What Form 1096 Is For

Form 1096 is the IRS's "cover sheet" for mailing paper information returns. Think of it as the envelope summary you need when you send certain tax forms to the IRS by mail. If your business paid independent contractors, collected mortgage interest, received donations, or engaged in various other financial transactions during 2020, you likely filed information returns like Forms 1099, 1098, 5498, 3921, 3922, or W-2G. These forms report payments and transactions to both the IRS and the recipients.

Form 1096 doesn't stand alone—it must accompany these paper forms when you mail them to the IRS. It serves as a summary transmittal document that tells the IRS what you're sending and provides totals for the entire batch. You'll fill out key information like your business name, taxpayer identification number (TIN), the total number of forms you're submitting, total federal income tax withheld, and the combined dollar amounts reported on all the forms in that batch.

Important: Form 1096 is only for paper filers. If you file your information returns electronically through the IRS FIRE (Filing Information Returns Electronically) system, you don't need Form 1096 at all. The electronic system handles the transmittal automatically.

When You’d Use Form 1096

For most 2020 information returns, you needed to file Form 1096 by March 1, 2021 if filing on paper. However, there were important exceptions: Form 1099-NEC (reporting nonemployee compensation) had an earlier deadline of February 1, 2021, while retirement account forms (5498 series) weren't due until June 1, 2021.

Late and Amended Filings

If you missed these deadlines, you still needed to file—late filing is better than not filing at all, though penalties apply based on how late you are. You file amended or corrected returns using the same Form 1096 process. Interestingly, you can group original and corrected returns of the same type together with one Form 1096; you don't need to send them separately.

If you needed extra time, you could request an automatic 30-day extension by filing Form 8809 before the original due date. Under certain hardship conditions, an additional 30-day extension was possible. However, for Forms W-2 and 1099-NEC, no automatic extensions were available.

Key Rules or Details for 2020

Several critical rules governed Form 1096 filing for tax year 2020:

• Electronic Filing Threshold: If you had to file 250 or more information returns of any single type, you were required to file electronically and didn't use Form 1096. This threshold applied separately to each form type—so 500 Forms 1098 meant electronic filing for those, but 100 Forms 1099-A could still be filed on paper. Those filing electronically needed to apply at least 30 days before the deadline using Form 4419.
• Separate Forms by Type: You needed to submit a separate Form 1096 for each type of information return. For example, if you filed both Forms 1099-INT and 1099-MISC, you prepared two different Forms 1096—one accompanying all your 1099-INT forms and another with all your 1099-MISC forms. Mixing different form types with one Form 1096 was a common error that could trigger penalties.
• Matching Information: The filer's name, address, and taxpayer identification number on Form 1096 had to exactly match what appeared on all the accompanying information returns. Mismatches were a red flag for the IRS and could result in penalties.
• Official Forms Required: The IRS emphasized that downloaded or photocopied versions of Form 1096 were not acceptable for filing. The official scannable version (printed in special red ink) was required because the IRS processes these forms by machine. Using a printed copy from the IRS website could result in penalties because the forms couldn't be scanned properly.
• Proper Transmittal: You mailed completed Form 1096 with Copy A of the information returns to one of three IRS service centers—Austin, TX; Kansas City, MO; or Ogden, UT—depending on your business location.

Step-by-Step (High Level)

Filing Form 1096 for 2020 involved these general steps:

1. Determine if You Need It: First, confirm whether you were required to file electronically. With fewer than 250 returns of any one type, you could file on paper and needed Form 1096. Check if your transaction types required information returns at all.
2. Obtain Official Forms: Order scannable Form 1096 and the appropriate information return forms from the IRS at IRS.gov/orderforms. Don't use downloaded copies—order the official red-ink scannable versions well before your deadline.
3. Complete Information Returns: Fill out all required Forms 1097, 1098, 1099, 3921, 3922, 5498, or W-2G for each recipient, ensuring accuracy in names, addresses, TINs, and dollar amounts. Keep Copy A (for the IRS) separate from recipient copies.
4. Group by Form Type: Sort all your completed Copy A forms by form type. Each type gets its own Form 1096.
5. Fill Out Form 1096: For each form type group, complete one Form 1096. Enter your business information (matching what's on the information returns exactly), count how many forms you're sending, calculate total federal income tax withheld, and sum up the required dollar amounts from the specific boxes indicated in the instructions.
6. Mail to Correct IRS Center: Based on your principal business location, determine which of the three IRS service centers to use. Mail the appropriate Form 1096 with its accompanying Copy A information returns together, but don't staple them. Use U.S. Postal Service or an IRS-approved private delivery service.
7. Keep Records: Retain copies of all forms for your records, along with proof of mailing. The IRS recommends keeping these records for at least four years.

