26 U.S.C. § 6722 | Failure to furnish correct payee statements

(a)

Imposition of penalty

(1)

General rule

In the case of each failure described in paragraph (2) by any person with respect to a payee statement, such person shall pay a penalty of $250 for each statement 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.

(2)

Failures subject to penalty

For purposes of paragraph (1), the failures described in this paragraph are—

(A)

any failure to furnish a payee statement on or before the date prescribed therefor to the person to whom such statement is required to be furnished, and

(B)

any failure to include all of the information required to be shown on a payee statement or the inclusion of incorrect information.

(b)

Reduction where correction in specified period

(1)

Correction within 30 days

If any failure described in subsection (a)(2) is corrected on or before the day 30 days after the date prescribed for furnishing such statement—

(A)

the penalty imposed by subsection (a) shall be $50 in lieu of $250, and

(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.

(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 date prescribed for furnishing such statement occurs—

(A)

the penalty imposed by subsection (a) shall be $100 in lieu of $250, and

(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.

(c)

Exception for de minimis failures

(1)

In general

If—

(A)

a payee statement is furnished to the person to whom such statement is required to be furnished,

(B)

there is a failure described in subsection (a)(2)(B) (determined after the application of section 6724(a)) with respect to such statement, and

(C)

such failure is corrected on or before August 1 of the calendar year in which the date prescribed for furnishing such statement occurs,

for purposes of this section, such statement shall be treated as having been furnished with all of the correct required information.

(2)

Limitation

The number of payee statements 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 payee statements required to be furnished by the person during the calendar year.

(3)

Safe harbor for certain de minimis errors

(A)

In general

If, with respect to any payee statement—

(i)

there are 1 or more failures described in subsection (a)(2)(B) relating to an incorrect dollar amount,

(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 payee statement differs from the correct amount by more than $25,

then no correction shall be required and, for purposes of this section, such statement shall be treated as having been furnished with all of the correct required information.

(B)

Exception

Subparagraph (A) shall not apply to any payee statement if the person to whom such statement is required to be furnished makes an election (at such time and in such manner as the Secretary may prescribe) that subparagraph (A) not apply with respect to such statement.

(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

(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—

(A)

subsection (a)(1) shall be applied by substituting “$1,000,000” for “$3,000,000”,

(B)

subsection (b)(1)(B) shall be applied by substituting “$175,000” for “$500,000”, and

(C)

subsection (b)(2)(B) shall be applied by substituting “$500,000” for “$1,500,000”.

(2)

Gross receipts test

A person meets the gross receipts test of this paragraph if such person meets the gross receipts test of section 6721(d)(2).

(e)

Penalty in case of intentional disregard

If 1 or more failures to which subsection (a) applies are due to intentional disregard of the requirement to furnish a payee statement (or the correct information reporting requirement), then, with respect to each such failure—

(1)

subsections (b), (c), and (d) shall not apply,

(2)

the penalty imposed under subsection (a)(1) shall be $500, or, if greater—

(A)

in the case of a payee statement other than a statement required under section 6045(b), 6041A(e) (in respect of a return required under section 6041A(b)), 6050H(d), 6050J(e), 6050K(b), or 6050L(c), 10 percent of the aggregate amount of the items required to be reported correctly, or

(B)

in the case of a payee statement required under section 6045(b), 6050K(b), or 6050L(c), 5 percent of the aggregate amount of the items required to be reported correctly, and

(3)

in the case of any penalty determined under paragraph (2)—

(A)

the $3,000,000 limitation under subsection (a) shall not apply, and

(B)

such penalty shall not be taken into account in applying such limitation to penalties not determined under paragraph (2).

(f)

Adjustment for inflation

(1)

In general

In the case of any failure relating to a statement required to be furnished in a calendar year beginning after 2014, each of the dollar amounts under subsections (a), (b), (d)(1), 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.

(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

(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.

Pub. L. 99–514, title XV, § 1501(a)Oct. 22, 1986100 Stat. 2733 Pub. L. 101–239, title VII, § 7711(a)Dec. 19, 1989103 Stat. 2390 Pub. L. 111–240, title II, § 2102(g)Sept. 27, 2010124 Stat. 2562 Pub. L. 113–295, div. A, title II, § 207(a)(2)Dec. 19, 2014128 Stat. 4027 Pub. L. 114–27, title VIII, § 806(e)June 29, 2015129 Stat. 417 Pub. L. 114–113, div. Q, title II, § 202(b)Dec. 18, 2015129 Stat. 3077 Pub. L. 115–97, title I, § 11002(d)(1)(QQ)Dec. 22, 2017131 Stat. 2061 Pub. L. 115–141, div. U, title I, § 101(f)(1)Mar. 23, 2018132 Stat. 1161(Added , , ; amended , , ; , , ; , (3), div. B, title II, § 208(g), , , 4028, 4074; , , ; , , ; , , ; , title IV, § 401(a)(299)(G), , , 1198.)

Inflation Adjusted Items for Certain Years

section 1 of this titleFor inflation adjustment of certain items in this section, see Revenue Procedures listed in a table under .

Editorial Notes

Amendments

Pub. L. 115–141, § 101(f)(1)(B)2018—Subsec. (c)(3)(A). , substituted “furnished” for “filed” in concluding provisions.

Pub. L. 115–141, § 101(f)(1)(A)Subsec. (c)(3)(A)(iii). , substituted “the payee statement” for “any information return”.

