Scarinci Hollenbeck, LLC
The Firm
201-896-4100 info@sh-law.comFirm Insights
Author: Scarinci Hollenbeck, LLC
Date: August 22, 2015
The Firm
201-896-4100 info@sh-law.comIn the new legislation, penalties for inaccurate information on a tax return may have more than doubled for failure to file accurate information on returns or payee statements.
The new rules mark the second time since 2010 that Congress has voted to increase the minimum penalties for inaccurate information under Section 6721(b) and per-employer penalty caps under Section 6722(b) for an inaccurate or un-filed tax return. However, this provision was significant because it was passed in a revenue increase, rather than a tax bill, as part of the Trade Preference Extension Act of 2015. These penalties for inaccurate information will also be imposed under Code sections 6721 and 6722 retroactive to 2015 tax returns.
The previous penalties for inaccurate information on a tax return for both sections 6721 and 6722 are $100 for each return, and up to $1.5 million for each year. However, under the new provision, the penalties will increase to $250 for each erroneous tax return, and up to $3 million per year. Although there are ways to reduce the penalties if a tax return is amended within 30 days after filing. The penalty is now reduced by $50 per inaccurate return if corrective actions are taken within 30 days, and a threshold of $500,000. This is a significant change as the previous penalty reduction was $30 per return with a $250,000 threshold. This benefit increases to $60 per return if corrective actions are taken on erroneous returns within 30 days, but before Aug. 1, 2015. These reductions extend for erroneous returns with a threshold of $1.5 million as the amount per return increases to $100 if corrective actions are made by Aug. 1. Finally, for gross receipts with a threshold of $5 million, the new legislation allows a reduction between $250 to $500 for cases of unintentional error.
The new penalties for inaccurate information under Sections 6721 and 6722 are Forms 1099 “Miscellaneous Income”, 1098 “Mortgage Interest Statement”, 1097 “Bond Tax Credit”, W-2 “Wage and Tax Statement”, W-2G “Certain Gambling Winnings” and 5498 “IRA Contribution Information”. Although taxpayers need to be aware that these new penalties apply to both total income reported and information returns for a variety of gross proceeds, including mortgage interest statements, payments subject to the Fair and Accurate Credit Transactions Act as well as various information returns required under the Affordable Care Act. However, under Section 6724, the IRS does allow certain penalties to be abated if the failure to submit accurate information is the result of reasonable cause.
According to The National Law Review, due to the fact that the new penalties apply to the copy of the form filed with the IRS and the copy filed with an employee, the penalties for inaccurate information are not only more strict, they impact more taxpayers. These new penalties will now also apply to inaccurate tax returns before 2015 if they are discovered this year, or if the corrective actions are taken after 2015.
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Breach of contract disputes are the most common type of business litigation. Therefore, nearly all New York and New Jersey businesses will likely have to deal with a contract dispute at least once. Understanding when to file a breach of contract lawsuit and how long you have to sue for breach of contract is essential […]
Author: Brittany P. Tarabour
Closing your business can be a difficult and challenging task. For corporations, the process includes formal approval of the dissolution, winding up operations, resolving tax liabilities, and filing all required paperwork. Whether you need to understand how to dissolve a corporation in New York or New Jersey, it’s imperative to take all of the proper […]
Author: Christopher D. Warren
Commercial leases can take a variety of forms, which is often confusing for both landlords and tenants. Understanding the different types, especially the gross lease structure, is important when selecting the lease that best suits your needs. One key distinction between lease types is how rent is calculated and paid. This article addresses the two […]
Author: Robert L. Baker, Jr.
Over the past year, brick-and-mortar stores have closed their doors at a record pace. Fluctuating consumer preferences, the rise of online shopping platforms, and ongoing economic uncertainty continue to put pressure on the retail industry. When a retailer seeks bankruptcy protection, a myriad of other businesses are often impacted. Whether you are a supplier, customer, […]
Author: Brian D. Spector
Since his inauguration two months ago, Donald Trump’s administration and the Congress it controls have indicated important upcoming policy changes. These changes will impact financial services policies and priorities. The changes will particularly affect cryptocurrency, as well as banking rules and regulations. Key Regulatory Changes in Cryptocurrency For example, in the burgeoning cryptocurrency business environment, […]
Author: Dan Brecher
The retail sector has experienced a wave of bankruptcy filings over the last year. Brick-and-mortar businesses in financial distress include big-name brands like Big Lots, Party City, The Container Store, and Vitamin Shoppe. When large retailers seek bankruptcy protection, they are not the only businesses impacted. Landlords can be particularly hard hit. While commercial landlords […]
Author: Brian D. Spector
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!