Information reporting by the numbers: what the IRS publishes about the 1099 system, and what it means for a payer

How big the system is

The IRS received 4,474,519,835 information returns in fiscal year 2025 (Data Book 2025, Table 3-8), of which 987,460 were electronic, 885,323 were paper and about 272 million were processed by the Social Security Administration. Publication 6961, which counts by calendar year and adds the SSA's benefit statements and Form 1096 transmittals, puts the 2024 total at 4,637,956,645 and projects 5,209,293,200 for 2026 and 7,069,254,000 for 2033. The two series measure different populations and should not be added, but both say the same thing: the information reporting system is roughly thirty times the size of the individual return system (about 160 million Forms 1040 a year, Publication 6292), and it runs almost entirely on electronic files.

Information returns received by the IRS, billions (Data Book)

The dip after fiscal 2023 is partly real and partly definitional: the 2024 and 2025 Data Books changed how paper is tracked ('may not be comparable to prior years', Table 3-8 footnote 2) and the electronic total includes foreign information records exchanged under OECD standards, which vary year to year. Publication 6961's calendar-year series, which is the IRS's planning figure, grows every year, driven almost entirely by Form 1099-B (3.24 billion documents in 2024 against 55 million 1099-NECs). The volumes tool has every form.

Why the IRS defends the 1099: the tax gap by visibility

The tax gap research is the reason the information return penalties exist and the reason the IRS does not relax them. Publication 5869 projects a gross tax gap of $696 billion for tax year 2022 ($63 billion nonfiling, $539 billion underreporting, $94 billion underpayment), a net gap of $606 billion after enforcement and late payments, and a voluntary compliance rate of 85.0 percent. The underreporting figure is then sorted by how 'visible' each kind of income is to the IRS, meaning how much of it is reported on an information return and whether tax is withheld at source.

Read across the last column: when a payment is on a 1099 and tax is withheld, 1 percent of it is misreported; when it is on a 1099 with no withholding, 6 percent; when it is on no information return, 55 percent. That spread is the whole argument for the 1099-NEC, for backup withholding, and for the penalties that enforce both, and it is why GAO (GAO-24-107095) and the IRS's own advisers keep asking for more reporting rather than less. The oversight page has the GAO reports; Publication 5869 is here. The IRS's tax gap page (reviewed April 14, 2026) says the next estimates, scheduled for fall 2025, are delayed.

What the IRS does with the returns

Two automated programs consume the information returns after filing season. The Automated Underreporter (AUR) matches 1099s and W-2s to individual returns and sends a CP2000 when they disagree; the Automated Substitute for Return (ASFR) builds a return for a nonfiler from their 1099s and assesses it. The Data Book reports both.

AUR additional assessments, billions of dollars (Data Book)

The AUR ran about a million cases a year with roughly 1,400 staff in 2024 and 2025. ETAAC's June 2026 report reprints the 2024 table to argue that Forms 1099-R and 1099-K should be due January 31 so the matching can happen before refunds go out, which has been its position since 2021; the IRS's first AUR match of the year ran in July when GAO last described the schedule (GAO-13-515, cited by ETAAC 2016). For a payer the point is simpler: every 1099 you file is matched, and the payee's CP2000 is where your form reappears.

Penalties: what the Data Book shows and what it hides

The Data Book's civil penalty table (Table 26 or 28 in earlier editions, Table 4-2 in the 2025 edition) reports penalties assessed and abated by type of tax. Information return penalties are not a type of tax, so sections 6721 and 6722 sit in a 'nonreturn penalties' line together with return preparer penalties, Form 8300 and 3520-A penalties, aiding and abetting, frivolous return and dyed-fuel penalties and the trust fund recovery penalty. The IRSAC asked in 2024 for the information return penalties to be broken out and was told the international information return figures exist but are not published; nothing changed in the 2025 edition.

'Nonreturn' penalties assessed, billions of dollars (Data Book)

What the line does show: about 200,000 to 290,000 nonreturn penalties a year, $4 to 7 billion assessed, and abatements running from a quarter to two thirds of the dollars. The fiscal 2025 total civil penalty figures ($1,247 billion assessed, $1,210 billion abated) are dominated by employment tax delinquency and failure-to-pay penalties assessed and reversed in the same year, printed without explanation in Table 4-2; this page reports them as printed and draws no conclusion from them. Trust fund recovery penalty credits of $738.9 million are included in the 2025 abatements.

