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IRS Releases 2015 Inflation-Adjusted Items for Some Penalties

DEC. 17, 2015

Rev. Proc. 2016-11; 2016-2 I.R.B. 274

DATED DEC. 17, 2015
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Citations: Rev. Proc. 2016-11; 2016-2 I.R.B. 274

26 CFR 601.602: Tax forms and instructions.

(Also Part I, §§ 6651, 6652, 6695, 6698, 6699, 6721, 6722)

                           Table of Contents

 

 

                                                          Code Section

 

 _____________________________________________________________________

 

 

 SECTION 1. PURPOSE

 

 

 SECTION 2. LEGISLATIVE HISTORY

 

 

 SECTION 3. 2015 PENALTY ADJUSTED ITEMS

 

 

      .01 Failure to File Tax Return                          6651

 

      .02 Failure to file Certain Information                 6652

 

          Returns, Registration Statements, etc.

 

      .03 Other Assessable Penalties With Respect             6695

 

          to 6695 the Preparation of Tax Returns

 

          for Other Persons

 

      .04 Failure to File Partnership Return                  6698

 

      .05 Failure to File S Corporation Return                6699

 

      .06 Failure to File Correct Information                 6721

 

          Returns

 

      .07 Failure to Furnish Correct Payee                    6722

 

          Statements

 

 

 SECTION 4. CORRECTION OF SECTION 3.48(3) OF REV. PROC. 2015-53

 

 

 SECTION 5. EFFECTIVE DATE

 

 

 SECTION 6. DRAFTING INFORMATION

 

 

SECTION 1. PURPOSE

Rev. Proc. 2015-53, I.R.B. 2015-44, provides inflation-adjusted items for 2016 for certain Civil Penalties under the Internal Revenue Code (§§ 6651, 6652(c), 6695, 6698, 6699, 6721 and 6722) for returns and statements required to be filed after December 31, 2016. This revenue procedure sets forth inflation-adjusted items for 2015 for certain Civil Penalties under the Code (§§ 6651, 6652(c), 6695, 6698, 6699, 6721, and 6722) for returns and statements required to be filed after December 31, 2015. In addition, this revenue procedure corrects section 3.48(3), Failure to File Correct Information Returns, of Rev. Proc. 2015-53.

SECTION 2. LEGISLATIVE HISTORY

Section 2102 of the Small Business Jobs Act of 2010, Pub. L. 111-240, 124 Stat. 2504, provides that for each fifth calendar year beginning after 2012, the penalty under § 6721, Failure to File Correct Information Returns, and the penalty under § 6722, Failure to Furnish Correct Payee Statements, will be adjusted for inflation. Section 208 of the Tax Increase Prevention Act of 2014, Achieving a Better Life Experience (ABLE) Act, Pub. L. 113-295, 128 Stat. 4010, provides for inflation adjustments for certain Civil Penalties under the Code (§§ 6651, 6652(c), 6695, 6698, 6699, 6721, and 6722) for returns and statements required to be filed after December 31, 2014. For returns and statements required to be filed after December 31, 2015, Section 806 of the Trade Preferences Extension Act of 2015, Pub. L. 114-27, 129 Stat. 362, increased the tax penalties for failure to file correct information returns and furnish correct payee statements under §§ 6721 and 6722, respectively.

SECTION 3. 2015 PENALTY ADJUSTED ITEMS

.01 Failure to File Tax Return. For taxable years beginning in 2015, the amount of the additional tax under § 6651(a) for failure to file a tax return within 60 days of the due date of such return (determined with regard to any extensions of time for filing) shall not be less than the lesser of $135 or 100 percent of the amount required to shown as tax on such returns.

.02 Failure to File Certain Information Returns, Registration Statements, etc. For taxable years beginning in 2015, the penalty amounts under § 6652(c) are:

(1) for failure to file a return required under § 6033(a)(1) (relating to returns by exempt organization) or § 6012(a)(6) (relating to returns by political organizations):

                                                        Maximum

 

 Scenario                        Daily Penalty          Penalty

 

 _____________________________________________________________________

 

 

 Organization                         $20               Lessor of

 

 (§ 6652(c)(1)(A))                                      $10,000 or 5%

 

                                                        of gross

 

                                                        receipts of

 

                                                        the

 

                                                        organization

 

                                                        for the year.

