26 U.S.C. § 6722: Failure to furnish correct payee statements

In the case of each failure described in paragraph (2) by any person with respect to a payee statement, such person shall pay a penalty of $250 for each statement 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 $3,000,000. any failure to furnish a payee statement on or before the date prescribed therefor to the person to whom such statement is required to be furnished, and any failure to include all of the information required to be shown on a payee statement or the inclusion of incorrect information. the penalty imposed by subsection (a) shall be $50 in lieu of $250, and the total amount imposed on the person for all such failures during any calendar year which are so corrected shall not exceed $500,000. the penalty imposed by subsection (a) shall be $100 in lieu of $250, and the total amount imposed on the person for all such failures during the calendar year which are so corrected shall not exceed $1,500,000. a payee statement is furnished to the person to whom such statement is required to be furnished, there is a failure described in subsection (a)(2)(B) (determined after the application of section 6724(a)) with respect to such statement, and such failure is corrected on or before August 1 of the calendar year in which the date prescribed for furnishing such statement occurs, 10, or one-half of 1 percent of the total number of payee statements required to be furnished by the person during the calendar year. there are 1 or more failures described in subsection (a)(2)(B) relating to an incorrect dollar amount, no single amount in error differs from the correct amount by more than $100, and no single amount reported for tax withheld on the payee statement differs from the correct amount by more than $25, Subparagraph (A) shall not apply to any payee statement if the person to whom such statement is required to be furnished makes an election (at such time and in such manner as the Secretary may prescribe) that subparagraph (A) not apply with respect to such statement. The Secretary may issue regulations to prevent the abuse of the safe harbor under this paragraph, including regulations providing that this paragraph shall not apply to the extent necessary to prevent any such abuse. subsection (a)(1) shall be applied by substituting “$1,000,000” for “$3,000,000”, subsection (b)(1)(B) shall be applied by substituting “$175,000” for “$500,000”, and subsection (b)(2)(B) shall be applied by substituting “$500,000” for “$1,500,000”. A person meets the gross receipts test of this paragraph if such person meets the gross receipts test of section 6721(d)(2). subsections (b), (c), and (d) shall not apply, in the case of a payee statement other than a statement required under section 6045(b), 6041A(e) (in respect of a return required under section 6041A(b)), 6050H(d), 6050J(e), 6050K(b), or 6050L(c), 10 percent of the aggregate amount of the items required to be reported correctly, or in the case of a payee statement required under section 6045(b), 6050K(b), or 6050L(c), 5 percent of the aggregate amount of the items required to be reported correctly, and the $3,000,000 limitation under subsection (a) shall not apply, and such penalty shall not be taken into account in applying such limitation to penalties not determined under paragraph (2). In the case of any failure relating to a statement required to be furnished in a calendar year beginning after 2014, each of the dollar amounts under subsections (a), (b), (d)(1), and (e) shall be increased by an amount equal to such dollar amount multiplied by the cost-of-living adjustment determined under section 1(f)(3) for the calendar year determined by substituting “calendar year 2011” for “calendar year 2016” in subparagraph (A)(ii) thereof. is not less than $75,000 and is not a multiple of $500, such amount shall be rounded to the next lowest multiple of $500, and is not described in subparagraph (A) and is not a multiple of $10, such amount shall be rounded to the next lowest multiple of $10.