Where the IRS does publish penalty-level figures, the abatement rates are the story. The Taxpayer Advocate found that systemically assessed international information return penalties (sections 6038 and 6038A, Forms 5471 and 5472) were abated 73 percent by count and 81 percent by dollars for 2020 to 2023 (2026 Purple Book), and that FIRPTA failure-to-file and failure-to-pay penalties were abated at between 47 and 84 percent of the dollars assessed in each of fiscal years 2022 to 2025 (2025 Annual Report). The IRSAC's 2024 report computed 69.1 percent of all civil penalty dollars abated in fiscal 2022 and 19.8 percent in 2023 from the Data Book. None of these is the 6721 rate, which has never been published; the closest public measure is the IRS's own evaluation, reported to GAO (GAO-21-102), that its late-filer penalty program 'encourages timely filing'. The 972CG guide and the response guide cover the penalty as it is actually administered.

The withholding returns: Forms 945 and 1042

Publication 6292 counts the tax returns. In fiscal year 2024 the IRS received 50,669 Forms 945, 41,127 of them on paper, against 26,828,731 Forms 941. The 945 is the annual return on which backup withholding, pension withholding and gambling withholding are paid over, so the count is, in effect, the number of payers in the country that reported any nonpayroll withholding that year. Set beside TIGTA's finding that 182,075 payers filed tax year 2018 returns with missing or incorrect TINs on which withholding was required (TIGTA 2021-40-030, $13.3 billion not withheld), the figure explains why the IRS built the 945 matching program: the population that should withhold is several times the population that files the return.

Form 1042 was paper for 59 percent of filers in fiscal 2024 and is projected to be 18 percent paper in 2026 because T.D. 9972 made e-filing mandatory from 2025; the IRSAC's 2024 report describes what that cost small withholding agents. Form 945 has no mandate, and the IRS projects it staying mostly paper through 2032 while the count slowly falls. Source: Publication 6292, Table 1.

The end of paper

Publication 6961's Table 3 is the shortest table in the publication: 3,964,231 paper information documents in 2024, 1,050,000 projected for 2026 and 558,200 for 2033, out of a grand total approaching seven billion. Forms W-2, W-2G, 1099-B, 1099-DIV, 1099-INT, 1099-K, 1099-MISC and 1099-NEC show zero paper from 2025 on. What remains is Schedules K-1 (about 1.4 million paper K-1s in 2024, falling to half a million), Form 1042-S (80,774 on paper in 2024, still 58,000 in 2033) and the Form 1096 transmittals that go with paper filings. The Data Book tells the same story from the other end: 33 million paper information returns received in fiscal 2019, 885,323 in fiscal 2025.

The mandate did this. ETAAC asked in 2016 for the 250-return e-file threshold to fall to 20 and for an SSA-style fill-in portal; Congress wrote the Taxpayer First Act in 2019 (100 returns, then 10, counted across all form types), the IRS launched IRIS in January 2023 and T.D. 9972 made the 10-return rule effective for returns filed from 2024. The IRSAC's 2021 report carried the IRS's own estimate of the effect: 629,000 to 751,000 payer EINs and 24.3 million paper returns moving to electronic filing at the 10-return threshold, 81 percent of all paper returns. The paper 1099 guide explains what happens to the paper that is still filed, and the advisory tracker follows the asks that produced the mandate.

Figures the advisers cite

What a payer should take from the numbers

• Your forms will be matched. Five billion documents a year go through the same name/TIN comparison and the same AUR match; the scale is the reason the process is automated and the reason an error is caught by a machine, not reviewed by a person. The IRPTR guide shows what the machine keeps.
• The penalty is not going away. The 1-percent-versus-55-percent spread is the IRS's own evidence that reporting works; every GAO and TIGTA review and every adviser report since 2015 has asked for more of it. Expect thresholds to move with inflation, not the obligation.
• Form 945 is a small club with an audience. Fifty thousand returns against a population TIGTA sized in the hundreds of thousands means the IRS reconciles box 4 withholding to the 945 for every payer that reports any. If your 1099s show withholding, the 945 must match them, under the same EIN.
• Paper is a flag. With fewer than a million paper information documents expected in 2026 across the whole country, a paper 1099 batch is unusual enough to be noticed, and over ten returns it is a failure to file electronically.
• Nobody can tell you the 972CG odds. There is no published count of 972CG notices, assessments or abatements; what exists is the nonreturn penalty line and the pattern that systemic penalties elsewhere are abated most of the time when challenged. Respond to every one.

Questions people ask