
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC6721]

 
                     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
 
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, or
            (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, 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).

(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.)


                               Amendments

    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].''

                  Section Referred to in Other Sections

    This section is referred to in sections 1060, 6047, 6724 of this 
title.
