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PROCEDURE & ADMINISTRATION
INDIVIDUALS

However, if there is more than one per return.61 An identical penalty reduc- the date requested by the IRS; and (4)
transaction, the information for all tion applies to payee notices corrected whether the amount of the penalties is
Forms 8300 must be aggregated on one within 30 days after Jan. 31.62 If the less than the cost of complying.66
year-end statement with all required failures are corrected after 30 days, but The IRS has, in several cases, sought
information.54 Providing copies of the on or before Aug. 1, the penalty is $110 to assess the intentional disregard penal-
Form 8300 to the cash payer at the in lieu of $280.63 ties for repeated failures to file or failures
time of sale or sending multiple copies However, these sections also provide to include all required information. The
at year end does not satisfy the notice for greatly enhanced penalties for inten- typical fact pattern involves a Sec. 6050I
requirement.55 tional disregard of the filing or notifica- compliance audit that uncovers one or
If a business voluntarily files a Form tion requirements. If the failure to file more failures to file, to deliver payee
8300 to report a suspicious transaction, (or to include all required information notices, or to properly complete a Form
the business does not deliver an annual or include correct information) is due 8300 (e.g., missing TINs).67 The IRS
notice to the payer.56 Further, a business to intentional disregard, the penalty assesses negligence penalties and po-
is prohibited from notifying the payer for 2021, applied to each failure, is the tentially requires the taxpayer to sign a
that the suspicious transaction box was greater of (1) $28,550, or (2) the amount statement acknowledging the taxpayer’s
checked.57 of cash received in the transaction, not requirement to file a Form 8300. Similar
The IRS’s position is that there is no to exceed $114,000.64 For intentional failures are uncovered in a subsequent
statute of limitation for a failure to fur- disregard of the payee notification re- examination, and the IRS then assesses
nish or include all required information quirements, the penalty is the greater of intentional disregard penalties.
in a payee statement.58 (1) $570 per failure, or (2) 10% of the Fortunately for taxpayers, the IRS
aggregate amounts of the items required has not enjoyed judicial success enforc-
Penalties for noncompliance to be reported correctly. ing intentional disregard penalties for
Secs. 6721 and 6722 initially provide A failure is due to intentional disre- repeated failures. The facts in the most
fairly innocuous civil penalties for neg- gard if it is a knowing or willful failure recent decision involving Sec. 6050I,
ligent failure to comply with both the to timely file, or to include correct Mycles Cycles, Inc.,68 follow the same
filing requirements and the customer information. The determination depends pattern: The IRS assessed intentional
notice requirements. The penalties are on the facts and circumstances of each disregard penalties following a subse-
adjusted annually for inflation. The case.65 The regulations additionally pro- quent examination that found repeated
penalty amount for failures to timely file vide a list of nonexclusive circumstances violations. The court, consistent with
or to include all required information on to consider when determining whether prior decisions, reviewed all the facts and
the form or include correct information a failure is intentional, including (1) circumstances before concluding that
(for 2021) is $280 per return.59 An iden- whether the failure is a pattern of con- intentional disregard penalties were not
tical penalty can be assessed for failures duct involving repeated failures to file summarily warranted.
to furnish a timely, complete, and correct or include the correct information; (2) Courts have routinely defined inten-
payee notice.60 For failures that are cor- whether the correction was promptly tional disregard as requiring willful con-
rected within 30 days after the required made after discovery; (3) whether the duct; that is, conduct that is purposeful
filing date, the penalty is reduced to $50 correction was made within 30 days after rather than accidental or unconscious.69

54. Id. 64. Sec. 6721(e)(2)(C).
55. Id. 65. Regs. Sec. 301.6721-1(f)(2).
56. IRS Form 8300 Reference Guide. 66. Regs. Sec. 301.6721-1(f)(3).
57. FS-2021-03. 67. See Tysinger Motor Co., Inc., 428 F. Supp. 2d 480 (E.D. Va. 2006); Purser
58. IRM §4.26.10.11.1(7). Truck Sales, Inc., 710 F. Supp. 2d 1334 (M.D. Ga. 2008); Bale Chevrolet
59. Sec. 6721(a)(1). Note that penalty amounts in Secs. 6721 and Co., 620 F.3d 868 (8th Cir. 2010); Mycles Cycles, Inc., No. 18-CV-314
6722 are adjusted annually for inflation. Actual current amounts JLS (AGS) (S.D. Cal. 9/4/19).
can be found in the IRS Form 8300 Reference Guide. 68. Mycles Cycles, Inc., 18-CV-314 JLS (AGS) (S.D. Cal. 9/4/19).
60. Sec. 6722(a)(1). 69. Tysinger Motor Co., Inc., 428 F. Supp. 2d 480 (E.D. Va. 2006).
61. Sec. 6721(b)(1).
62. Sec. 6722(b)(1).
63. Sec. 6721(b)(2) and Sec. 6722(b)(2).

38 May 2022 The Tax Adviser