Amended 1989
- 1989 Pub. L. 101-239 Pub. L. 101–239 substituted “correct” for “certain” in section catchline and amended text generally, substituting subsecs. (a) to (e) for former subsec. (a) stating general rule and subsec. (b) relating to penalty in case of intentional disregard.
Cases: Gerald B. Lefcourt, P.C. v. United States, 125 F.3d 79 (2d Cir. 1997)
Forms: Form 1099-INT; Form 8300; Form 1099-B; Form 1099-DIV
Final rules 13
(a) Imposition of penalty
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(1) In general In the case of a failure described in paragraph (2) by any person with respect to an information return, such person shall pay a penalty of $250 for each return with respect to which such a failure occurs, but the total amount imposed on such person for all such failures during any calendar year shall not exceed $3,000,000.
Amended 2010, 2015
- 2015 Pub. L. 114-27 Pub. L. 114–27, § 806(a), substituted “$250” for “$100” and “$3,000,000” for “$1,500,000”.
- 2010 Pub. L. 111-240 Pub. L. 111–240, § 2102(a), substituted “$100” for “$50” and “$1,500,000” for “$250,000”.
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(2) Failures subject to penalty For purposes of paragraph (1), the failures described in this paragraph are—
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(A) any failure to file an information return with the Secretary on or before the required filing date, and
(B) any failure to include all of the information required to be shown on the return or the inclusion of incorrect information.
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(b) Reduction where correction in specified period
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(1) Correction within 30 days If any failure described in subsection (a)(2) is corrected on or before the day 30 days after the required filing date—
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(A) the penalty imposed by subsection (a) shall be $50 in lieu of $250, and
Amended 1988, 2010, 2015
- 2015 Pub. L. 114-27 Pub. L. 114–27, § 806(b)(1)(A), (B), substituted “$50” for “$30” and “$250” for “$100”.
- 2010 Pub. L. 111-240 Pub. L. 111–240, § 2102(a)(1), (b)(1), substituted “$30” for “$15” and “$100” for “$50”.
- 1988 Pub. L. 100-690 Pub. L. 100–690 inserted “(or, if greater, in the case of a return filed under section 6050I, 10 percent of the taxable income derived from the transaction)” after “reported”.
(B) the total amount imposed on the person for all such failures during any calendar year which are so corrected shall not exceed $500,000.
Amended 2010, 2015
- 2015 Pub. L. 114-27 Pub. L. 114–27, § 806(b)(1)(C), substituted “$500,000” for “$250,000”.
- 2010 Pub. L. 111-240 Pub. L. 111–240, § 2102(b)(2), substituted “$250,000” for “$75,000”.
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(2) Failures corrected on or before August 1 If any failure described in subsection (a)(2) is corrected after the 30th day referred to in paragraph (1) but on or before August 1 of the calendar year in which the required filing date occurs—
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(A) the penalty imposed by subsection (a) shall be $100 in lieu of $250, and
Amended 2010, 2015
- 2015 Pub. L. 114-27 Pub. L. 114–27, § 806(b)(2)(A), (B), substituted “$100” for “$60” and “$250” for “$100”.
- 2010 Pub. L. 111-240 Pub. L. 111–240, § 2102(a)(1), (c)(1), substituted “$60” for “$30” and “$100” for “$50”.
(B) the total amount imposed on the person for all such failures during the calendar year which are so corrected shall not exceed $1,500,000.
Amended 2010, 2015
- 2015 Pub. L. 114-27 Pub. L. 114–27, § 806(b)(2)(C), substituted “$1,500,000” for “$500,000”.
- 2010 Pub. L. 111-240 Pub. L. 111–240, § 2102(c)(2), substituted “$500,000” for “$150,000”.
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(c) Exceptions for certain de minimis failures
Amended 2015
- 2015 Pub. L. 114-113 Pub. L. 114–113, § 202(d)(1), substituted “Exceptions for certain de minimis failures” for “Exception for de minimis failures to include all required information” in heading.
