26 U.S. Code § 6721 - Failure to file correct information returns

§ 6721.
Failure to file correct information returns
(a) Imposition of penalty
(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.

(2) Failures subject to penaltyFor purposes of paragraph (1), the failures described in this paragraph are—
(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.
(b) Reduction where correction in specified period
(1) Correction within 30 daysIf any failure described in subsection (a)(2) is corrected on or before the day 30 days after the required filing date—
(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 1If 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—
(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 to include all required information
(1) In generalIf—
(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
(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.
(2) LimitationThe 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.
(d) Lower limitations for persons with gross receipts of not more than $5,000,000
(1) In generalIf 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) 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.

(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 disregardIf 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—
(1)
subsections (b), (c), and (d) shall not apply,
(2) the penalty imposed under subsection (a) shall be $500, or, if greater—
(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
(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 (or any similar limitation under subsection (b)) to penalties not determined under paragraph (2).
(f) Adjustment for inflation
(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 such dollar amount multiplied by the cost-of-living adjustment determined under section 1(f)(3) determined by substituting “calendar year 2011” for “calendar year 1992” in subparagraph (B) thereof.

(2) RoundingIf 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.
Amendments

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

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

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

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

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

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

Subsec. (d)(1)(B). Pub. L. 114–27, § 806(c)(2), substituted “$175,000” for “$75,000” and “$500,000” for “$250,000”.

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

Subsec. (e)(2). Pub. L. 114–27, § 806(d)(1), substituted “$500” for “$250”.

Subsec. (e)(3)(A). Pub. L. 114–27, § 806(d)(2), substituted “$3,000,000” for “$1,500,000”.

2014—Subsec. (f)(1). 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”.

2010—Subsec. (a)(1). Pub. L. 111–240, § 2102(a), substituted “$100” for “$50” and “$1,500,000” for “$250,000”.

Subsec. (b)(1)(A). Pub. L. 111–240, § 2102(a)(1), (b)(1), substituted “$30” for “$15” and “$100” for “$50”.

Subsec. (b)(1)(B). Pub. L. 111–240, § 2102(b)(2), substituted “$250,000” for “$75,000”.

Subsec. (b)(2)(A). Pub. L. 111–240, § 2102(a)(1), (c)(1), substituted “$60” for “$30” and “$100” for “$50”.

Subsec. (b)(2)(B). Pub. L. 111–240, § 2102(c)(2), substituted “$500,000” for “$150,000”.

Subsec. (d)(1). Pub. L. 111–240, § 2102(d)(2), substituted “such calendar year” for “such taxable year” in introductory provisions.

Subsec. (d)(1)(A). Pub. L. 111–240, § 2102(a)(2), (d)(1)(A), substituted “$500,000” for “$100,000” and “$1,500,000” for “$250,000”.

Subsec. (d)(1)(B). Pub. L. 111–240, § 2102(b)(2), (d)(1)(B), substituted “$75,000” for “$25,000” and “$250,000” for “$75,000”.

Subsec. (d)(1)(C). Pub. L. 111–240, § 2102(c)(2), (d)(1)(C), substituted “$200,000” for “$50,000” and “$500,000” for “$150,000”.

Subsec. (e)(2). Pub. L. 111–240, § 2102(e), substituted “$250” for “$100” in introductory provisions.

Subsec. (e)(3)(A). Pub. L. 111–240, § 2102(a)(2), substituted “$1,500,000” for “$250,000”.

Subsec. (f). Pub. L. 111–240, § 2102(f), added subsec. (f).

2006—Subsec. (e)(2)(D). 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.

1990—Subsec. (e)(2). 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).

1989—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.

1988—Subsec. (b)(1)(A). 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”.

Effective Date of 2015 Amendment

Pub. L. 114–27, title VIII, § 806(f), June 29, 2015, 129 Stat. 418, provided that:

“The amendments made by this section [amending this section and section 6722 of this title] shall apply with respect to returns and statements required to be filed after December 31, 2015.”

Effective Date of 2014 Amendment

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

Effective Date of 2010 Amendment

Pub. L. 111–240, title II, § 2102(h), Sept. 27, 2010, 124 Stat. 2564, as amended by Pub. L. 113–295, div. A, title II, § 207(a)(1), Dec. 19, 2014, 128 Stat. 4027, provided that:

“The amendments made by this section [amending this section and section 6722 of this title] shall apply with respect to information returns required to be filed, and payee statements required to be furnished, on or after January 1, 2011.”

Effective Date of 2006 Amendment

Amendment by Pub. L. 109–280 applicable to acquisitions of contracts after Aug. 17, 2006, see section 1211(d) of Pub. L. 109–280, set out as an Effective Date note under section 6050V of this title.

Effective Date of 1990 Amendment

Amendment by Pub. L. 101–508 applicable to amounts received after Nov. 5, 1990, see section 11318(e)(1) of Pub. L. 101–508, set out as a note under section 6050I of this title.

Effective Date of 1989 Amendment

Pub. L. 101–239, title VII, § 7711(c), Dec. 19, 1989, 103 Stat. 2393, provided that:

“The amendments made by this section [amending this section and December 31, 1989.”sections 6722 to 6724 and 7205 of this title and repealingsections 6017A, 6676, and 6687 of this title]

Effective Date of 1988 Amendment

Amendment by Pub. L. 100–690 applicable to actions after Nov. 18, 1988, see section 7601(a)(3) of Pub. L. 100–690, set out as a note under section 6050I of this title.

Effective Date

Pub. L. 99–514, title XV, § 1501(e), Oct. 22, 1986, 100 Stat. 2741, provided that:

“The amendments made by this section [enacting this section and section 6678 of this title] shall apply to returns the due date for which (determined without regard to extensions) is after December 31, 1986, except that the amendments made by subsections (c)(2), (c)(3), and (c)(5) [amending sections 6042, 6044, and 6049 of this title] shall apply to returns the due [date] for which (determined without regard to extensions) is after the date of the enactment of this Act [Oct. 22, 1986].”sections 6722 to 6724 of this title, amendingsections 219, 6031, 6033 to 6034A, 6041, 6042 to 6045, 6047, 6049, 6050A to 6050C, 6050E to 6050I, 6050K, 6052, 6057, 6058, 6652, and 6676 of this title,

Written determinations for this section

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