Internal Revenue Code:Sec. 6721. Failure to file correct information returns
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Location in Internal Revenue Code
TITLE 26 - INTERNAL REVENUE CODE
Subtitle F - Procedure and Administration
CHAPTER 68 - ADDITIONS TO THE TAX, ADDITIONAL AMOUNTS, AND
ASSESSABLE PENALTIES
Subchapter B - Assessable Penalties
PART II - FAILURE TO COMPLY WITH CERTAIN INFORMATION REPORTING
REQUIREMENTS
Statute
Sec. 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 $50 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
$250,000.
(2) Failures subject to penalty
For 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 days
If 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 $15 in
lieu of $50, and
(B) the total amount imposed on the person for all such
failures during any calendar year which are so corrected shall
not exceed $75,000.
(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 required filing date
occurs -
(A) the penalty imposed by subsection (a) shall be $30 in
lieu of $50, and
(B) the total amount imposed on the person for all such
failures during the calendar year which are so corrected shall
not exceed $150,000.
(c) Exception for de minimis failures to include all required
information
(1) In general
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
(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) 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.
(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 taxable year -
(A) subsection (a)(1) shall be applied by substituting
''$100,000'' for ''$250,000'',
(B) subsection (b)(1)(B) shall be applied by substituting
''$25,000'' for ''$75,000'', and
(C) subsection (b)(2)(B) shall be applied by substituting
''$50,000'' for ''$150,000''.
(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 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 -
(1) subsections (b), (c), and (d) shall not apply,
(2) the penalty imposed under subsection (a) shall be $100, 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 $250,000 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).
Sources
(Added Pub. L. 99-514, title XV, Sec. 1501(a), Oct. 22, 1986, 100
Stat. 2732; amended Pub. L. 100-690, title VII, Sec. 7601(a)(2)(A),
Nov. 18, 1988, 102 Stat. 4503; Pub. L. 101-239, title VII, Sec.
7711(a), Dec. 19, 1989, 103 Stat. 2388; Pub. L. 101-508, title XI,
Sec. 11318(b), Nov. 5, 1990, 104 Stat. 1388-459.)
Miscellaneous
AMENDMENTS
Pension Protection Act of 2006 (P.L. 109-280)
Section 1211(b)(2) Intentional disregard.--Section 6721(e)(2) is amended by
striking ``or'' at the end of subparagraph (B), by striking
``and'' at the end of subparagraph (C) and inserting ``or'', and
by adding at the end the following new subparagraph:
``(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''.
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 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
Section 7711(c) of Pub. L. 101-239 provided that: ''The
amendments made by this section (amending this section and sections
6722 to 6724 and 7205 of this title and repealing sections 6017A,
6676, and 6687 of this title) shall apply to returns and statements
the due date for which (determined without regard to extensions) is
after December 31, 1989.''
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
Section 1501(e) of Pub. L. 99-514 provided that: ''The amendments
made by this section (enacting this section and sections 6722 to
6724 of this title, amending sections 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, and
repealing 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).''
References
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 1060, 6047, 6724 of this
title.
