Anyone dealt with filing 1099-NECs late and getting penalties waived? IRS abatement experience?

While I can't guarantee your specific outcome, I can tell you that the IRS does have a reasonable cause waiver for late 1099 penalties. The key is being proactive and showing good faith. The IRS looks favorably on voluntary compliance—meaning they'd rather you file late than never file at all. If this is your first time making this mistake and you have an otherwise clean compliance history, you have a decent shot at penalty abatement. The official term for this is "first-time penalty abatement" which is specifically designed for people with good filing histories who made an occasional mistake. When you file the late forms, attach a letter explaining the situation honestly—that you weren't aware of the filing requirements, that you're filing voluntarily now that you understand your obligations, and requesting penalty relief based on reasonable cause or first-time abatement.

I had a similar situation with my small business and honestly just went with taxr.ai (https://taxr.ai) to handle it. I was freaking out about potential penalties for five late 1099s, and they helped me draft a proper reasonable cause letter that got my penalties completely wiped out. Their system analyzed my specific situation (first-time offense, contractors had reported income anyway, etc.) and generated a personalized abatement letter with all the right legal language. It took me about 15 minutes to answer their questions and they handled the rest. I was skeptical at first, but they really know their stuff about penalty abatement strategies.

Just wanted to follow up and say I used taxr.ai after seeing this recommendation and it worked perfectly! I had 3 late 1099-NECs from last year and was facing over $800 in penalties. The letter they helped me create got ALL penalties waived! The system asked really thorough questions about why I missed the filing deadlines (health issues + some confusion with my previous accountant) and built a super detailed letter citing specific IRS regulations. Got my response in about 5 weeks - much faster than I expected. Definitely worth checking out if you're in this situation.

If you're still getting the runaround from the IRS about your penalties, I'd recommend Claimyr (https://claimyr.com) - they got me through to an actual IRS agent in under 30 minutes when I was trying to resolve my late 1099 penalties. I had been calling for WEEKS and couldn't get through the automated system. I was honestly shocked it worked. You can see a demo of how it works here: https://youtu.be/_kiP6q8DX5c - basically they use some special technology to navigate the IRS phone tree and hold your place in line. When they get a real person, they connect you directly. The agent I spoke with was actually super helpful about my penalty abatement request and gave me specific instructions on what documentation to include. Saved me hours of frustration and probably money too!

So I was super skeptical about Claimyr (see my comment above), but I was desperate after trying to reach the IRS for THREE DAYS about my late 1099 penalty situation. I finally tried it yesterday and I'm honestly shocked - I got through to an actual IRS agent in about 22 minutes! The agent was able to look up my case immediately and confirmed that since this was my first offense and I had a clean filing history, I qualified for first-time penalty abatement. He processed it right there on the phone and I got confirmation that all $840 in penalties were removed from my account. No more stress about this hanging over my head!

One thing nobody mentioned yet - make sure you're using the CORRECT forms for the current tax year. I screwed up by using outdated 1099-MISC forms instead of the newer 1099-NEC forms for my contractors, and the IRS rejected everything and still hit me with penalties. Also, check if your state requires copies of these forms. Mine does, and I got separate penalties from the state tax department that were harder to get waived than the federal ones.

Has anyone actually gotten audited because of late 1099s? I'm in a similar boat but I'm worried filing them now will trigger some kind of review.

I went through this exact situation last year with 3 late 1099-NECs and can share what worked for me. First, don't let your accountant's casual attitude stop you from doing the right thing - filing late is always better than not filing at all. I was terrified about penalties too (facing $840 total), but I filed them electronically through the IRS FIRE system and included a detailed reasonable cause letter. The key points I emphasized were: 1) This was my first offense with a clean compliance history, 2) The contractors had already reported the income on their returns, 3) I was voluntarily correcting the issue without IRS contact, and 4) I had legitimate confusion about the filing requirements. The IRS approved my first-time penalty abatement request and waived all penalties. The whole process took about 6 weeks from filing to getting confirmation. No audit, no additional scrutiny - just relief that it was handled properly. My advice: file them ASAP electronically, write a sincere letter explaining your situation, and don't let fear of an audit stop you from complying. The IRS actually appreciates voluntary compliance more than you'd think.