EO and EP penalties are important tools for IRS enforcement. In addition, penalties provide the IRS with an important tool to achieve that goal because they enhance voluntary compliance by taxpayers. See IRM 1.2.1.12.1, Policy Statement 20–1 (Formerly P-1-18), Penalties are used to enhance voluntary compliance.

IRC 527 – political organizations.

IRC 6404 – abatements.

IRC 6501 – limitations on assessment and collection.

IRC 6651 – failure to file tax return or to pay tax.

IRC 6652 – failure to file certain information returns, registration statements, etc.

IRC 6654 – failure by individual to pay estimated income tax.

IRC 6655 – failure by corporation to pay estimated income tax.

IRC 6662 – imposition of accuracy-related penalty on underpayments.

IRC 6663 – imposition of fraud penalty.

IRC 6664 – definitions and special rules.

IRC 6684 – assessable penalties with respect to liability for tax under chapter 42.

IRC 6685 – assessable penalty with respect to public inspection requirements for certain tax exempt organizations.

IRC 6690 – fraudulent statement or failure to furnish statement to plan participant.

IRC 6692 – failure to file actuarial report.

IRC 6693 – failure to provide reports on certain tax-favored accounts or annuities; penalties relating to designated nondeductible contributions.

IRC 6704 – failure to keep records necessary to meet reporting requirements under IRC 6047(d).

IRC 6710 – failure to disclose that contributions are nondeductible.

IRC 6711 – failure by tax exempt organization to disclose that certain information or service available from federal government.

IRC 6714 – failure to meet disclosure requirements applicable to quid pro quo contributions.

IRC 6720 – fraudulent acknowledgements with respect to donations of motor vehicles, boats, and airplanes.

IRC 6751 – procedural requirements.

The Director, Business Support, is the director responsible for the servicewide civil penalty program.

Overall responsibility for civil penalty programs is assigned to OSP. OSP is a matrix organization residing in the Business Support (Small Business/Self Employed) Function. OSP is charged with coordinating policy and procedures concerning the administration of civil penalty programs, ensuring consistency with the penalty policy statement, reviewing and analyzing penalty information, researching penalty effectiveness on compliance trends, and determining appropriate action necessary to promote voluntary compliance.

Each IRS organization is responsible for establishing an internal process for managing their procedures based upon these Servicewide policies and may develop additional guidance or reference materials for their specific functional administrative needs. However, such reference material must receive approval from OSP prior to distribution and must remain consistent with the policies and general procedural requirements set forth in this IRM, Policy Statement 20-1 (Formerly P-1-18), Penalties are used to enhance voluntary compliance (see IRM 1.2.1.12.1), and any other guidance relating to civil penalties.

All employees should keep the following objectives in mind when handling each penalty case:

Every function in the IRS has a role in proper penalty administration. It is essential that each function conducts its operations with an emphasis on promoting voluntary compliance. Appropriate reviews should be conducted to ensure consistency with the penalty policy statement (Policy Statement 20-1) and philosophy.

To promote the goal of consistency and fairness, OSP will review semi-annually a sample of penalty assessments, provided by SB/SE Research. See IRM 20.3.1, Civil Penalty Accuracy Review Process. The report of findings is shared with the Director, Business Support, the CFO, and other leadership as needed. The completed report is uploaded to an enterprise shared folder. Reports may be prepared when a significant issue develops, such as a correction to programming that affects many taxpayers.

Internal Management Document Certification: this IRM is annually recertified as required by Servicewide Policy, Directives, and Electronic Resources and regularly updated when new legislation or policy is published.

The table below is a list of terms and acronyms used in this IRM.

Additional forms and resources include:

In general, each penalty discussed in this chapter is unique and will stand alone unless otherwise indicated. Exceptions and additional information are noted in the discussions of the specific penalties; however some general procedures apply.

Statute of Limitations: In general, the additions to tax, additional amounts, and assessable penalties are assessed, collected, and paid in the same manner as taxes. To the extent such an item pertains to a tax return, the assessment is subject to the statute of limitation per IRC 6501, Limitations on Assessment and Collection (generally, three years from the later of the due date (unextended) or the filing of the return).