 

 

 Organization with gross             $100               $50,500

 

 receipts exceeding $1,015,500

 

 (§ 6652(c)(1)(A))

 

 

 Managers (§ 6652(c)(1)(B))           $10               $5,000

 

 

 Public inspection of annual          $20               $10,000

 

 returns and reports

 

 (§ 6652(c)(1)(C))

 

 

 Public inspection of                 $20               No Limits

 

 applications for exemption

 

 and notice of status

 

 (§ 6652(c)(1)(D))

 

 

(2) for failure to file a return required under § 6034 (relating to returns by certain trust) or § 6043(b) (relating to terminations, etc., of exempt organizations):

                                                               Maximum

 

 Scenario                           Daily Penalty              Penalty

 

 _____________________________________________________________________

 

 

 Organization or trust                   $10                    $5,000

 

 (§ 6652(c)(2)(A))

 

 

 Managers (§ 6652(c)(2)(B))              $10                    $5,000

 

 

 Split-Interest Trust                    $20                   $10,000

 

 (§ 6652(c)(2)(C)(ii))

 

 

 Any trust with gross receipts          $100                   $50,500

 

 exceeding $253,500

 

 (§ 6652(c)(2)(C)(ii))

 

 

(3) for failure to file a disclosure required under § 6033(a)(2):

                                                               Maximum

 

 Scenario                           Daily Penalty              Penalty

 

 _____________________________________________________________________

 

 

 Taxexempt entity                       $100                   $50,500

 

 (§ 6652(c)(3)(A))

 

 

 Failure to comply with                 $100                   $10,000

 

 written demand

 

 (§ 6652(c)(3)(B)(ii))

 

 

.03 Other Assessable Penalties With Respect to the Preparation of Tax Returns for Other Persons. For taxable years beginning in 2015, the penalty amounts under § 6695 are:

                                    Per Return or             Maximum

 

 Scenario                           Claim for Refund          Penalty

 

 _____________________________________________________________________

 

 

 Failure to furnish copy to         $50                       $25,000

 

 taxpayer (§ 6695(a))

 

 

 Failure to sign return             $50                       $25,000

 

 (§ 6695(b))

 

 

 Failure to furnish                 $50                       $25,000

 

 identifying number

 

 (§ 6695(c))

 

 

 Failure to retain copy or          $50                       $25,000

 

 list (§ 6695(d))

 

 

 Failure to file correct            $50 per return or         $25,000

 

 information returns                item in return

 

 (§ 6695(e))

 

 

 Negotiation of check               $505 per check            No limit

 

 (§ 6695(f))

 

 

 Failure to be diligent in          $505                      No limit

 

 determining eligibility for

 

 earned income credit

 

 (§ 6695(g))

 

 

.04 Failure to File Partnership Return. For taxable years beginning in 2015, the dollar amount used to determine amount of the penalty under § 6698(b)(1) is $195.

.05 Failure to File S Corporation Return. For taxable years beginning in 2015, the dollar amount used to determine amount of the penalty under § 6699(b)(1) is $195.

.06 Failure to File Correct Information Returns. For taxable years beginning in 2015, the penalty amounts under § 6721 are:

(1) for persons with average annual gross receipts for the most recent three taxable years of more than $5,000,000, for failure to file correct information returns are:

                                                          Calendar

 

 Scenario                        Penalty Per Return       Year Maximum

 

 _____________________________________________________________________

 

 

 General Rule (§ 6721(a)(1))            $260              $3,178,500

 

 

 Corrected on or before 30               $50                $529,500

 

 days after required filing

 

 date (§ 6721(b)(1))

 

 

 Corrected after 30th day               $100              $1,589,000

 

 but on or before August 1

 

 (§ 6721(b)(2))

 

 

(2) for persons with average annual gross receipts for the most recent three taxable years of $5,000,000 or less, for failure to file correct information returns are:

                                                          Calendar

 

 Scenario                        Penalty Per Return       Year Maximum

 

 _____________________________________________________________________

 

 

 General Rule                           $260              $1,059,500

 

 (§ 6721(d)(1)(A))

 

 

 Corrected on or before 30               $50                $185,000

 

 days after required filing

 

 date (§ 6721(d)(1)(B))

 

 

 Corrected after 30th day               $100                $529,500

 

 but on or before August 1

 

 (§ 6721(d)(1)(C))

 

 

(3) for failure to file correct information returns due to intentional disregard of the filing requirement (or the correct information reporting requirement) are:

                                                          Calendar

 

 Scenario                        Penalty Per Return       Year Maximum

 

 _____________________________________________________________________

 

 

 Return other than a return      Greater of (i) $520,     No limit

 

 required to be filed under      or (ii) 10% of

 

 §§ 6045(a), 6041A(b), 6050H,    aggregate amount of

 

 6050I, 6050J, 6050K, or 6050L   items required to be

 