Common Mistakes and How to Avoid Them

• Duplicate Filing: Sending the same information to the IRS multiple times was a costly mistake. Before filing, verify you haven't already submitted the same returns. If you need to correct information, file corrected returns—don't just send duplicates.
• Mismatched Filer Information: The most common error was having different names, addresses, or taxpayer identification numbers on Form 1096 versus the attached information returns. Double-check that every detail matches exactly before mailing.
• Missing Decimal Points: Dollar amounts must include decimal points showing cents (e.g., 1230.00, not 1230). Omitting decimals meant the IRS couldn't process your forms correctly.
• Multiple Form Types with One Form 1096: Trying to transmit Forms 1099-INT and 1099-MISC together with a single Form 1096 was wrong. Each form type requires its own separate Form 1096 transmittal.
• Using Downloaded Forms: Printing Form 1096 from the IRS website and filing it was specifically prohibited. The scannable forms have special properties that regular printers can't reproduce. Always order official forms.
• Wrong TIN Box: Businesses needed to use Box 1 (Employer Identification Number), while individuals not in business used Box 2 (Social Security Number). Sole proprietors without an EIN could use their SSN in Box 2. Using the wrong box or filling in both caused processing delays.
• Incorrect Mailing Address: The IRS consolidated filing to three centers, and using an outdated address delayed processing. Always verify the current address for your location on the official Form 1096.
• Not Filing Electronically When Required: If you had 250 or more returns of one type and filed on paper without an approved waiver (Form 8508), you faced penalties even if everything else was correct.

What Happens After You File

Once the IRS receives your Form 1096 and accompanying information returns:

• Processing: The IRS scans and processes the forms, typically within several weeks to a few months. They match the information to the recipients' tax returns to verify reported income.
• Matching Program: The IRS runs a sophisticated matching program that compares what you reported on Forms 1099 and other information returns against what recipients reported on their individual tax returns. Discrepancies trigger notices to taxpayers.
• Penalty Notices: If errors are found—such as missing TINs, incorrect amounts, late filing, or formatting problems—you'll receive a penalty notice (typically CP2100 or CP2100A for TIN issues). These notices explain the problem and any penalties assessed.

For 2020 returns, penalties were:

• $50 per form if corrected within 30 days (up to $565,000 annually; $197,500 for small businesses)
• $110 per form if corrected between 31 days and August 1 (up to $1,696,000; $565,000 for small businesses)
• $280 per form if corrected after August 1 or not filed at all (up to $3,392,000; $1,130,500 for small businesses)
• At least $560 per form with no maximum for intentional disregard
• Interest Accrual: Penalties accrue interest monthly until paid in full, increasing your total amount due.
• No News is Good News: If your filing was correct and complete, you typically won't hear from the IRS. Your records are processed and matched without notification. Retain your copies and proof of mailing for at least four years in case questions arise later.

FAQs

Q1: Can I file Form 1096 electronically?

No. Form 1096 is only for paper filers. If you file information returns electronically through the IRS FIRE system, the transmittal information is included automatically in your electronic submission, and you don't complete or submit a Form 1096.

Q2: What if I only have a few forms to send—do I still need Form 1096?

Yes. Regardless of quantity, if you're mailing paper information returns to the IRS, you must include Form 1096 as the transmittal document. Even one Form 1099 sent to the IRS requires an accompanying Form 1096.

Q3: Can I staple or bind Form 1096 to my information returns?

No. Do not staple, clip, or bind Form 1096 to the information returns. The IRS uses scanning equipment that can be damaged by staples or clips. Send them together in the same envelope, but leave them loose.

Q4: I made a mistake on Form 1096 after mailing it. What should I do?

File corrected information returns with a new, corrected Form 1096. On the information returns, mark the "CORRECTED" checkbox. The corrected Form 1096 should reflect accurate totals. The IRS processes corrected returns to replace the original information.

Q5: Where can I get official scannable Form 1096 for 2020?

Order official forms free from the IRS at IRS.gov/orderforms or by calling 1-800-TAX-FORM (1-800-829-3676). The IRS mails them to you within about two weeks. Don't download and print from the website—those versions aren't acceptable for filing.

Q6: Do I need Form 1096 if I'm filing Forms 1099 with my state?

It depends on your state. Form 1096 is specifically for federal IRS filing. Many states have their own procedures and forms for transmitting information returns. Check with your state tax agency for their specific requirements, which may differ from federal rules.

Q7: What's the difference between "small business" and regular penalties?

For penalty purposes, a "small business" in 2020 meant average annual gross receipts of $5 million or less for the three most recent tax years. Small businesses faced lower penalty caps but the same per-form penalty amounts. The lower caps provided some relief for smaller entities while still encouraging compliance.

Additional Resources:
Form 1096 - IRS.gov/forms-pubs/about-form-1096
2020 General Instructions for Certain Information Returns - IRS.gov/pub/irs-prior/i1099gi--2020.pdf
Information Return Penalties - IRS.gov/payments/information-return-penalties

Note: This guide provides general information based on 2020 tax year rules. Tax laws and procedures change. Always consult current IRS publications or a tax professional for your specific situation.