IRS Issues Notice Regarding De Minimis Errors

The IRS has issued Notice 2017-09, which provides a safe harbor for filers that have made de minimis errors on certain IRS forms.

Specifically, an employer or payer that makes a single mathematical error on a Form W-2 or any form in the 1099 series that is not more than $100, or not more than $25 for errors involving tax withholding or backup withholding, is automatically covered under the safe harbor for de minimis errors. The safe harbor relieves the filer of a penalty assessment for failing to file a correct return or provide the recipient with a correct copy of that return.

The safe harbor applies to returns required to be filed after December 31, 2016. Although an employer or payer does not need to file corrected forms and provide them to the recipient(s), the IRS stresses that they are free to do so.

However, the Notice provides that a recipient of an incorrect form—an employee or independent contractor—may elect out of the safe harbor and request to be provided with a corrected form that is accurate.

The safe harbor does not apply if an employer or payer makes an intentional error on a Form W-2 or 1099.

For more information, consult a competent tax professional.