Title 26 — Internal Revenue CodeRelease 119-73
§6722 Failure to furnish correct payee statements
Title 26 › Subtitle Subtitle F— - Procedure and Administration › Chapter CHAPTER 68— - ADDITIONS TO THE TAX, ADDITIONAL AMOUNTS, AND ASSESSABLE PENALTIES › Subchapter Subchapter B— - Assessable Penalties › Part PART II— - FAILURE TO COMPLY WITH CERTAIN INFORMATION REPORTING REQUIREMENTS › § 6722
Summary
You must pay a penalty if you fail to give a correct payee statement. If you don’t give the statement on time or you leave out required information or put in wrong information, the penalty is $250 for each wrong or missing statement, up to $3,000,000 in one year. If you fix the mistake within 30 days after the due date, the penalty is $50 per statement and the yearly cap is $500,000. If you fix it after 30 days but by August 1 of that year, the penalty is $100 per statement and the cap is $1,500,000. A small safe-harbor covers a limited number of minor dollar errors (up to the greater of 10 statements or 0.5% of all statements) where each wrong amount is off by no more than $100 and any tax withheld is off by no more than $25; the payee can opt out and the IRS can issue rules to prevent abuse. Businesses that meet a gross-receipts test have lower caps: $1,000,000 yearly, $175,000 for the 30-day fixes, and $500,000 for the August 1 fixes. If the failure was intentional, reduced penalties and caps don’t apply. Intentional failures carry at least $500 per statement or higher penalties — generally 10% of the total items for most forms, but 5% for statements under sections 6045(b), 6050K(b), or 6050L(c). Dollar amounts are adjusted for inflation for years after 2014, with set rounding rules.
Full Legal Text
Title 26, §6722
Internal Revenue Code — Source: USLM XML via OLRC
(a)(1)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.
(2)For purposes of paragraph (1), the failures described in this paragraph are—
(A)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
(B)any failure to include all of the information required to be shown on a payee statement or the inclusion of incorrect information.
(b)(1)If any failure described in subsection (a)(2) is corrected on or before the day 30 days after the date prescribed for furnishing such statement—
(A)the penalty imposed by subsection (a) shall be $50 in lieu of $250, and
(B)the total amount imposed on the person for all such failures during any calendar year which are so corrected shall not exceed $500,000.
(2)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 date prescribed for furnishing such statement occurs—
(A)the penalty imposed by subsection (a) shall be $100 in lieu of $250, and
(B)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.
(c)(1)If—
(A)a payee statement is furnished to the person to whom such statement is required to be furnished,
(B)there is a failure described in subsection (a)(2)(B) (determined after the application of section 6724(a)) with respect to such statement, and
(C)such failure is corrected on or before August 1 of the calendar year in which the date prescribed for furnishing such statement occurs,
(2)The number of payee statements 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 payee statements required to be furnished by the person during the calendar year.
(3)(A)If, with respect to any payee statement—
(i)there are 1 or more failures described in subsection (a)(2)(B) relating to an incorrect dollar amount,
(ii)no single amount in error differs from the correct amount by more than $100, and
(iii)no single amount reported for tax withheld on the payee statement differs from the correct amount by more than $25,
(B)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.
(C)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.
(d)(1)If any person meets the gross receipts test of paragraph (2) with respect to any calendar year, with respect to failures during such calendar year—
(A)subsection (a)(1) shall be applied by substituting “$1,000,000” for “$3,000,000”,
(B)subsection (b)(1)(B) shall be applied by substituting “$175,000” for “$500,000”, and
(C)subsection (b)(2)(B) shall be applied by substituting “$500,000” for “$1,500,000”.
(2)A person meets the gross receipts test of this paragraph if such person meets the gross receipts test of section 6721(d)(2).
(e)If 1 or more failures to which subsection (a) applies are due to intentional disregard of the requirement to furnish a payee statement (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)(1) shall be $500, or, if greater—
(A)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
(B)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
(3)in the case of any penalty determined under paragraph (2)—
(A)the $3,000,000 limitation under subsection (a) shall not apply, and
(B)such penalty shall not be taken into account in applying such limitation to penalties not determined under paragraph (2).
(f)(1)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.
(2)If any amount adjusted under paragraph (1)—
(A)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
(B)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.
Legislative History
Notes & Related Subsidiaries
Inflation Adjusted Items for Certain YearsFor inflation adjustment of certain items in this section, see Revenue Procedures listed in a table under section 1 of this title.
