Par. 15. Section 301.6726-1 is added to read as follows:
(a) Imposition of penalty —(1) General rule. A penalty of $500 is imposed under section 6726 of the Internal Revenue Code (Code) for each day that a person, required to file an information return under section 6039K of the Code (section 6039K return), fails to file such return under paragraph (a)(2) of this section. No more than one penalty will be imposed under this paragraph (a)(1) with respect to a single section 6039K return even though there may be more than one failure with respect to such return. See paragraph (b) of this section for the maximum penalty that may be imposed under this section with respect to any one section 6039K return. See paragraph (c) of this section for higher penalties if a failure is due to intentional disregard of the requirement to file timely correct information returns. See paragraph (d) of this section for inflation adjustments to penalty amounts. See § 301.6724-1(a)(1) for waiver of the penalty for a failure that is due to reasonable cause.
(2) Failures subject to the penalty —(i) Scope. The failures to which section 6726(a)(1) apply are—
(A) A failure to file the section 6039K return on or before the required filing date (failure to file timely); and
(B) A failure to include all the information required to be shown on the section 6039K return or including incorrect information (failure to include correct information).
(ii) Other rules. A failure to file timely includes a failure to file in the required manner, for example, electronically or in other machine-readable form as provided under section 6011(e) of the Code. A failure to include correct information under paragraph (a)(2)(i)(B) of this section encompasses a failure to include all information required by § 1.6039K-1(b) of this chapter, Form 8996, or any successor form, and any instructions to such form. A failure to include information in the correct format may be either a failure to file timely an information return or a failure to include correct information on the information return. For example, an error on an electronic submission to the Internal Revenue Service that prevents processing by the Internal Revenue Service may constitute a failure to file timely. However, if information is set forth on the wrong field of the electronic submission, that error may constitute a failure to file timely or a failure to include correct information, depending upon the extent of the failure.
(3) Termination of penalty when a correction made. The per-day penalty imposed under this paragraph (a) for any failure to file the section 6039K return will terminate on the day that the QOF files the section 6039K return (showing all the correct information required to be shown on the section 6039K return) as provided in § 1.6039K-1(g) of this chapter.
(4) Example. R is a corporation with gross assets that are not in excess of $10,000,000. R is a qualified opportunity fund required under section 6039K to file a section 6039K return each year. For calendar year 2026, R fails to file its section 6039K return by the March 15, 2027, due date for that return. On March 30, 2027, R files a complete and correct section 6039K return. Because the penalty under this paragraph (a) applies for each day for which the person required to file section 6039K return fails to file such return, R would be subject to a $7,500 penalty ($500 × 15 days).
(b) Limitation on penalties —(1) In general. Except as provided in paragraph (b)(2) of this section, the total penalty amount imposed on any person under paragraph (a) of this section for any failure under paragraph (a)(2) of this section with respect to a single section 6039K return may not exceed $10,000.
(2) Higher limitation on the maximum penalty for Large QOFs. In the case of any failure under paragraph (a)(2) of this section with respect to a single section 6039K return required to be filed by a QOF the gross assets of which (determined on the last day of the QOF's taxable year) are in excess of $10,000,000, the total penalty amount imposed under paragraph (a)(2) of this section may not exceed $50,000.
(c) Higher penalty for intentional disregard of requirement to file timely correct information return —(1) Application of section 6726(a). If a failure described in paragraph (a)(2) of this section is due to intentional disregard of the requirement to file timely or to include correct information on a return, the penalty amount imposed under paragraph (a)(1) of this section must be determined under paragraph (c)(4) of this section.
(2) Meaning of intentional disregard. A failure is due to intentional disregard if it is a knowing or willful—
(i) Failure to file timely; or
(ii) Failure to include correct information. Whether a person knowingly or willfully fails to file timely or fails to include correct information is determined on the basis of all the facts and circumstances in the particular case.
(3) Facts and circumstances considered. The facts and circumstances that are considered in determining whether a failure is due to intentional disregard include, but are not limited to—
(i) Whether the failure to file timely or the failure to include correct information is part of a pattern of conduct by the person who filed the information return of repeatedly failing to file timely or repeatedly failing to include correct information;
(ii) Whether correction was promptly made upon discovery of the failure;
(iii) Whether the filer corrects a failure to file or a failure to include correct information within 30 days after the date of any written request from the IRS to file or to correct; and
(iv) Whether the amount of the information reporting penalties is less than the cost of complying with the requirement to file timely or to include correct information on an information return.
(4) Amount of the penalty. If one or more failures to file timely or to include correct information are due to intentional disregard of the requirement to file timely or to include correct information, then, with respect to each failure determined under this paragraph (c)—
(i) The per-day penalty set forth in paragraph (a)(1) of this section applies by substituting “$2,500” for “$500”;
(ii) The limitation on penalties set forth in paragraph (b)(1) of this section applies by substituting “$50,000” for “$10,000”; and
(iii) The higher limitation on the maximum penalty for Large QOFs set forth in paragraph (b)(2) of this section applies by substituting “$250,000” for “$50,000”;
(d) Adjustment for inflation. Each of the dollar amounts under paragraphs (a)(1), (b)(1) and (2), and (c)(4)(i) through (iii) of this section will be adjusted for inflation pursuant to section 6726(d).
(e) Applicability date. This section applies with respect to information returns required to be filed by corporations (without regard to extensions of the filer's annual tax return) and partnerships (without regard to extensions of the filer's annual return) on or after [date of publication of final regulations in the Federal Register ].