10.1). That is the category a former contractor who believes they were an employee uses, and it is the one a filing history does not deflect. The protection there is the section 530 record: the 1099s themselves, the reasonable basis for the treatment, and consistency across similar workers. A worker who wants a determination rather than an enforcement referral files Form SS-8, which is a different process with notice to the firm.

What it means for a payer

• You will not be told. Nothing in the chapter notifies the subject of a referral. The first sign of a selected case is an examination contact.
• Your filing history is read before anything else. For a 1099 or W-2 allegation the screener's only evidence is PMFOL. A payer that files its 1099s every year has, in the IRS's own procedure, an invalid allegation on arrival.
• Zero filings are the exposure. A business with employees or contractors and no 1099s or W-2s on file for a year is the profile the routing table forwards. If the reason is that nothing was reportable, keep the analysis that shows it (corporate payees, payments under threshold, card payments reported by the processor) so an examiner can see it quickly.
• Classification allegations go forward regardless. The defense is the section 530 file, assembled before anyone asks.
• A late filing fixes the record. PMFOL is updated as returns post. Filing the missing 1099s, with the ordinary late penalty, changes what the screener sees for every later referral.

If you are the one filing

A payer sometimes wants to report the other side: a vendor who refuses a W-9 and claims not to be in business, or a competitor paying crews in cash. The manual shows what makes a referral survive screening: the business must be identifiable on IDRS (a name and address the IRS can resolve to an EIN), the allegation must be specific to a category the routing table recognizes, and for 1099 and W-2 allegations it must be true that nothing was filed. Allegations of cash wages and misclassification need no filing-history condition. Form 3949-A is not the vehicle for your own compliance problem: a vendor who will not give a TIN is handled by backup withholding and the solicitation record, not by a referral.

Questions people ask