Miss a Form 1098-VLI deadline and the IRS can fine you per form — and it can do it twice. Filing with the IRS (§6721) and giving the borrower their copy (§6722) are separate. Blow both on the same loan and you pay for both. A few hundred reportable accounts is enough to turn a quiet January into a six-figure mess.
Most shops that get hit are not ignoring the rules. Interest totals, VINs, or TINs simply were not ready, and nobody ran the “what if we file nothing?” math until it was too late. Calendar dates: 1098-VLI filing deadlines. The reporting duty itself: §6050AA.
The dollar amounts below are the inflation-adjusted figures for returns and statements due in 2027 (calendar-year 2026 interest for most lenders), from Revenue Procedure 2025-32. They change every year, so check the procedure for the season you are actually filing.
Filing and furnishing are two different problems
For each reportable loan you have two jobs:
- Get the information return to the IRS on time and correct.
- Get a proper statement to the borrower on time and correct.
Do one and miss the other, and you still have a penalty. An IRIS acceptance does not help a borrower who never got a copy. A clean mail-out does not help if the March 31 e-file never went in.
Late, missing, and wrong all count. “Wrong” usually means something that breaks matching — bad TIN, bad interest figure, bad VIN — not a harmless typo in a middle initial. How bad it gets depends mostly on how fast you get a correct form to the IRS and to the borrower.
What it costs (2027 season)
Per return or per statement:
| When you get a correct form in | Per form |
|---|---|
| Within 30 days of the due date | $60 |
| After 30 days, but by August 1 | $130 |
| After August 1 — or you never file / never furnish | $340 |
| Intentional disregard | $690 (or more, if the percentage-of-amount rule is higher), and no annual cap |
Read that table once for §6721 and again for §6722. Same loan, both duties missed at the late tier: $340 + $340.
There are annual caps on the first three tiers. They differ by how late you are and whether your average annual receipts for the prior three years sit over or under $5 million. For larger filers in 2027, the ceilings run about $698,500 (30-day tier), $2,095,500 (August 1 tier), and $4,191,500 (general late tier). Smaller filers get lower caps on the same ladder. Intentional disregard has no ceiling.
To put the late tier in plain numbers on one track only ($340 each):
| Reportable loans | One track | Both tracks |
|---|---|---|
| 100 | $34,000 | $68,000 |
| 200 | $68,000 | $136,000 |
| 500 | $170,000 | $340,000 |
File and furnish on time and you never need this table.
Fixing it early is most of the game
The tier follows the date a correct form lands — not the date someone first noticed the problem. Correct within 30 days of the deadline and you are looking at $60. Miss that window but finish by August 1 and you are at $130. After August 1 you are in the $340 world. Late and right still beats missing forever.
A few rules help if you actually qualify for them:
If you filed on time and the only issue is certain correctable data mistakes, a de minimis safe harbor may wipe the penalty on forms you fix by August 1, up to the greater of 10 returns or half of one percent of what you were required to file that year. Read the statute and current IRS guidance before you assume you fit.
Inconsequential errors — mistakes that do not stop the IRS or the borrower from using the form — generally are not penalized. A wrong TIN, interest amount, or VIN is never “inconsequential.”
Corrections go through IRIS (or your transmitter) as a corrected return, with a CORRECTED copy to the borrower. Keep the confirmation and the date. How e-file works in practice: file 1098-VLI electronically.
One bad loan-system export can mess up an entire batch on both tracks. Finding that in February is annoying. Finding it in September is expensive.
Do not treat 2025 relief like it still applies
For calendar year 2025 interest only, Notice 2025-57 let lenders get interest totals to borrowers by January 31, 2026 without filing Form 1098-VLI with the IRS, and said the usual §§6721/6722 penalties would not apply on that path.
That was one year. It does not carry over to 2026 interest. From 2026 on, plan on the real form, January 31 furnish, IRS filing on the normal calendar, and the full penalty structure above. More on the shift: IRS car loan interest reporting. A portal summary is not a substitute once full reporting applies.
If you already have a penalty notice
§6724 lets the IRS waive a §6721 or §6722 penalty for reasonable cause when you used ordinary business care and something outside that still went wrong. Documented disasters and vendor failures you could not reasonably prevent sometimes qualify. “January was busy” almost never does.
Fix the filing first. Then ask for relief with a clear timeline: what broke, when you found it, what you did, and when the correct forms went out.
Name and TIN mismatches are worth chasing before January even when the interest figure looks fine. They generate their own IRS notices and can add furnish/file penalties on top of the headache.
Bottom line
Identify loans with $600 or more of qualifying interest, lock interest and TIN/VIN data while you still have time, furnish by January 31, and get an accepted IRS file before the e-file deadline — not an upload that rejects on the last afternoon. Deadlines and a practical month-by-month rhythm are in the filing deadlines post. If you want help running the filing itself: sign up.
Educational information only, not legal or tax advice. Penalty amounts are inflation-adjusted; confirm the figures and rules for your filing year under §§6721, 6722, and 6724 and the current revenue procedure.