Reasonable Cause: Determination as to whether or not reasonable cause exists must be based on careful consideration of the facts and circumstances of each case prior to the assertion of a penalty. Examiners should consider any reason a taxpayer provides in conjunction with the guidelines, principles, and evaluating factors identified in IRM 20.1.1.3.2, Reasonable Cause, and IRM 20.1.8, Penalty Handbook, Employee Plans and Exempt Organization Miscellaneous Civil Penalties.

Abatements: Information on penalty abatements is provided in IRM 20.1.1.3, Criteria for Relief from Penalties.

Penalty reference numbers (PRN) are used to assess non-tax return related penalties (conduct or information returns).

Other civil penalties common to EP/EO returns are discussed in the following handbooks:

When a delinquent income, employment, or excise tax return is received from an entity during an examination or if the delinquent return is never received, the TEGE employee will determine whether the failure to file and/or failure to pay penalties under IRC 6651(a)(1), IRC 6651(a)(2), and IRC 6652(a)(3) should be asserted. See IRM 20.1.2, Failure to File/Failure to Pay. The excise tax returns required to be filed in connection with employee plans and exempt organizations are:

The income tax returns required of certain exempt organizations and trusts are:

The employment tax returns required of certain exempt organizations are:

There is no statutory prohibition against asserting the fraud penalty under IRC 6663 and the fraudulent failure to file penalty under IRC 6651(f) for the same year. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. See also IRM 20.1.2.3.7.5, Fraudulent Failure to File-IRC 6651(f).

IRC 6662(a) imposes a penalty equal to 20 percent of certain underpayments. IRC 6662(b)(4) and IRC 6662(f) apply to underpayments attributable to deductions for employer contributions to a defined benefit plan or retirement annuity plan where such deductions are based on a substantial overstatement of pension liabilities.

Penalties relating to employee benefit plan forms are assessed as follows:

A political organization (except those described in IRC 527(j)(5), Coordination With Other Requirements) that accepts a contribution or makes an expenditure for an exempt function during any calendar year shall file a disclosure with the Secretary.

IRC 527(j)(2) requires that such disclosure be made in semiannual, quarterly, or monthly reports.

The applicable disclosure form is Form 8872, Political Organization Report of Contributions and Expenditures.

IRC 527(j)(1) imposes a penalty for each failure equal to the highest rate of tax specified in IRC 11(b) multiplied by the amount to which the failure relates. It imposes a penalty on:

The amount imposed shall be assessed and collected in the same manner as penalties imposed by IRC 6652(c).

IRC 527(l) provides that the Secretary may waive all or any portion of the:

The request for "penalty relief" due to reasonable cause must be made in the form of a written statement providing all the facts to substantiate reasonable cause. The statement must contain a declaration, made by the appropriate individual, that the statement is made under penalties of perjury.

See IRM 20.1.1.3.2, Reasonable Cause, and Exhibit 20.1.8-3, EP and EO Reasonable Cause Guidelines.

Penalties applicable under IRC 6652(c).

IRC 6684 provides that a penalty may be asserted on any person (as defined in IRC 7701) liable for tax under Chapter 42, Private Foundations and Certain Other Tax Exempt Organizations (other than sections 4940 and 4948(a)). See Treas. Reg. 301.6684-1(a). The act or failure to act must not be due to reasonable cause and either:

The amount of the penalty is equal to the amount of the excise tax for which it is determined the person is liable.

The term "willful and flagrant" under IRC 6684 has the same meaning as such term possesses in section 507(a)(2)(A) and the regulations thereunder (i.e., an act “which is voluntarily, consciously, and knowingly committed in violation of any provision of Chapter 42, and which appears to a reasonable man to be a gross violation of any such provision.”) See Treas. Reg. 301.6684-1(c) and Treas. Reg. 1.507-1(c)(2).

The IRC 6684 penalty:

IRC 6685 imposes a $5,000 penalty on any person who is required to, and willfully fails to, comply with the public disclosure requirement of IRC 6104(d).

Before asserting penalties for failure to comply with the public disclosure requirements of IRC 6104(d), the IRS should obtain a statement from an individual denied inspection, or a copy of an application for recognition of exemption or an annual information return. The statement should describe the request, including the date the request was made and the reason for the individual's belief that the denial was in violation of the legal requirements. The IRS should also obtain a response from the person required to disclose its application and annual information returns.

The amount of the penalty is $5,000 with respect to each such return or application. There is no maximum amount of penalty.

The penalty may not be waived for reasonable cause.

