Taxpayers need to respond to the IRS as explained in the penalty notice in order to obtain a waiver of the penalties. The IRS indicated that it may be several weeks before taxpayers receive notification of penalty waivers.
Read the IRS announcement (January 30, 2014).
For the 2011 tax period, the IRS:
- Introduced Form 1098-T, Tuition Statement, into the automated penalty notice program
- Included the form on Notice 972CG, imposing a $100 penalty for each missing or incorrect taxpayer identification number (TIN)
In general, Form 1098-T is filed by colleges and universities to report payments received (or amounts billed) for qualified tuition and related expenses.
Many of the proposed penalties on Notice 972CG relate to incorrect TINs from students having supplied an incorrect number on their enrollment forms.
Currently, the IRS is offering this waiver only for the 2011 tax period and only with respect to Form 1098-T failures.
Taxpayers with proposed penalties related to other information returns—such as Form 1099-MISC—will still need to request a waiver of such penalties (by asserting reasonable cause for the reporting failures).
Similar issues likely exist for the 2012 and 2013 tax years. Absent the IRS providing a similar waiver program for these years, taxpayers may be able to avoid penalties by establishing that missing or incorrect TINs were due to an event beyond their control and that they acted in a responsible manner. This requires the taxpayer to make a follow-up TIN solicitation request of all student and vendor accounts identified by the IRS as having furnished an incorrect TIN.
For more information, contact:
Rick Speizman, Partner-in-Charge of KPMG's Washington National Tax Exempt Organizations Tax group
+1 (202) 533-3084