 (§ 6721(e)(2)(A))               reported correctly

 

 

 Return required to be filed     Greater of (i) $520,     No limit

 

 under §§ 6045(a), 6050K, or     or (ii) 5% of

 

 6050L (§ 6721(e)(2)(B))         aggregate amount of

 

                                 items required to be

 

                                 reported correctly

 

 

 Return required to be filed     Greater of (i)           No limit

 

 under § 6050I(a)                $26,480, or (ii)

 

 (§ 6721(e)(2)(C))               amount of cash

 

                                 received up to

 

                                 $105,500

 

 

 Return required to be filed     Greater of (i) $520,     No limit

 

 under § 6050V                   or (ii) 10% of the

 

 (§ 6721(e)(2)(D))               value of the benefit

 

                                 of any contract with

 

                                 respect to which

 

                                 information is

 

                                 required to be

 

                                 included on the

 

                                 return

 

 

.07 Failure to Furnish Correct Payee Statements. For taxable years beginning in 2015, the penalty amounts under § 6722 are:

(1) for persons with average annual gross receipts for the most recent three taxable years of more than $5,000,000, for failure to file correct payee statements are:

                                                          Calendar

 

 Scenario                        Penalty Per Return       Year Maximum

 

 _____________________________________________________________________

 

 

 General Rule (§ 6722(a)(1))             $260             $3,178,500

 

 

 Corrected on or before 30                $50               $529,500

 

 days after required filing

 

 date (§ 6722(b)(1))

 

 

 Corrected after 30th day                $100             $1,589,000

 

 but on or before August 1

 

 (§ 6722(b)(2))

 

 

(2) for persons with average annual gross receipts for the most recent 3 taxable years of $5,000,000 or less, for failure to file correct payee statements are:

                                                          Calendar

 

 Scenario                        Penalty Per Return       Year Maximum

 

 _____________________________________________________________________

 

 

 General Rule                           $260              $1,059,500

 

 (§ 6722(d)(1)(A))

 

 

 Corrected on or before 30               $50                $185,000

 

 days after required filing

 

 date (§ 6722(d)(1)(B))

 

 

 Corrected after 30th day               $100                $529,500

 

 but on or before August 1

 

 (§ 6722(d)(1)(C))

 

 

(3) for failure to file correct payee statements due to intentional disregard of the requirement to furnish a payee statement (or the correct information reporting requirement) are:

                                                          Calendar

 

 Scenario                        Penalty Per Return       Year Maximum

 

 _____________________________________________________________________

 

 

 Statement other than a          Greater of (i) $520,     No limit

 

 statement required under §§     or (ii) 10% of

 

 6045(b), 6041A(e)               aggregate amount of

 

 (in respect of a return         items required to be

 

 required under § 6041A(b)),     reported correctly

 

 6050H(d), 6050J(e), 6050K(b),

 

 or 6050L(c) (§ 6722(e)(2)(A))

 

 

 Payee statement required        Greater of (i) $520,     No limit

 

 under §§ 6045(b), 6050K(b),     or (ii) 5% of

 

 or 6050L(c)                     aggregate amount of

 

 (§ 6722(e)(2)(B))               items required to be

 

                                 reported correctly

 

 

SECTION 4. CORRECTION OF SECTION 3.48(3), FAILURE TO FILE CORRECT INFORMATION RETURNS, OF REV. PROC. 2015-53.

For taxable years beginning in 2016, section 3.48(3) of Rev. Proc. 2015-53 provides the penalty amounts under § 6721 for failure to file correct information returns due to intentional disregard of the filing requirement (or the correct information reporting requirement). The scenario for a return required to be filed under § 6050V (§ 6721(e)(2)(D)) is corrected to provide as follows:

                                                          Calendar

 

 Scenario                        Penalty Per Return       Year Maximum

 

 _____________________________________________________________________

 

 

 Return required to be filed     Greater of (i) $530,     No limit

 

 under § 6050V (§                or (ii) 10% of the

 

 6721(e)(2)(D))                  value of the benefit

 

                                 of any contract with

 

                                 respect to which

 

                                 information is

 

                                 required to be

 

                                 included on the

 

                                 return

 

 

SECTION 5. EFFECTIVE DATES

Section 3 of this revenue procedure applies to taxable years beginning in 2015.

Section 4 of this revenue procedure applies to taxable years beginning in 2016.

SECTION 6. DRAFTING INFORMATION

The principal author of this revenue procedure is William Ruane of the Office of Associate Chief Counsel (Income Tax & Accounting). For further information regarding this revenue procedure, contact Mr. Ruane at (202) 317-4718 (not a toll-free call).

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