“ Is it to late to issue 1099?”---> Failure to file 1099-MISC forms is common among small businesses, but not well tolerated by the IRS as a long-term practice. If you pay more than $600 in non-employee compensation, prizes or rent to any non-corporate entity during the calendar year, you are required to send that person or business a 1099-MISC form by Jan. 31 of the following year.If you file them electronically, in which case the due date is March 31, 2008.So, just mail the 109s as soon as possible. As you are late, you can still do so, but penalties will apply.
“ What is my next step? Would I have to pay any penalties?”--> Penalties for not filing or late filing increase with time, ranging from $15 to $50 per form, so$45~ $150 for the three forgotten 1099s, not filed or incorrectly filed. So for simply not filing them at all, the penalty is $50 per form. On the other hand, if the IRS can show "intentional disregard" of the filing,then the minimum penalty is $100 per 1099 form. Your best bet is to file on time and make sure you have the recipient's correct name, address and ID number. If you are audited by the IRS and it discovers just 10 instances where you should have filed 1099s but intentionally did not, the penalties could be in the thousands of dollars.