Burning the post-midnight oil again and

[Black Bart]

thought of a question prompted by a client who brought in a brokerage 1099 (yes, those notoriously late-mailing folks) received today.

I know it's written everywhere that employers (and brokers, etc.) are supposed to mail all that by Jan. 31st -- however; is there any real monetary penalty for not doing so. If there is, I've never heard of one, much less seen it assessed against anybody. As we know, IRS occasionally bills people for not sending theirs by Feb. 28th, but what about Jan. 31st?

Anybody know if there's actually a reg and/or a penalty for not making that deadline (instructors used to say mail everything by 1-31 and keep any returned envelopes as proof to IRS that you complied)?

[joanmcq]

It's supposed to be something like $50 per.

Brokers had until Feb 15 to get the statements out.

[S T]

I believe the financial institutions regarding 1099-B forms have until 2/15/2013 to mail and then there is always the possibility of the "dreaded" correction statements that will follow.

Sandy

[Traveling EA]

Brokerage Statements

Brokerage statements do not have to be out until 2-15. However, I have a Merrill Lynch statement that says: Based upon your investments, you will be receiving a Supplemental Tax Information Statement in addition to this statement. The Supplemental Statement must be used in conjuntion with this tax statement to complete your tax return. That supplemental statement will be produced and mailed to you on or before the IRS deadlne of March 15, 2013.

[FEDUKE404]

A couple of additionals here

The brokerage firms do indeed have a separate (later) deadline of Feb 15th for getting their statements to clients. Two of my three statement have not "arrived" yet, although as of the last week or so I have been able to view those tax statements online and save them as PDF.

As Sandy noted, the REAL problem is dealing with those later "changes" that may be coming at you. I have had some clients with one original + three "later" sets of tax information from the same account.

If an investment account is pretty much plain vanilla, i.e. common stocks and some bond/bank interest, the original statement should hold. OTOH, if the account is of more complexity to include things such as REITs or foreign investments, unless you like to live dangerously (and have a fondness for Form 1040X) the prudent thing to do is to wait.

Another thing which can surprise many investors who may "not quite know" what is going on within their accounts. If there is a PTP, MLP, and some other similar goodies, that tax information will NOT show up in the broker's tax statement. (Albeit, the "income" likely will.) Then your radar screen needs to be looking for Sch K-1s somewhere out there!

FE

[Roberts]

Some of those MLPs (K-1s) aren't available online until April 1st.

Corrected 1099's are due March 15th but the brokers should have an idea whether it is relevant or not by the codes on the original 1099.

The income from the MLPs show up sometimes on 1099s in the back pages the IRS aren't provided with. I'd wait for the K-1.

[JohnH]

This was such a problem a couple of years back that I began telling clients with active brokerage accounts (or who own anything requiring a K-1) that we MUST file an extension, no matter how early they get their other info to me. That has been a very handy policy to follow. Sometimes the extension is not needed, but by having it in place, Apr 15 is off the table.

[DaveO]

The later and later trend of the brokerage statements is running up against the earlier and earlier trend of the FASFA form. I've had to tell a few clients to either dump their MLP investments or forget about grants and scholarships for their kids.

[FEDUKE404]

MLP income

Some of those MLPs (K-1s) aren't available online until April 1st.

Corrected 1099's are due March 15th but the brokers should have an idea whether it is relevant or not by the codes on the original 1099.

The income from the MLPs show up sometimes on 1099s in the back pages the IRS aren't provided with. I'd wait for the K-1.

The "income from the MLP" is totally irrelevant to the preparation of a client's tax return, regardless of wherever it might show up.

You must work from the K-1. Many/most are now available online with a few mouse clicks.

FE

[Nashville]

Actual Penalty Assessment

Back to something Bart referred to in the original post:

Has anyone heard of the IRS actually assessing a late penalty against any of these brokerage houses for failure to meet the prescribed deadlines?

Certainly not me, and I doubt any of you unless the payer was small-time.

Institutions that are too big and unwieldy for government to deal with lead a charmed life. Just how successful do you think the IRS would be if they tried to collect a penalty from Merrill Lynch, Franklin Templeton, or any of these giant firms? Add to the list the big banks, Bank of America, Citibank, MorganChase, etc. and we won't even mention the ever-worthless 1098-T by the University of Wisconsin or whatever your favorite alma mater might be. Or W-2s filed late by General Motors or WalMart. What about W-2s from the National Guard which are ALWAYS late?

It is easier for the Government to Tag-Team with these huge institutions to bully up on small businesses, tax preparers, and taxpayers.

[Lion]

K-1s from entities on extension can be mailed 15 September.

[taxxcpa]

My broker had the 1099Bs ready before Feb 15, but had some sales coded "A" instead of "B" on Form 8949 although they actually had the cost/basis since the securities had been acquired in 2012 from the same broker.

I've tried to get a corrected 1099B. If I don't I'll have to deduct the basis that should have been reported, leaving the Code "A".

[Black Bart]

Thanx all. I know we all have problems with late brokerage statements. I didn't know about the Feb. 15 extension but I also put off anybody who I know has those accounts (even when they do bring 'em in, you're lucky if not later "corrected"). But more to the point (like Nash says):

Actual Penalty Assessment

Back to something Bart referred to in the original post:

Has anyone heard of the IRS actually assessing a late penalty against any of these brokerage houses for failure to meet the prescribed deadlines? Certainly not me, and I doubt any of you unless the payer was small-time...

Some small employers I do payroll reports for don't round up complete W2/1099 pedigrees by 1-31 (I know, I know -- they should have gotten all the numbers and addresses when signing 'em up, but...stuff happens and, besides, good-paying clients aren't that easily replaced). So anyway, I use that deadline as a "scare" tactic; threatening $50 penalties. But I don't know if it's really "real." And I have yet to see/hear of anyone being fined -- ever.

All that Circular E says is "By January 31 furnish each employee a completed Form W-2, Wage and Tax Statement. Furnish each other payee a completed Form 1099." But nothing is stated about what happens if you don't. The only mention of penalties anywhere in the book is about late or underpaid tax deposits.

So anyway, since nobody else mentioned ever getting/seeing such a penalty, I think it's safe to assume that, even if there is one, IRS/SSA ignores it and nothing ever comes of it. I guess those clients saying "I never heard anything from them" are telling the truth and, apparently, I'm making empty threats.

P.S. Come to think of it, it would largely be impossible for IRs to enforce anyway since they have no way of knowing how/when the majority of small employers mailed/handed out a W2. Would probably only happen if a disgruntled employee took/sent his late-postmarked envelope to IRS and then penalty imposed only on that one. Actually, I've only seen IRS fine an employer twice for mailing the IRS copies late (and that was for 50 or more each). So anyway I'm thinking it's a dead issue.