Rev. Proc. 2016-11 - Rev. Proc. 2016–11
Rev. Proc. 2016–11
| SECTION 1. PURPOSE | |
|---|---|
| SECTION 2. LEGISLATIVE HISTORY | |
| SECTION 3. 2015 PENALTY ADJUSTED ITEMS | Code Section |
| .01 Failure to File Tax Return | 6651 |
| .02 Failure to File Certain Information Returns, Registration Statements, etc | 6652 |
| .03 Other Assessable Penalties With Respect to the Preparation of Tax Returns for Other Persons | 6695 |
| .04 Failure to File Partnership Return | 6698 |
| .05 Failure to File S Corporation Return | 6699 |
| .06 Failure to File Correct Information Returns | 6721 |
| .07 Failure to Furnish Correct Payee Statements | 6722 |
| SECTION 4. EFFECT ON OTHER DOCUMENTS | |
| SECTION 5. EFFECTIVE DATES | |
| 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 modifies Rev. Proc. 2015–53 to correct section 3.48(3), Failure to File Correct Information Returns.
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):
| Scenario | Daily Penalty | Maximum Penalty |
|---|---|---|
| Organization (§ 6652(c)(1)(A)) | $20 | Lessor of $10,000 or 5% of gross receipts of the organization for the year. |
| Organization with gross receipts exceeding $1,015,500 (§ 6652(c)(1)(A)) | $100 | $50,500 |
| Managers (§ 6652(c)(1)(B)) | $10 | $5,000 |
| Public inspection of annual returns and reports (§ 6652(c)(1)(C)) | $20 | $10,000 |
| Public inspection of applications for exemption and notice of status (§ 6652(c)(1)(D)) | $20 | No Limits |
(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):
| Scenario | Daily Penalty | Maximum Penalty |
|---|---|---|
| Organization or trust (§ 6652(c)(2)(A)) | $10 | $5,000 |
| Managers (§ 6652(c)(2)(B)) | $10 | $5,000 |
| Split-Interest Trust (§ 6652(c)(2)(C)(ii)) | $20 | $10,000 |
| Any trust with gross receipts exceeding $253,500 (§ 6652(c)(2)(C)(ii)) | $100 | $50,500 |
(3) for failure to file a disclosure required under § 6033(a)(2):
| Scenario | Daily Penalty | Maximum Penalty |
|---|---|---|
| Tax–exempt entity (§ 6652(c)(3)(A)) | $100 | $50,500 |
| Failure to comply with written demand (§ 6652(c)(3)(B)(ii)) | $100 | $10,000 |
.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:
| Scenario | Per Return or Claim for Refund | Maximum Penalty |
|---|---|---|
| Failure to furnish copy to taxpayer (§ 6695(a)) | $50 | $25,000 |
| Failure to sign return (§ 6695(b)) | $50 | $25,000 |
| Failure to furnish identifying number (§ 6695(c)) | $50 | $25,000 |
| Failure to retain copy or list (§ 6695(d)) | $50 | $25,000 |
| Failure to file correct information returns (§ 6695(e)) | $50 per return or item in return | $25,000 |
| Negotiation of check (§ 6695(f)) | $505 per check | No limit |
| Failure to be diligent in determining eligibility for earned income credit (§ 6695(g)) | $505 | No limit |
.04 Failure to File Partnership Return. For taxable years beginning in 2015, the dollar amount used to determine the 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 the 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:
| Scenario | Penalty Per Return | Calendar Year Maximum |
|---|---|---|
| General Rule (§ 6721(a)(1)) | $260 | $3,178,500 |
| Corrected on or before 30 days after required filing date (§ 6721(b)(1)) | $50 | $529,500 |
| Corrected after 30th day but on or before August 1 (§ 6721(b)(2)) | $100 | $1,589,000 |
(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:
| Scenario | Penalty Per Return | Calendar Year Maximum |
|---|---|---|
| General Rule (§ 6721(d)(1)(A)) | $260 | $1,059,500 |
| Corrected on or before 30 days after required filing date (§ 6721(d)(1)(B)) | $50 | $185,000 |
| Corrected after 30th day but on or before August 1 (§ 6721(d)(1)(C)) | $100 | $529,500 |
(3) for failure to file correct information returns due to intentional disregard of the filing requirement (or the correct information reporting requirement):
| Scenario | Penalty Per Return | Calendar Year Maximum |
|---|---|---|
| Return other than a return required to be filed under §§ 6045(a), 6041A(b), 6050H, 6050I, 6050J, 6050K, or 6050L (§ 6721(e)(2)(A)) | Greater of (i) $520, or (ii) 10% of aggregate amount of items required to be reported correctly | No limit |
| Return required to be filed under §§ 6045(a), 6050K, or 6050L (§ 6721(e)(2)(B)) | Greater of (i) $520, or (ii) 5% of aggregate amount of items required to be reported correctly | No limit |
| Return required to be filed under § 6050I(a) (§ 6721(e)(2)(C)) | Greater of (i) $26,480, or (ii) amount of cash received up to $105,500 | No limit |
| Return required to be filed under § 6050V (§ 6721(e)(2)(D)) | Greater of (i) $520, or (ii) 10% of the value of the benefit of any contract with respect to which information is required to be included on the return | No limit |
.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:
| Scenario | Penalty Per Return | Calendar Year Maximum |
|---|---|---|
| General Rule (§ 6722(a)(1)) | $260 | $3,178,500 |
| Corrected on or before 30 days after required filing date (§ 6722(b)(1)) | $50 | $529,500 |
| Corrected after 30th day but on or before August 1 (§ 6722(b)(2)) | $100 | $1,589,000 |
(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:
| Scenario | Penalty Per Return | Calendar Year Maximum |
|---|---|---|
| General Rule (§ 6722(d)(1)(A)) | $260 | $1,059,500 |
| Corrected on or before 30 days after required filing date (§ 6722(d)(1)(B)) | $50 | $185,000 |
| Corrected after 30th day but on or before August 1 (§ 6722(d)(1)(C)) | $100 | $529,500 |
(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):
| Scenario | Penalty Per Return | Calendar Year Maximum |
|---|---|---|
| Statement other than a statement required under §§ 6045(b), 6041A(e) (in respect of a return required under § 6041A(b)), 6050H(d), 6050J(e), 6050K(b), or 6050L(c) (§ 6722(e)(2)(A)) | Greater of (i) $520, or (ii) 10% of aggregate amount of items required to be reported correctly | No limit |
| Payee statement required under §§ 6045(b), 6050K(b), or 6050L(c) (§ 6722(e)(2)(B)) | Greater of (i) $520, or (ii) 5% of aggregate amount of items required to be reported correctly | No limit |
SECTION 4. EFFECT ON OTHER DOCUMENTS
Rev. Proc. 2015–53 is modified to correct section 3.48(3) of that revenue procedure concerning 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) under § 6050V (§ 6721(e)(2)(D)) for taxable years beginning in 2016. Section 3.48(3) of Rev. Proc. 2015–53 is modified as follows:
| Scenario | Penalty Per Return | Calendar Year Maximum |
|---|---|---|
| Return required to be filed under § 6050V (§ 6721(e)(2)(D)) | Greater of (i) $530, or (ii) 10% of the value of the benefit of any contract with respect to which information is required to be included on the return | No limit |
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 number).