Pub. L. 115–141, § 401(a)(299)(G)Subsec. (f)(1). , inserted “an amount equal to” after “increased by” and “for the calendar year” after “section 1(f)(3)”.

Pub. L. 115–972017—Subsec. (f)(1). substituted “for ‘calendar year 2016’ in subparagraph (A)(ii)” for “for ‘calendar year 1992’ in subparagraph (B)”.

Pub. L. 114–27, § 806(e)(1)2015—Subsec. (a)(1). , substituted “$250” for “$100” and “$3,000,000” for “$1,500,000”.

Pub. L. 114–27, § 806(e)(2)(A)(i)Subsec. (b)(1)(A). , (ii), substituted “$50” for “$30” and “$250” for “$100”.

Pub. L. 114–27, § 806(e)(2)(A)(iii)Subsec. (b)(1)(B). , substituted “$500,000” for “$250,000”.

Pub. L. 114–27, § 806(e)(2)(B)(i)Subsec. (b)(2)(A). , (ii), substituted “$100” for “$60” and “$250” for “$100”.

Pub. L. 114–27, § 806(e)(2)(B)(iii)Subsec. (b)(2)(B). , substituted “$1,500,000” for “$500,000”.

Pub. L. 114–113Subsec. (c)(3). added par. (3).

Pub. L. 114–27, § 806(e)(3)(A)Subsec. (d)(1)(A). , substituted “$1,000,000” for “$500,000” and “$3,000,000” for “$1,500,000”.

Pub. L. 114–27, § 806(e)(3)(B)Subsec. (d)(1)(B). , substituted “$175,000” for “$75,000” and “$500,000” for “$250,000”.

Pub. L. 114–27, § 806(e)(3)(C)Subsec. (d)(1)(C). , substituted “$500,000” for “$200,000” and “$1,500,000” for “$500,000”.

Pub. L. 114–27, § 806(e)(4)(A)Subsec. (e)(2). , substituted “$500” for “$250” in introductory provisions.

Pub. L. 114–27, § 806(e)(4)(B)Subsec. (e)(3)(A). , substituted “$3,000,000” for “$1,500,000”.

Pub. L. 113–295, § 207(a)(2)2014—Subsecs. (b)(1), (2), (c)(1)(C). , substituted “the date prescribed for furnishing such statement” for “the required filing date”.

Pub. L. 113–295, § 207(a)(3)Subsec. (c)(2)(B). , substituted “furnished” for “filed”.

Pub. L. 113–295, § 208(g)Subsec. (f)(1). , substituted “In the case of any failure relating to a statement required to be furnished in a calendar year beginning after 2014” for “For each fifth calendar year beginning after 2012”.

Pub. L. 111–2402010— amended section generally. Prior to amendment, section related to: in subsec. (a), general rule for imposition of penalty for failure to furnish correct payee statements; in subsec. (b), failures subject to penalty; and, in subsec. (c), penalty in case of intentional disregard.

Pub. L. 101–2391989— substituted “correct” for “certain” in section catchline and amended text generally, substituting subsecs. (a) to (c) for former subsec. (a) stating general rule and subsec. (b) relating to failure to notify partnership of exchange of partnership interest.

Statutory Notes and Related Subsidiaries

Effective Date of 2018 Amendment

section 101(f)(1) of Pub. L. 115–141 Pub. L. 114–113 section 101(s) of Pub. L. 115–141 section 24 of this titleAmendment by effective as if included in the provision of the Protecting Americans from Tax Hikes Act of 2015, div. Q of , to which such amendment relates, see , set out as a note under .

Effective Date of 2017 Amendment

Pub. L. 115–97Dec. 31, 2017section 11002(e) of Pub. L. 115–97 section 1 of this titleAmendment by applicable to taxable years beginning after , see , set out as a note under .

Effective Date of 2015 Amendment

Pub. L. 114–113Dec. 31, 2016section 202(e) of Pub. L. 114–113 section 6045 of this titleAmendment by applicable to returns required to be filed, and payee statements required to be provided, after , see , set out as a note under .

Pub. L. 114–27Dec. 31, 2015section 806(f) of Pub. L. 114–27 section 6721 of this titleAmendment by applicable with respect to returns and statements required to be filed after , see , set out as a note under .

Effective Date of 2014 Amendment

Pub. L. 113–295, div. A, title II, § 207(b)Dec. 19, 2014128 Stat. 4028

section 6721 of this title Pub. L. 111–240, title II“The amendments made by this section [amending this section and provisions set out as a note under ] shall take effect as if included in the provision of the Creating Small Business Jobs Act of 2010 [] to which they relate.”

, , , provided that:

section 208(g) of Pub. L. 113–295Dec. 31, 2014section 208(h) of Pub. L. 113–295 section 6651 of this titleAmendment by applicable to returns required to be filed, and statements required to be furnished, after , see , set out as a note under .

Effective Date of 2010 Amendment

Pub. L. 111–240Jan. 1, 2011section 2102(h) of Pub. L. 111–240 section 6721 of this titleAmendment by applicable with respect to information returns required to be filed, and payee statements required to be furnished, on or after , see , set out as a note under .

Effective Date of 1989 Amendment

Pub. L. 101–239Dec. 31, 1989section 7711(c) of Pub. L. 101–239 section 6721 of this titleAmendment by applicable to returns and statements the due date for which (determined without regard to extensions) is after , see , set out as a note under .

Effective Date

Dec. 31, 1986section 1501(e) of Pub. L. 99–514 section 6721 of this titleSection applicable to returns the due date for which (determined without regard to extensions) is after , see , set out as a note under .