IRC 6710 imposes a penalty on an organization that fails to meet the requirement of IRC 6113 with respect to a fund-raising solicitation required to disclose that contributions or gifts made to the organization (or on behalf of the organization) are not deductible as charitable contributions for federal income tax purposes.

IRC 6113 requires certain fund-raising solicitations to disclose (in a conspicuous and easily recognized format) that contributions or gifts made to the organization are not deductible as charitable contributions for federal income tax purposes.

Generally, the penalty applies to organizations, which are not described in IRC 170(c), but are described in IRC 501(c) or (d) and tax exempt under IRC 501(a). The fund-raising disclosure requirement does not apply to organizations with annual gross receipts that normally do not exceed $100,000.

The penalty also applies to a political organization (as defined in IRC 527(e)).

This penalty is assessed on Form 8278.

IRC 6710(a) provides for a penalty of $1,000 per day each day the failure occurred up to a maximum of $10,000 during any calendar year.

IRC 6710(c) provides an exception to the maximum annual penalty of $10,000. When it is shown that the failure was due to intentional disregard, the penalty for the day on which such failure occurred shall be the greater of:

The penalty shall not be taken into account in applying such limitations to other penalties under IRC 6710(a).

Consider the following conditions when determining the day a failure to meet the requirement occurred.

IRC 6710(b) provides that no penalty should be asserted if any failure is due to reasonable cause. See IRM 20.1.1.3.2, Reasonable Cause, and Exhibit 20.1.8-3, EO and EP Reasonable Cause Guidelines.

IRC 6711 provides that when a tax exempt organization offers to sell (or solicits money for) specific information or offers to provide routine service for any individual that could be readily obtained by such individual free of charge (or for a nominal charge) from an agency of the federal government, the tax exempt organization must, when making such offer or solicitation make "an express statement" in a conspicuous and easily recognizable format that the information can be obtained from the federal government.

Material and/or services available from the federal government for less than $2.50, including postage and handling costs, meet the nominal charge requirement. See Notice 88-120.

A penalty applies if the failure to make such express statement is due to the intentional disregard of this requirement.

This penalty is assessed on Form 8278.

See IRM 20.1.1.4, Methods of Appealing Penalties, for post-assessment appeal procedures.

The penalty may not be waived for reasonable cause.

For each day a failure occurred, the penalty shall be the greater of:

There is no maximum amount of penalty.

Consider the following when determining the day a failure to meet the requirement occurred.

IRC 6714 imposes a penalty on organizations that did not disclose quid pro quo contributions in excess of $75 as required under IRC 6115(a).

IRC 6115(b) defines "quid pro quo contribution" as a payment:

IRC 6115 provides that organizations described in IRC 170(c) (except governmental instrumentalities described in IRC 170(c)(1)) are required to provide a written statement to each donor in connection with the solicitation or receipt of the quid pro quo contribution.

IRC 6714 provides for a penalty of $10 per failure to provide the required written statement to the payor (donor). The maximum penalty per fund-raising event or mailing shall not exceed $5,000.

The penalty does not apply if the organization can establish that the failure to provide the written statement was due to reasonable cause.

This penalty is assessed on Form 8278.

See IRM 20.1.1.4, Methods of Appealing Penalties, for post-assessment appeal procedures.

IRC 170(f)(12)(A) requires the donee organization to furnish a contemporaneous written acknowledgment to a donor who donates a qualified vehicle (motor vehicle, boat, or airplane) the claimed value of which exceeds $500.

IRC 6720 provides for a penalty for any donee organization which knowingly furnishes a false or fraudulent acknowledgement, or which knowingly fails to furnish such acknowledgment in the manner, at the time, and showing the information required under IRC 170(f)(12), or the regulations thereunder.

IRC 6720 provides that for each act or for each failure, the penalty is equal to, in the case of:

The penalty is:

The criteria for establishing "reasonable cause" for penalty relief are contained in IRM 20.1.1, Introduction and Penalty Relief. See IRM 20.1.1.3, Criteria for Relief From Penalties.

IRC 6652(d)(1) and IRC 6652(d)(2) discuss the registration and the notification of the change of status applicable under IRC 6652(d).

IRC 6652(e) imposes a penalty for failure to file annual returns and statements by the due date and in the prescribed manner required under:

In general, IRC 6058(a) requires the employer or the plan administrator of each funded plan of deferred compensation, to file an annual return (Form 5500 (series), Annual Return/Report of Employee Benefit Plan). See Exhibit 20.1.8-1, Plans Filing Requirements, and Exhibit 20.1.8-2, Plans Exempt From Filing.