Editorial Notes
Amendments
2018—Subsec. (c)(3)(A). Pub. L. 115–141, § 101(f)(1)(B), substituted “furnished” for “filed” in concluding provisions. Subsec. (c)(3)(A)(iii). Pub. L. 115–141, § 101(f)(1)(A), substituted “the payee statement” for “any information return”. Subsec. (f)(1). Pub. L. 115–141, § 401(a)(299)(G), inserted “an amount equal to” after “increased by” and “for the calendar year” after “section 1(f)(3)”. 2017—Subsec. (f)(1). Pub. L. 115–97 substituted “for ‘calendar year 2016’ in subparagraph (A)(ii)” for “for ‘calendar year 1992’ in subparagraph (B)”. 2015—Subsec. (a)(1). Pub. L. 114–27, § 806(e)(1), substituted “$250” for “$100” and “$3,000,000” for “$1,500,000”. Subsec. (b)(1)(A). Pub. L. 114–27, § 806(e)(2)(A)(i), (ii), substituted “$50” for “$30” and “$250” for “$100”. Subsec. (b)(1)(B). Pub. L. 114–27, § 806(e)(2)(A)(iii), substituted “$500,000” for “$250,000”. Subsec. (b)(2)(A). Pub. L. 114–27, § 806(e)(2)(B)(i), (ii), substituted “$100” for “$60” and “$250” for “$100”. Subsec. (b)(2)(B). Pub. L. 114–27, § 806(e)(2)(B)(iii), substituted “$1,500,000” for “$500,000”. Subsec. (c)(3). Pub. L. 114–113 added par. (3). Subsec. (d)(1)(A). Pub. L. 114–27, § 806(e)(3)(A), substituted “$1,000,000” for “$500,000” and “$3,000,000” for “$1,500,000”. Subsec. (d)(1)(B). Pub. L. 114–27, § 806(e)(3)(B), substituted “$175,000” for “$75,000” and “$500,000” for “$250,000”. Subsec. (d)(1)(C). Pub. L. 114–27, § 806(e)(3)(C), substituted “$500,000” for “$200,000” and “$1,500,000” for “$500,000”. Subsec. (e)(2). Pub. L. 114–27, § 806(e)(4)(A), substituted “$500” for “$250” in introductory provisions. Subsec. (e)(3)(A). Pub. L. 114–27, § 806(e)(4)(B), substituted “$3,000,000” for “$1,500,000”. 2014—Subsecs. (b)(1), (2), (c)(1)(C). Pub. L. 113–295, § 207(a)(2), substituted “the date prescribed for furnishing such statement” for “the required filing date”. Subsec. (c)(2)(B). Pub. L. 113–295, § 207(a)(3), substituted “furnished” for “filed”. Subsec. (f)(1). Pub. L. 113–295, § 208(g), substituted “In the case of any failure relating to a statement required to be furnished in a calendar year beginning after 2014” for “For each fifth calendar year beginning after 2012”. 2010—Pub. L. 111–240 amended section generally. Prior to amendment, section related to: in subsec. (a), general rule for imposition of penalty for failure to furnish correct payee statements; in subsec. (b), failures subject to penalty; and, in subsec. (c), penalty in case of intentional disregard. 1989—Pub. L. 101–239 substituted “correct” for “certain” in section catchline and amended text generally, substituting subsecs. (a) to (c) for former subsec. (a) stating general rule and subsec. (b) relating to failure to notify partnership of exchange of partnership interest.
Statutory Notes and Related Subsidiaries
Effective Date
of 2018 AmendmentAmendment by section 101(f)(1) of Pub. L. 115–141 effective as if included in the provision of the Protecting Americans from Tax Hikes Act of 2015, div. Q of Pub. L. 114–113, to which such amendment relates, see section 101(s) of Pub. L. 115–141, set out as a note under section 24 of this title.
Effective Date
of 2017 AmendmentAmendment by Pub. L. 115–97 applicable to taxable years beginning after Dec. 31, 2017, see section 11002(e) of Pub. L. 115–97, set out as a note under section 1 of this title.
Effective Date
of 2015 AmendmentAmendment by Pub. L. 114–113 applicable to returns required to be filed, and payee statements required to be provided, after Dec. 31, 2016, see section 202(e) of Pub. L. 114–113, set out as a note under section 6045 of this title. Amendment by Pub. L. 114–27 applicable with respect to returns and statements required to be filed after Dec. 31, 2015, see section 806(f) of Pub. L. 114–27, set out as a note under section 6721 of this title.
Effective Date
of 2014 Amendment Pub. L. 113–295, div. A, title II, § 207(b), Dec. 19, 2014, 128 Stat. 4028, provided that: “The
Amendments
made by this section [amending this section and provisions set out as a note under section 6721 of this title] shall take effect as if included in the provision of the Creating Small Business Jobs Act of 2010 [Pub. L. 111–240, title II] to which they relate.” Amendment by section 208(g) of Pub. L. 113–295 applicable to returns required to be filed, and statements required to be furnished, after Dec. 31, 2014, see section 208(h) of Pub. L. 113–295, set out as a note under section 6651 of this title.
Effective Date
of 2010 AmendmentAmendment by Pub. L. 111–240 applicable with respect to information returns required to be filed, and payee statements required to be furnished, on or after Jan. 1, 2011, see section 2102(h) of Pub. L. 111–240, set out as a note under section 6721 of this title.
Effective Date
of 1989 AmendmentAmendment by Pub. L. 101–239 applicable to returns and statements the due date for which (determined without regard to extensions) is after Dec. 31, 1989, see section 7711(c) of Pub. L. 101–239, set out as a note under section 6721 of this title.
Effective Date
Section applicable to returns the due date for which (determined without regard to extensions) is after Dec. 31, 1986, see section 1501(e) of Pub. L. 99–514, set out as a note under section 6721 of this title.
Reference
Citations & Metadata
Citation
26 U.S.C. § 6722
Title 26 — Internal Revenue Code
Last Updated
Apr 6, 2026
Release point: 119-73