The IRS issued final regulations on Monday, Dec. 18, that provide a de minimis safe harbor from the penalties for failure to file correct information returns under Sec. 6721 and failure to furnish correct payee statements under Sec. 6722 (T.D. 9984).
Under the de minimis rules, payers are not required to correct an error on an information return or payee statement and are not subject to penalties for failure to file a correct information return or payee statement if the error relates to an incorrect dollar amount and is no more than $100 ($25 for withholdings).
The modifications made in the final regulations include a requirement that the payee be consistent in using the de minimis safe harbor when reporting basis.
The final rules also clarify the definition of "tax withheld" to settle any ambiguity about whether the term includes Social Security, Medicare and additional Medicare taxes. Learn more.