In general, the due date for the Form 5500, Annual Return/Report of an Employee Benefit Plan, and appropriate schedules and attachments is:

Extension of time to file:

Plans are automatically granted extensions of time to file Form 5500 and its required schedules until the extended due date of the federal income tax return of the employer and are not required to file Form 5558, if all the following conditions are met:

Plans granted an extension under the conditions in (5) above, cannot further extend the due date by filing a Form 5558.

In general, IRC 6058(b) requires a plan administrator to file an actuarial statement of valuation evidencing compliance with IRC 401(a)(12), in the case of a merger, consolidation, or transfer of assets or liabilities from one plan to another.

The instructions for Form 5310-A provide that a Form 5310-A is not required to be filed for:

In general, IRC 6047(d) requires Form 1096, (Annual Summary and Transmittal of U.S. Information Returns) and Form 1099-R, (Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.) to be filed by:

Designated distributions are defined in IRC 3405(e)(1) and include, generally, any includible non-wage distributions from an employer deferred compensation plan, an IRA, or a commercial annuity.

A separate Form 1099-R must be made for each payee, but is not required if the aggregate payment to the payee is less than $10.

Form 1099-R is required to be filed with the IRS following the year of the distribution. File Form 1099-R as follows:

Form 1096 is required to be filed with the IRS following the year of the distribution. File Form 1096 as follows:

Penalties under IRC 6652(e) are assessed against the plan administrator as defined in IRC 414(g), Plan Administrator. The employer and/or contract issuer may also be liable.

The penalty is assessed using PRN 167.

The penalty under IRC 6652(e) will be assessed on BMF (MFT 74). It is computed after the return is processed on the master file, or it may be asserted by an EP/EO specialist.

The penalty imposed by IRC 6652(e) for failing to file any form required under IRC 6058 and IRC 6047 on the due date in the prescribed manner is equal to:

IRC 6652(e) provides for non-assertion of the penalty if reasonable cause can be shown.

The request for "penalty relief" due to reasonable cause must be made in the form of a written statement providing all the facts to substantiate reasonable cause. The statement must contain a declaration by the appropriate individual that the statement is made under penalties of perjury.

In Alton OB-Gyn, Ltd. v. United States, 789 F.2d 515 (7th Cir. 1986), the taxpayer's reliance on a bank, as plan trustee, to handle ministerial duties of taxpayer's pension and profit-sharing plans, did not constitute reasonable cause for the failure to timely file the required Form 5500 series return.

See IRM 20.1.1.3.2, Reasonable Cause, and Exhibit 20.1.8-3, EP and EO Reasonable Cause Guidelines, for a discussion of reasonable cause penalty relief. See IRM 20.1.1, Introduction and Penalty Relief, for a general discussion of penalty relief.

The penalty is imposed against the person responsible for the failure to file as reflected in the chart below:

IRC 6652(h) imposes a penalty for each failure to give notice concerning withholding to recipients of distributions from an employer's deferred compensation plan or an Individual Retirement Account (IRA) as required by IRC 3405(e)(10)(B). The penalty is imposed on the payor.

In general, IRC 3405(e)(10)(B) requires that the "payor" of:

In general, these requirements pertain to payments and distributions made from employer deferred compensation plans, individual retirement plans, and commercial annuities.

Due Date: The notice of election must be transmitted no earlier than six months before the first payment and no later than when the first payment is made. For periodic payments, notice must also be provided at least once in each calendar year of the right to make and revoke the election. See Treas. Reg. 35.3405-1T D-21, D-22, D-25, and D-26 for examples of notices that can be used to satisfy the notice requirements.

The penalty under IRC 6652(h) is identified by the Tax Exempt/Government Entities (TE/GE) specialist.

The penalty is assessed on BMF (MFT 74). It is computed after the return is processed on the master file, or it may be asserted by an Employee Plan/Exempt Organization (EP/EO) specialist.

The penalty under IRC 6652(h) is $100 for each failure to give notice, up to a maximum penalty of $50,000 for all such failures per calendar year.

IRC 6652(h) provides for non-assertion of the penalty if the payor can show that the failure was due to reasonable cause and not due to willful neglect.

