26 U.S.C. § 6722 — Failure to furnish correct payee statements
submitted 40 years ago by Pub. L. 99-514 to r/title-26-INTERNAL-REVENUE-CODE · 1,043 words · no verdicts yet
A person who fails to furnish a correct payee statement generally owes $250 per statement, with reduced penalties for prompt correction. The section sets caps, de minimis rules, intentional-disregard penalties, and inflation adjustments.
(a) Imposition. (1) For each failure in (2), a person owes $250 per affected payee statement*, capped at $3,000,000 for a calendar year. (2) Failures are not furnishing the statement by its deadline or omitting required information or including incorrect information.
(b) Correction. (1) Correction within 30 days reduces the amount to $50 and the applicable cap to $500,000. (2) Correction after 30 days but by August 1 reduces it to $100 and the cap to $1,500,000.
(c) De minimis. (1) If the statement was furnished, has a failure under (a)(2)(B) after section 6724(a), and is corrected by August 1, it is treated as correct. (2) The limit is the greater of 10 statements or one-half of 1 percent of required statements. (3) No correction is required for a dollar error of no more than $100, or a tax-withheld error of no more than $25. The safe harbor does not apply if the recipient elects otherwise, and the Secretary* may issue anti-abuse regulations.
(d) If the person’s average annual gross receipts for the latest three taxable years do not exceed $5,000,000, the caps become $1,000,000, $175,000, and $500,000 as specified in (a)(1), (b)(1)(B), and (b)(2)(B); the section 6721(d)(2) test applies.
(e) For intentional disregard, (b), (c), and (d) do not apply. The penalty is $500 or, if greater, 10 percent of correctly reportable items for most statements or 5 percent for statements under sections 6045(b), 6050K(b), or 6050L(c). The $3,000,000 cap does not apply to this penalty or count it against the cap for other penalties.
(f) For failures involving statements due after 2014, increase the dollar amounts in (a), (b), (d)(1), and (e) using the stated section 1(f)(3) cost-of-living adjustment with 2011 substituted for 2016. Round amounts of at least $75,000 down to $500 multiples and other amounts down to $10 multiples.
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.
For purposes of paragraph (1), the failures described in this paragraph are—
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
any failure to include all of the information required to be shown on a payee statement or the inclusion of incorrect information.
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—
the penalty imposed by subsection (a) shall be $50 in lieu of $250, and
the total amount imposed on the person for all such failures during any calendar year which are so corrected shall not exceed $500,000.
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—
the penalty imposed by subsection (a) shall be $100 in lieu of $250, and
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.
If—
a payee statement is furnished to the person to whom such statement is required to be furnished,
there is a failure described in subsection (a)(2)(B) (determined after the application of section 6724(a)) with respect to such statement, and
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.
The number of payee statements to which paragraph (1) applies for any calendar year shall not exceed the greater of—
10, or
one-half of 1 percent of the total number of payee statements required to be furnished by the person during the calendar year.
If, with respect to any payee statement—
there are 1 or more failures described in subsection (a)(2)(B) relating to an incorrect dollar amount,
no single amount in error differs from the correct amount by more than $100, and
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.
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.
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.
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—
subsection (a)(1) shall be applied by substituting “$1,000,000” for “$3,000,000”,
subsection (b)(1)(B) shall be applied by substituting “$175,000” for “$500,000”, and
subsection (b)(2)(B) shall be applied by substituting “$500,000” for “$1,500,000”.
A person meets the gross receipts test of this paragraph if such person meets the gross receipts test of section 6721(d)(2).
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—
subsections (b), (c), and (d) shall not apply,
the penalty imposed under subsection (a)(1) shall be $500, or, if greater—
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
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
in the case of any penalty determined under paragraph (2)—
the $3,000,000 limitation under subsection (a) shall not apply, and
such penalty shall not be taken into account in applying such limitation to penalties not determined under paragraph (2).
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.
If any amount adjusted under paragraph (1)—
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
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.
Source credit: (Added Pub. L. 99–514, title XV, § 1501(a), Oct. 22, 1986, 100 Stat. 2733; amended Pub. L. 101–239, title VII, § 7711(a), Dec. 19, 1989, 103 Stat. 2390; Pub. L. 111–240, title II, § 2102(g), Sept. 27, 2010, 124 Stat. 2562; Pub. L. 113–295, div. A, title II, § 207(a)(2), (3), div. B, title II, § 208(g), Dec. 19, 2014, 128 Stat. 4027, 4028, 4074; Pub. L. 114–27, title VIII, § 806(e), June 29, 2015, 129 Stat. 417; Pub. L. 114–113, div. Q, title II, § 202(b), Dec. 18, 2015, 129 Stat. 3077; Pub. L. 115–97, title I, § 11002(d)(1)(QQ), Dec. 22, 2017, 131 Stat. 2061; Pub. L. 115–141, div. U, title I, § 101(f)(1), title IV, § 401(a)(299)(G), Mar. 23, 2018, 132 Stat. 1161, 1198.)
- 1986Enacted · Pub. L. 99-514 · 100 Stat. 2733
- 1989Amended · Pub. L. 101-239 · 103 Stat. 2390
- 2010Amended · Pub. L. 111-240 · 124 Stat. 2562
- 2014Amended · Pub. L. 113-295 · 128 Stat. 4027, 4028, 4074
- 2015Amended · Pub. L. 114-27 · 129 Stat. 417
- 2015Amended · Pub. L. 114-113 · 129 Stat. 3077
- 2017Amended · Pub. L. 115-97 · 131 Stat. 2061
- 2018Amended · Pub. L. 115-141 · 132 Stat. 1161, 1198
A history note hasn’t been published yet. The record shows enactment by Pub. L. 99-514 on 1986-10-22.
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