The IRS recently released an updated version of Publication 1586, Reasonable Cause Regulations & Requirements for Missing and Incorrect Name/TINs. This publication details the information related to penalty notices issued by the IRS (Notice 972CG), the procedure for addressing such notices, and the penalties themselves.
There are a number of updates to the content of the publication, mostly which involve clarifying and elaborating on preexisting language in the publication.
- Clarified the imposition of multiple penalties in Part II: Penalty for Missing TINs and Incorrect Name/TIN Combinations:
- Only one penalty will be issued per information return even if there is more than one failure with the respect to the return. The highest penalty amount will always be imposed. However, please note that penalties relating to IRC 6721 and IRC 6722 can be imposed for the same payment.
- Greater clarification was also added to the de minimis rule for corrections, outlining the qualifications for the rule and the safe harbor exceptions for de minimisdollar amount errors.
- Clarified penalty notices language in Part IV: Notice 972CG, Noticed of Proposed Civil Penalties:
- Notice 972CG are not sent to federal agencies. Instead, Notice 972F or Letter 1313 are issued to federal agencies, which said agencies are not required to respond to. Rather, those agencies must correct their records by abiding by the same solicitation rules outlined in this section.
- A Letter 854C will be issued by the IRS in the event that a filer’s written statement does not establish reasonable cause.
- The table for penalty amounts relating to Large Businesses and Small Businesses (p. 12) has been updated in format and content. Penalty rates have generally been adjusted to account for inflation.
To review this publication in full, please visit the IRS website by clicking here.