The request for "penalty relief" due to reasonable cause must be made in the form of a written statement providing all the facts to substantiate reasonable cause. The statement must contain a declaration by the appropriate individual that the statement is made under penalties of perjury. See IRM 20.1.1.3.2, Reasonable Cause, and Exhibit 20.1.8-3, EP and EO Reasonable Cause Guidelines, for a discussion of reasonable cause penalty relief. See IRM 20.1.1, Introduction and Penalty Relief, for a general discussion of penalty relief.

IRC 6652(i) imposes a penalty for each failure to timely provide a written explanation of an eligible rollover distribution as required by IRC 402(f), Written Explanation to Recipients of Distributions Eligible for Rollover Treatment.

In general, IRC 402(f) requires plan administrators of qualified plans to provide a written explanation to recipients of eligible rollover distributions that explains:

In general an eligible retirement plan includes the following:

An eligible rollover distribution means any distribution to an employee of all or part of the balance to the credit of the employee in a qualified trust, other than certain periodic payments, hardship distributions, and distributions required by IRC 401(a)(9).

Due Date: The explanation must be provided no less than 30 days and no more than 90 days before the date of the distribution.

The penalty under IRC 6652(i) is identified by the EP specialist.

The penalty is assessed on Business Master File (BMF) Master File Transaction (MFT 74). It is computed after the return is processed on the master file, or it may be asserted by an EP specialist.

The penalty under IRC 6652(i) is $100 for each failure to provide a written explanation, up to a maximum penalty of $50,000 for all such failures per calendar year.

IRC 6652(i) provides for non-assertion of the penalty if the payor can show that the failure was due to reasonable cause and not due to willful neglect.

The request for "penalty relief" due to reasonable cause must be made in the form of a written statement providing all the facts to substantiate reasonable cause. The statement must contain a declaration by the appropriate individual that the statement is made under penalties of perjury. See IRM 20.1.1.3.2, Reasonable Cause, and Exhibit 20.1.8-3, EP and EO Reasonable Cause Guidelines, for a discussion of reasonable cause penalty relief. See IRM 20.1.1, Introduction and Penalty Relief, for a general discussion of penalty relief.

IRC 6690 imposes a penalty on a plan administrator who:

In general, the individual statement to a participant required by IRC 6057(e) must include the following:

Due Date: The due date for delivering the statement to the individual is no later than the due date (including extensions) for the Form 8955-SSA that reports information with respect to the individual.

The penalty under IRC 6690 can be identified by the EP specialist.

The penalty is assessed using PRN 168.

The penalty is assessed on BMF (MFT 74). It is computed after the return is processed on the master file, or it may be asserted by an EP specialist.

The penalty under IRC 6690 is not subject to deficiency procedures described in IRM 20.1.1.4.2, Deficiency Procedures.

The penalty is imposed at $50 for each act or failure with no maximum.

IRC 6690 provides a penalty for willfully failing to provide the statement, or willfully furnishing a false or fraudulent statement. Therefore, this code section does not provide for reasonable cause consideration.

IRC 6692 imposes a penalty on the plan administrator of a defined benefit plan to which IRC 412, Minimum Funding Standard, applies, when the plan administrator fails to file an actuarial report (Form 5500, Schedule SB or MB), in the time and manner as required by IRC 6059, Periodic Report of Actuary.

The penalty under IRC 6692 is imposed if there is a failure to file Schedule SB, Single Employer Defined Benefit Plan Actuarial Information, or Schedule MB, Multi-employer Defined Benefit Plan and Certain Money Purchase Plan Actuarial Information, which must be filed as an attachment to the appropriate Form 5500 (series) return.

The penalty is imposed on the plan administrator. If more than one plan administrator is responsible for the failure, all are jointly and severally liable.

The penalty under IRC 6692 is assessed on BMF (MFT 74).

The penalty may be computed when the return is filed or asserted by the EP specialist.

The penalty is assessed using PRN 169.

The penalty is imposed at $1,000 for each failure to file with no maximum.

The penalty is assessed on BMF (MFT 74). It is computed after the return is processed on the master file, or it may be asserted by an EP specialist.

IRC 6692 provides for non-assertion of the penalty if the responsible party can show that the failure was due to reasonable cause.

The request for "penalty relief" due to reasonable cause must be made in the form of a written statement providing all the facts to substantiate reasonable cause. The statement must contain a declaration by the appropriate individual that the statement is made under penalties of perjury.