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(1) Exception for de minimis failure to include all required information If—
(A) an information return is filed with the Secretary,
(B) there is a failure described in subsection (a)(2)(B) (determined after the application of section 6724(a)) with respect to such return, and needs § 6721(a)(2)(B)
(C) such failure is corrected on or before August 1 of the calendar year in which the required filing date occurs,
for purposes of this section, such return shall be treated as having been filed with all of the correct required information.
Amended 2015
- 2015 Pub. L. 114-113 Pub. L. 114–113, § 202(d)(2), substituted “Exception for de minimis failure to include all required information” for “In general” in heading.
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(2) Limitation The number of information returns to which paragraph (1) applies for any calendar year shall not exceed the greater of—
(A) 10, or
(B) one-half of 1 percent of the total number of information returns required to be filed by the person during the calendar year.
(3) Safe harbor for certain de minimis errors
Amended 2015
- 2015 Pub. L. 114-113 Pub. L. 114–113, § 202(a), added par. (3).
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(A) In general If, with respect to an information return filed with the Secretary—
(i) there are 1 or more failures described in subsection (a)(2)(B) relating to an incorrect dollar amount, needs § 6721(a)(2)(B)
(ii) no single amount in error differs from the correct amount by more than $100, and
(iii) no single amount reported for tax withheld on the information return differs from the correct amount by more than $25,
Amended 2018
- 2018 Pub. L. 115-141 Pub. L. 115–141, § 101(f)(2), substituted “the information return” for “any information return”.
then no correction shall be required and, for purposes of this section, such return shall be treated as having been filed with all of the correct required information.
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(B) Exception Subparagraph (A) shall not apply with respect to any incorrect dollar amount to the extent that such error relates to an amount with respect to which an election is made under section 6722(c)(3)(B).
(C) Regulatory authority The Secretary may issue regulations to prevent the abuse of the safe harbor under this paragraph, including regulations providing that this paragraph shall not apply to the extent necessary to prevent any such abuse.
(d) Lower limitations for persons with gross receipts of not more than $5,000,000
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(1) In general If any person meets the gross receipts test of paragraph (2) with respect to any calendar year, with respect to failures during such calendar year—
Amended 2010
- 2010 Pub. L. 111-240 Pub. L. 111–240, § 2102(d)(2), substituted “such calendar year” for “such taxable year” in introductory provisions.
(A) subsection (a)(1) shall be applied by substituting “$1,000,000” for “$3,000,000”,
Amended 2010, 2015
- 2015 Pub. L. 114-27 Pub. L. 114–27, § 806(c)(1), substituted “$1,000,000” for “$500,000” and “$3,000,000” for “$1,500,000”.
- 2010 Pub. L. 111-240 Pub. L. 111–240, § 2102(a)(2), (d)(1)(A), substituted “$500,000” for “$100,000” and “$1,500,000” for “$250,000”.
(B) subsection (b)(1)(B) shall be applied by substituting “$175,000” for “$500,000”, and
Amended 2010, 2015
- 2015 Pub. L. 114-27 Pub. L. 114–27, § 806(c)(2), substituted “$175,000” for “$75,000” and “$500,000” for “$250,000”.
- 2010 Pub. L. 111-240 Pub. L. 111–240, § 2102(b)(2), (d)(1)(B), substituted “$75,000” for “$25,000” and “$250,000” for “$75,000”.
(C) subsection (b)(2)(B) shall be applied by substituting “$500,000” for “$1,500,000”.
Amended 2010, 2015
- 2015 Pub. L. 114-27 Pub. L. 114–27, § 806(c)(3), substituted “$500,000” for “$200,000” and “$1,500,000” for “$500,000”.
- 2010 Pub. L. 111-240 Pub. L. 111–240, § 2102(c)(2), (d)(1)(C), substituted “$200,000” for “$50,000” and “$500,000” for “$150,000”.
(2) Gross receipts test
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(A) In general A person meets the gross receipts test of this paragraph for any calendar year if the average annual gross receipts of such person for the most recent 3 taxable years ending before such calendar year do not exceed $5,000,000.
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(B) Certain rules made applicable For purposes of subparagraph (A), the rules of paragraphs (2) and (3) of section 448(c) shall apply.
