[10138]
July 20, 1998
TO: PENSION MEMBERS No. 46-98
PENSION OPERATIONS ADVISORY COMMITTEE No. 29-98
OPERATIONS COMMITTEE No. 29-98
TAX COMMITTEE No. 24-98
TRANSFER AGENT ADVISORY COMMITTEE No. 42-98
RE: IRS GUIDANCE ON PENALTY RELIEF FOR TIN ERRORS ON FORMS
1099-R
______________________________________________________________________________
In early August, the Internal Revenue Service will begin to send filers of Forms 1099-R lists of
payees whose taxpayer identification numbers on 1996 Forms 1099-R have been identified as missing or
incorrect based on the IRS matching process. Although the law provides a penalty of $50 per return for
filing an information return with a missing or incorrect TIN, the IRS states in Announcement 98-73 that
for 1996 and 1997 Forms 1099-R, this penalty will not be assessed for missing or incorrect TINs
identified by the IRS matching process.
According to the Announcement, payers should use the information the IRS provides to correct
their records and, if necessary, obtain correct payee information in order to assure accurate information
returns are filed in the future. If a payer does not have a payee’s TIN and/or the payee refuses or
neglects to provide a TIN, the payer should comply with IRS Regulation section 301.6724-1(e) and
withhold federal income taxes from any payments made to the payee that are payments subject to Code
section 3405. The IRS also notes, however, that the informational listing provided to filers do not
constitute notice under Code section 3405(e)(12)(B) that the TIN furnished by a payee is incorrect.
Russell G. Galer
Senior Counsel
Attachment
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attachment referred to in this memo, please call the Institute's Library Services Division at (202)326-
8304, and ask for this memo's attachment number: 10138.