See IRM 20.1.1.3.2, Reasonable Cause, and Exhibit 20.1.8-3, EP and EO Reasonable Cause Guidelines, for a discussion of reasonable cause penalty relief. See IRM 20.1.1, Introduction and Penalty Relief, for a general discussion of penalty relief.

Covered under this sub-section are each of the penalties imposed by IRC 6693:

IRC 6693(a) imposes a penalty on the failure to furnish a report required by IRC 408(i) and IRC 408(l).

IRC 408(i) and associated regulations (e.g., Treas. Reg. 1.408-5 and Treas. Reg. 1.408-6) require that:

IRC 408(l) and associated regulations require that an employer who:

Due dates for certain forms required to filed under IRC 6693(a) :

IRC 6693(a) penalty also applies to reports required to be filed under:

The Stephen Beck, Jr., Achieving a Better Life Experience Act (ABLE Act) was enacted on December 19, 2014, as part of The Tax Increase Prevention Act of 2014 (P.L. 113-295). Generally, the ABLE Act permits a state (or a state agency or instrumentality) to establish and maintain a tax-advantaged savings program (under IRC 529A of the Internal Revenue Code). Contributions may be made to a IRC 529A account established for a designated beneficiary to pay for qualified disability expenses. ABLE programs will use two forms (Form 1099-QA, Distributions from ABLE Accounts and Form 5498-QA, ABLE Account Contribution Information) to report relevant account information annually to designated beneficiaries and the IRS.

IRC 6693(b)(2) imposes a penalty on the failure to furnish information under IRC 408(o)(4).

IRC 408(o)(4) requires that an individual who makes designated nondeductible contributions to any IRA for any taxable year or receives a distribution from any IRA to which nondeductible contributions have been made for any taxable year report such contributions or distribution, as well as other information. This information is reported on Form 8606, Nondeductible IRAs.

IRC 6693(b)(1) imposes a penalty on the overstatement of designated nondeductible contributions made on Form 8606.

The penalty for failure to satisfy the requirements of IRC 408(o) is imposed on the taxpayer who made the contributions or received the distribution.

Due Date.Form 8606, Nondeductible IRAs, is required to be filed as an attachment to the Form 1040 (series). If no 1040 return is required, the Form 8606 must still be filed by the due date of the Form 1040.

The penalty under IRC 6693(a) and IRC 6693(b):

IRC 6693(c) imposes a penalty on the failure to furnish certain information required under IRC 408(i) and IRC 408(l)(2) to participants in SIMPLE IRA plans described in IRC 408(p).

The penalty for failure to satisfy the requirement of IRC 408(i) and IRC 408(l)(2) described above is imposed on:

Due Date:

The computations for the penalties are as follows:

IRC 6693 provides for non-assertion of the penalty if it is shown that the failure is due to reasonable cause.

The request for "penalty relief" due to reasonable cause must be made in the form of a written statement providing all the facts to substantiate reasonable cause. The statement must contain a declaration, made by the appropriate individual, that the statement is made under penalties of perjury. See IRM 20.1.1, Introduction and Penalty Relief, for a discussion of penalty relief.

See IRM 20.1.1.3.2, Reasonable Cause, and Exhibit 20.1.8-3, EP and EO Reasonable Cause Guidelines, for a discussion of reasonable cause penalty relief. See IRM 20.1.1, Introduction and Penalty Relief, for a general discussion of penalty relief.

IRC 6047(d) requires the employer maintaining a plan or the plan administrator of a plan from which designated distributions may be made or any person issuing any contract under which designated distributions may be made, to make returns and reports regarding such plan or contract to:

IRC 6704(a) imposes a penalty on any person who:

IRC 6704(b) provides for a penalty of $50, per each calendar year, multiplied by the number of individuals in relation to whom such failure occurred.

The maximum amount of penalty shall not exceed $50,000 per calendar year.

IRC 6704(c)(1) provides for non-assertion of the penalty if it is shown that the failure is due to reasonable cause and not due to willful neglect.

The request for "penalty relief" due to reasonable cause must be made in the form of a written statement providing all the facts to substantiate reasonable cause. The statement must contain a declaration, made by the appropriate individual, that the statement is made under penalties of perjury. See IRM 20.1.1, Introduction and Penalty Relief, for a discussion of penalty relief.