Table of Contents.

(a) Imposition of penalty.

(1) General rule.

(2) Failures subject to the penalty.

(b) Reduction in the penalty when a correction is made within specified periods.

(1) Correction within 30 days.

(2) Correction after 30 days but on or before August 1.

(3) Required filing date defined.

(4) Penalty amount for return with multiple failures.

(5) Examples.

(6) Application to returns not due on January 31, February 28, or March 15.

(c) Exception for inconsequential errors or omissions.

(1) In General.

(2) Errors or omissions that are never inconsequential.

(3) Examples.

(d) Exception for a de minimis number of failures.

(1) Requirements.

(2) Calculation of the de minimis exception.

(3) Examples.

(4) Nonapplication to returns not due on January 31, February 28, or March 15.

(e) Safe harbor exception for certain de minimis errors.

(1) In general.

(2) Definition of de minimis error.

(3) Election to override the safe harbor exception.

(4) Voluntary corrections.

(5) Limitations on applicability.

(f) Lower limitations on the $250,000 maximum penalty amount with respect to persons with gross receipts of not more than $5,000,000.

(1) In general.

(2) Gross receipts test.

(g) Higher penalty for intentional disregard of requirement to file timely correct information returns.

(1) Application of section 6721(e).

(2) Meaning of “Intentional disregard.”

(3) Facts and circumstances considered.

(4) Amount of the penalty.

(5) Computation of the penalty; aggregate dollar amount of the items required to be reported correctly.

(6) Examples.

(h) Definitions.

(1) Information return.

(2) Statements.

(3) Returns.

(4) Other items.

(5) Payee.

(6) Filer.

(i) Adjustment for inflation.

(j) Applicability date.

(a) Imposition of penalty.

(1) General rule.

(2) Failures subject to the penalty.

(b) Exception for inconsequential errors or omissions.

(1) In general.

(2) Errors or omissions that are never inconsequential.

(3) Examples.

(c) Higher penalty for intentional disregard of requirement to furnish timely correct payee statements.

(1) Application of section 6722(c).

(2) Amount of the penalty.

(3) Computation of the penalty; aggregate dollar amount of items required to be shown correctly.

(d) Safe harbor exception for certain de minimis errors.

(1) In general.

(2) Definition of de minimis error.

(3) Election to override the safe harbor exception.

(4) Record retention.

(5) Examples.

(6) Voluntary corrections.

(7) Limitations on applicability.

(e) Definitions.

(1) Payee.

(2) Payee statement.

(3) Other items.

(4) Filer.

(f) Adjustment for inflation.

(g) Applicability date.

(a) Imposition of penalty.

(1) General rule.

(2) Failures subject to the penalty.

(3) Exception for inconsequential errors or omissions.

(4) Specified information reporting requirement defined.

(b) Examples.

(a) Waiver of the penalty.

(1) General rule.

(2) Reasonable cause defined.

(b) Significant mitigating factors.

(c) Events beyond the filer's control.

(1) In general.

(2) Unavailability of the relevant business records.

(3) Undue economic hardship relating to filing on magnetic media.

(4) Actions of the IRS.

(5) Actions of agent—imputed reasonable cause.

(6) Actions of the payee or any other person.

(d) Responsible manner.

(1) In general.

(2) Special rule for filers seeking a waiver pursuant to paragraph (c)(6) of this section.

(e) Acting in a responsible manner—special rules for missing TINs.

(1) In general.

(i) Initial solicitation.

(ii) First annual solicitation.

(iii) Second annual solicitation.

(iv) Additional requirements.

(v) Failures to which a solicitation relates.

(vi) Exceptions and limitations.

(2) Manner of making annual solicitations—by mail or telephone.

(i) By mail.

(ii) By telephone.

(f) Acting in a responsible manner—special rules for incorrect TINs.

(1) In general.

(i) Initial solicitation.

(ii) First annual solicitation.

(iii) Second annual solicitation.

(iv) Additional requirements.

(2) Manner of making annual solicitation if notified pursuant to section 3406(a)(1)(B) and the regulations thereunder.

(3) Manner of making annual solicitation if notified pursuant to section 6721.

(4) Failures to which a solicitation relates.

(5) Exceptions and limitations.

(g) Due diligence safe harbor.

(1) In general.

(2) Special rules relating to TINs.

(3) Effective dates.

(h) Reasonable cause safe harbor after election under section 6722(c)(3)(B).

(i) [Reserved]

(j) Failures to which this section relates.

(k) Examples.

(l) [Reserved]

(m) Procedure for seeking a waiver.

(n) Manner of payment.

(o) Applicability dates.