August 16, 1994
TO: OPERATIONS MEMBERS NO. 28-94
TAX MEMBERS NO. 36-94
TRANSFER AGENT ADVISORY COMMITTEE NO. 31-94
RE: NEW NOTICE OF PROPOSED PENALTY FOR INFORMATION RETURNS
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The IRS has announced that starting in November, payers that
appear to be out of compliance with information reporting
requirements will receive a new Notice of Proposed Civil Penalty,
Notice 972CG. The new notice will replace the current Notice
936CG that formally assesses a civil penalty, which was usually
issued in July or August. (In the future, the IRS expects to
issue Notice 972CGs during the summer.)
Under the old notice system, the first contact a taxpayer
would receive from the IRS concerning missing or incorrect
Taxpayer Identification Numbers on information returns was a
notice assessing penalties for failure to comply with the
information reporting rules. Taxpayers had 10 days to pay the
assessment or submit information showing that they had reasonable
cause for any problems. The new Notice 972CG will give taxpayers
45 days to show that there was reasonable cause for any errors.
If the IRS accepts the explanation, no penalty will be assessed.
If the IRS disagrees, the penalties will be assessed and the
taxpayer will have 10 days from the date of the assessment to pay
the amount due.
A copy of the IRS Announcement describing the new notice is
attached.
We will keep you informed of developments.
Peter J. Cinquegrani
Assistant Counsel - Tax
Attachment