Press Release - July, 2015
Jean-Philippe Choudhry
Email Jean-Philippe Choudhry
Higher 1099 Penalties Signed into Law.
The "Trade Preferences Extension Act of 2015" was signed into law by the President and it contained increased information return penalties.
The bill increases the penalties for failure to file a correct information return. The first-tier penalty increases from $30 to $50, and the calendar-year maximum increases from $75,000 to $500,000. The second-tier penalty increases from $60 to $100, and the calendar-year maximum increases from $500,000 to $1,500,000. The third-tier penalty increases from $100 to $250, and the calendar-year maximum increases from $1,500,000 to $3,000,000. For small business filers, the calendar-year maximum increases from $75,000 to $175,000 for the first-tier penalty, from $200,000 to $500,000 for the second-tier penalty, and from $500,000 to $1,500,000 for the third-tier penalty. The minimum penalty for each failure due to intentional disregard increases from $250 to $500. This provision applies to information returns required to be filed after December 31, 2015. (Tax Year 2015)
The TEXT of the "Trade Preferences Extension Act of 2015"
SEC. 806. PENALTY FOR FAILURE TO FILE CORRECT INFORMATION RETURNS AND PROVIDE PAYEE STATEMENTS.
(a) In general.-Section 6721(a)(1) of the Internal Revenue Code of 1986 is amended-
(1) by striking "$100" and inserting "$250"; and
(2) by striking "$1,500,000" and inserting "$3,000,000".
(b) Reduction where correction in specified period.-
(1) CORRECTION WITHIN 30 DAYS.-Section 6721(b)(1) of such Code is amended-
(A) by striking "$30" and inserting "$50";
(B) by striking "$100" and inserting "$250"; and
(C) by striking "$250,000" and inserting "$500,000".
(2) FAILURES CORRECTED ON OR BEFORE AUGUST 1.-Section 6721(b)(2) of such Code is amended-
(A) by striking "$60" and inserting "$100";
(B) by striking "$100" (prior to amendment by subparagraph (A)) and inserting "$250"; and
(C) by striking "$500,000" and inserting "$1,500,000".
(c) Lower limitation for persons with gross receipts of not more than $5,000,000.-Section 6721(d)(1) of such Code is amended-
(1) in subparagraph (A)-
(A) by striking "$500,000" and inserting "$1,000,000"; and
(B) by striking "$1,500,000" and inserting "$3,000,000";
(2) in subparagraph (B)-
(A) by striking "$75,000" and inserting "$175,000"; and
(B) by striking "$250,000" and inserting "$500,000"; and
(3) in subparagraph (C)-
(A) by striking "$200,000" and inserting "$500,000"; and
(B) by striking "$500,000" (prior to amendment by subparagraph (A)) and inserting "$1,500,000".
(d) Penalty in case of intentional disregard.-Section 6721(e) of such Code is amended-
(1) by striking "$250" in paragraph (2) and inserting "$500"; and
(2) by striking "$1,500,000" in paragraph (3)(A) and inserting "$3,000,000".
(e) Failure To furnish correct payee statements.-
(1) IN GENERAL.-Section 6722(a)(1) of such Code is amended-
(A) by striking "$100" and inserting "$250"; and
(B) by striking "$1,500,000" and inserting "$3,000,000".
(2) REDUCTION WHERE CORRECTION IN SPECIFIED PERIOD.-
(A) CORRECTION WITHIN 30 DAYS.-Section 6722(b)(1) of such Code is amended-
(i) by striking "$30" and inserting "$50";
(ii) by striking "$100" and inserting "$250"; and
(iii) by striking "$250,000" and inserting "$500,000".
(B) FAILURES CORRECTED ON OR BEFORE AUGUST 1.-Section 6722(b)(2) of such Code is amended-
(i) by striking "$60" and inserting "$100";
(ii) by striking "$100" (prior to amendment by clause (i)) and inserting "$250"; and
(iii) by striking "$500,000" and inserting "$1,500,000".
(3) LOWER LIMITATION FOR PERSONS WITH GROSS RECEIPTS OF NOT MORE THAN $5,000,000.-Section 6722(d)(1) of such Code is amended-
(A) in subparagraph (A)-
(i) by striking "$500,000" and inserting "$1,000,000"; and
(ii) by striking "$1,500,000" and inserting "$3,000,000";
(B) in subparagraph (B)-
(i) by striking "$75,000" and inserting "$175,000"; and
(ii) by striking "$250,000" and inserting "$500,000"; and
(C) in subparagraph (C)-
(i) by striking "$200,000" and inserting "$500,000"; and
(ii) by striking "$500,000" (prior to amendment by subparagraph (A)) and inserting "$1,500,000".
(4) PENALTY IN CASE OF INTENTIONAL DISREGARD.-Section 6722(e) of such Code is amended-
(A) by striking "$250" in paragraph (2) and inserting "$500"; and
(B) by striking "$1,500,000" in paragraph (3)(A) and inserting "$3,000,000".
(f) Effective date.-The amendments made by this section shall apply with respect to returns and statements required to be filed after December 31, 2015.
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