(e) Penalty in case of intentional disregard If 1 or more failures described in subsection (a)(2) are due to intentional disregard of the filing requirement (or the correct information reporting requirement), then, with respect to each such failure—
Cases: Bickham Lincoln-Mercury Incorporated v. United States, 168 F.3d 790 (5th Cir. 1999)
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(1) subsections (b), (c), and (d) shall not apply,
(2) the penalty imposed under subsection (a) shall be $500, or, if greater—
Amended 1990, 2010, 2015
- 2015 Pub. L. 114-27 Pub. L. 114–27, § 806(d)(1), substituted “$500” for “$250”.
- 2010 Pub. L. 111-240 Pub. L. 111–240, § 2102(e), substituted “$250” for “$100” in introductory provisions.
- 1990 Pub. L. 101-508 Pub. L. 101–508 inserted “6050I,” after “6050H,” and struck out “or” at end of subpar. (A), substituted “or” for “and” at end of subpar. (B), and added subpar. (C).
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(A) in the case of a return other than a return required under section 6045(a), 6041A(b), 6050H, 6050I, 6050J, 6050K, or 6050L, 10 percent of the aggregate amount of the items required to be reported correctly,
(B) in the case of a return required to be filed by section 6045(a), 6050K, or 6050L, 5 percent of the aggregate amount of the items required to be reported correctly,
(C) in the case of a return required to be filed under section 6050I(a) with respect to any transaction (or related transactions), the greater of—
(i) $25,000, or
(ii) the amount of cash (within the meaning of section 6050I(d)) received in such transaction (or related transactions) to the extent the amount of such cash does not exceed $100,000, or
(D) in the case of a return required to be filed under section 6050V, 10 percent of the value of the benefit of any contract with respect to which information is required to be included on the return, and
Amended 2006
- 2006 Pub. L. 109-280 Pub. L. 109–280, which directed the addition of subpar. (D) to section 6721(e)(2), without specifying the act to be amended, was executed by making the addition to subsec. (e)(2) of this section, which is section 6721 of the Internal Revenue Code of 1986, to reflect the probable intent of Congress.
(3) in the case of any penalty determined under paragraph (2)—
(A) the $3,000,000 limitation under subsection (a) shall not apply, and
Amended 2010, 2015
- 2015 Pub. L. 114-27 Pub. L. 114–27, § 806(d)(2), substituted “$3,000,000” for “$1,500,000”.
- 2010 Pub. L. 111-240 Pub. L. 111–240, § 2102(a)(2), substituted “$1,500,000” for “$250,000”.
(B) such penalty shall not be taken into account in applying such limitation (or any similar limitation under subsection (b)) to penalties not determined under paragraph (2).
(f) Adjustment for inflation
Amended 2010
- 2010 Pub. L. 111-240 Pub. L. 111–240, § 2102(f), added subsec. (f).
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(1) In general In the case of any failure relating to a return required to be filed in a calendar year beginning after 2014, each of the dollar amounts under subsections (a), (b), (d) (other than paragraph (2)(A) thereof), and (e) shall be increased by an amount equal to such dollar amount multiplied by the cost-of-living adjustment determined under section 1(f)(3) for the calendar year determined by substituting “calendar year 2011” for “calendar year 2016” in subparagraph (A)(ii) thereof.
Amended 2014, 2017, 2018
- 2018 Pub. L. 115-141 Pub. L. 115–141, § 401(a)(299)(F), inserted “an amount equal to” after “increased by” and “for the calendar year” after “section 1(f)(3)”.
- 2017 Pub. L. 115-97 Pub. L. 115–97 substituted “for ‘calendar year 2016’ in subparagraph (A)(ii)” for “for ‘calendar year 1992’ in subparagraph (B)”.
- 2014 Pub. L. 113-295 Pub. L. 113–295 substituted “In the case of any failure relating to a return required to be filed in a calendar year beginning after 2014” for “For each fifth calendar year beginning after 2012”.
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(2) Rounding If any amount adjusted under paragraph (1)—
(A) is not less than $75,000 and is not a multiple of $500, such amount shall be rounded to the next lowest multiple of $500, and
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(B) is not described in subparagraph (A) and is not a multiple of $10, such amount shall be rounded to the next lowest multiple of $10.