Forms 1096, 1097, 1098, 1099, 3921, 3922, 5498, And W-2g - General Instructions For Certain Information Returns - 2018 Page 18
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30must withhold on any reportable payment made to the
O. Penalties
account more than 30 business days after you receive the
notice. The IRS will notify you in writing when to stop
The following penalties generally apply to the person
withholding, or the payee may furnish you a written
required to file information returns. The penalties apply to
certification from the IRS stating when the withholding
paper filers as well as to electronic filers.
should stop. In most cases, the stop date will be January
For information on the penalty for failure to file
1 of the year following the year of the stop notice.
electronically, see Penalty, earlier, in
part
F.
TIP
You must notify the payee when withholding
under this procedure starts. For further
TIP
information, see Regulations section
Failure To File Correct Information Returns by
31.3406(c)-1(d).
the Due Date (Section 6721)
If you fail to file a correct information return by the due
4. Payee failure to certify that he or she is not
date and you cannot show reasonable cause, you may be
subject to backup withholding. Withhold on reportable
interest and dividends until the certification has been
subject to a penalty. The penalty applies if you fail to file
received.
timely, you fail to include all information required to be
shown on a return, or you include incorrect information on
For exceptions to these general timing rules, see
a return. The penalty also applies if you file on paper when
section 3406(e).
you were required to file electronically, you report an
For special rules on backup withholding on
incorrect TIN or fail to report a TIN, or you fail to file paper
gambling winnings, see the separate Instructions
forms that are machine readable.
TIP
for Forms W-2G and 5754.
The amount of the penalty is based on when you file
the correct information return. The penalty is as follows.
Reporting backup withholding. Report backup
$50 per information return if you correctly file within 30
withholding on Form 945, Annual Return of Withheld
days (by March 30 if the due date is February 28);
Federal Income Tax. Also, report backup withholding and
maximum penalty $547,000 per year ($191,000 for small
the amount of the payment on Forms W-2G, 1099-B, DIV,
businesses, defined below).
G, INT, K, MISC, OID, or PATR even if the amount of the
$100 per information return if you correctly file more
payment is less than the amount for which an information
than 30 days after the due date but by August 1;
return is normally required.
maximum penalty $1,641,000 per year ($547,000 for
Form 945. Report backup withholding, voluntary
small businesses).
withholding on certain government payments, and
$270 per information return if you file after August 1 or
withholding from gambling winnings, pensions, annuities,
you do not file required information returns; maximum
IRAs, military retirement, and Indian gaming profits on
penalty $3,282,500 per year ($1,094,000 for small
Form 945. Generally, file Form 945 for 2018 by January
businesses).
31, 2019. For more information, including the deposit
requirements for Form 945, see the separate Instructions
If you do not file corrections and you do not meet
for Form 945, and Pub. 15 (Circular E), Employer's Tax
any of the exceptions to the penalty described
!
Guide.
later, the penalty is $270 per information return.
CAUTION
Do not report on Form 945 any income tax withholding
Small businesses—lower maximum penalties. You
reported on the following forms.
are a small business if your average annual gross receipts
Form W-2, including withholding on distributions to plan
for the 3 most recent tax years (or for the period you were
participants from nonqualified plans that must be reported
in existence, if shorter) ending before the calendar year in
on Form 941, Employer's QUARTERLY Federal Tax
which the information returns were due are $5 million or
Return, and may be reported on Form 943, Employer's
less.
Annual Tax Return for Agricultural Employees; Form 944,
Employer's ANNUAL Federal Tax Return; or Schedule H
Exceptions to the penalty. The following are
(Form 1040), Household Employment Taxes.
exceptions to the failure to file penalty.
Form 1042-S must be reported on Form 1042, Annual
1. The penalty will not apply to any failure that you can
Withholding Tax Return for U.S. Source Income of
show was due to reasonable cause and not to willful
Foreign Persons.
neglect. In general, you must be able to show that your
Pub. 515 has more information on Form 1042
failure was due to an event beyond your control or due to
reporting, partnership withholding on effectively
significant mitigating factors. You must also be able to
TIP
connected income, and dispositions of U.S. real
show that you acted in a responsible manner and took
property interests by a foreign person.
steps to avoid the failure.
2. An inconsequential error or omission is not
Additional information. For more information about
considered a failure to include correct information. An
backup withholding, see Pub. 1281.
inconsequential error or omission does not prevent or
hinder the IRS from processing the return, from correlating
the information required to be shown on the return with the
information shown on the payee's tax return, or from
otherwise putting the return to its intended use. Errors and
omissions that are never inconsequential are those
-18-
Gen. Instr. for Certain Info. Returns (2018)
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