Ezel / IRS Rulings / 201503013

No information-return penalties when withholding was reported correctly

Number
201503013
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
Liability for Withheld Tax; Failure to File Certain Information Returns (See Also 6652.00-00); Failure to Furnish Certain Payee Statements
Topics
Other topics Procedure, penalties, and administration
Code sections
§ 1461, § 6721, § 6722
Ruling dated
December 24, 2014
Publicly released
January 16, 2015
Source
View Official PDF

Apply this to your situation

This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2015, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2015
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It is advice from the IRS Office of Chief Counsel to IRS personnel on the facts they presented, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
View official IRS release (PDF)

Plain-English summary

Chief Counsel advised that penalties under IRC §§ 6721 and 6722 generally could apply to errors on Forms 1042-S. Here, however, the withholding agent correctly reported in Box 7 the amounts it actually withheld. The IRS therefore should not assess those information-return and payee-statement penalties in the investigation.

Ruling snapshot

  • Question: Should the withholding agent face penalties under IRC §§ 6721 and 6722 for its Forms 1042-S?
  • Outcome: Advice given not to assess penalties
  • Key authorities: IRC §§ 1461, 6721, and 6722; Instructions for Form 1042-S

Full text (IRS public release)

ID: CCA_2014122413065046
UILC: 6721.00-00, 6722.00-00, 1461.00- 00
Number: 201503013
Release Date: 1/16/2015
From:
Sent: Wednesday, December 24, 2014 1:06:50 PM
To:
Cc:
Bcc:
Subject: RE: 6721 and 6722 question

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As a general matter, the calculation of the penalties under sections 6721 and 6722 would be correct if there were errors on the Forms 1042-S filed by the withholding agent. However, based on the information provided, the withholding agent correctly reported the amounts actually withheld in Box 7 on its Forms 1042-S. See Instructions for Form 1042-S, p. 14. The IRS should therefore not assess penalties against the withholding agent under sections 6721 and 6722 with regard to this investigation.

Please let me know if you have any questions.

Regards,

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