- What Notice 972CG is (and isn't)
- The penalty amounts for returns due in 2026
- How the IRS computes the proposed amount
- Your three options within 45 days
- What "reasonable cause" means for TIN errors
- The solicitation schedule you have to prove
- Writing the reasonable-cause statement
- Questions payers ask
What Notice 972CG is (and isn't)
Notice 972CG is a proposed civil penalty under IRC section 6721, "failure to file correct information returns." It is not yet assessed; it is the IRS telling you what it intends to charge and inviting you to agree, pay, or explain. It typically arrives 12 to 18 months after the filing season it covers, so the notice you receive in late 2026 is generally about returns filed in early 2025 for tax year 2024.
The notice lists each return by type and the failure charged: filed late, filed on paper when e-filing was required, missing TIN, or incorrect name/TIN combination. The TIN failures are the ones this guide is about, and they usually trace back to a CP2100 you received earlier. The CP2100 guide covers that notice.
What the 45 days are for. You have 45 calendar days from the notice date (60 if you're outside the U.S.) to respond. If you don't, the IRS assesses the full proposed amount and sends a bill. Interest runs from the assessment, not from the notice.
The penalty amounts for returns due in 2026
The per-return penalty is indexed for inflation and depends on how late the correct return was filed. For information returns due in 2026 (generally tax year 2025 forms) the IRS schedule is:
| Correct return filed | Per return |
|---|---|
| Within 30 days of the due date | $60 |
| 31 days late through August 1 | $130 |
| After August 1, or never filed / never corrected | $340 |
| Intentional disregard | $680, no annual maximum |
For returns due in 2025 the top tier was $330 ($660 intentional), and for 2024 it was $310 ($630). Annual maximums apply to the non-intentional tiers and are lower for businesses with average gross receipts of $5 million or less over the prior three years. The same amounts apply a second time under IRC 6722 if the payee statement (the copy you give the vendor) was also wrong, so a single bad TIN can cost $680 for the year without any intentional-disregard finding.
A missing or incorrect TIN that is never corrected lands in the top tier by definition: there is no "corrected within 30 days" for a TIN you didn't fix.
How the IRS computes the proposed amount
To check a notice or budget for one, the 972CG penalty estimator applies these tiers and the annual maximums for 2025 and 2026.
The notice multiplies the number of returns with each failure by the applicable tier and totals it. The numbers to check on your copy:
- Count. Does the number of TIN failures match the CP2100 listing for that year, after the corrections you filed? Corrected returns filed before the 972CG date should have dropped off.
- Tier. Were corrections filed within 30 days or by August 1 credited at the lower tier?
- Duplicates. The same payee can appear once per return type. That's correct under the statute, but a vendor reported on both a 1099-NEC and a 1099-MISC should not appear three times.
- Small-business cap. If your gross receipts qualify, the annual maximum is lower; the notice does not always apply it automatically.
Your three options within 45 days
The notice includes a response page. You can:
- Agree and pay. Sign, return, and pay the proposed amount. Reasonable for a small count with no defense.
- Disagree in part. Agree to some items and contest others. Common where late-filing items are undisputed but the TIN items have a solicitation defense.
- Disagree in full with a reasonable-cause statement. A signed written explanation, under penalties of perjury, of why the failures occurred and what you did to prevent and correct them, with supporting records.
If the IRS rejects the statement, it assesses the penalty and you receive a bill (CP15 or similar) with appeal rights. Most well-documented TIN-error waivers are granted at the 972CG stage without an appeal.
What "reasonable cause" means for TIN errors
IRC 6724 waives the penalty if the failure was due to reasonable cause and not willful neglect. Treasury Regulation 301.6724-1 defines that in two parts, and you need both:
- Significant mitigating factors or events beyond your control. For TIN failures, the regulation treats the payee's failure to provide a correct TIN as an event beyond the filer's control, provided the filer acted in a responsible manner.
- Acting in a responsible manner. Before the failure, you exercised ordinary business care to get it right. After the failure, you corrected it promptly once you found it (generally within 30 days of discovery or of the IRS notice).
For missing and incorrect TINs the regulation goes further and says exactly what "responsible manner" means: you made the required solicitations on the required schedule. That converts a judgment call into a documentation question. If you can show the solicitations, the waiver is close to automatic; if you can't, no amount of good-faith narrative substitutes.
The solicitation schedule you have to prove
| Failure | Required solicitations |
|---|---|
| Missing TIN | Initial: at account opening or first transaction (a W-9 request). First annual: by December 31 of the year the account was opened (January 31 of the next year if opened in December). Second annual: by December 31 of the following year if the TIN still hasn't arrived. |
| Incorrect TIN | Initial: the W-9 you obtained at onboarding. Annual (up to two): in response to the IRS notices. Sending the First B-Notice and, if applicable, the Second B-Notice within 15 business days of each CP2100 satisfies these. |
Solicitations can be by mail, phone (documented), or electronically. What the IRS wants to see is the date, the method, and the payee. A vendor onboarding system that time-stamps the W-9 request, the reminder, and the response is the cheapest reasonable-cause defense you can buy. If your process is email and a spreadsheet, the emails are the evidence; keep them.
Where waivers fail. The usual reason is not the narrative, it's the gap: a vendor set up in March with no W-9, paid all year, reported in January, and never solicited again. One missed annual solicitation removes the "responsible manner" finding for that payee, and the $340 stands.
Writing the reasonable-cause statement
A Word template with this structure is on the templates page.
Keep it factual and organized by failure type. A statement that works has these parts:
- Identification. Your name, EIN, the notice number and date, the tax year and return types covered.
- What happened. For TIN failures: the number of payees, that each was solicited for a W-9 at onboarding, and that the payees either provided incorrect information or failed to respond.
- Your process before the failure. Describe the solicitation procedure and, if you use it, TIN matching before payment. Attach a sample W-9 request and the solicitation log for the listed payees.
- What you did after. B-Notices sent (dates), backup withholding started (dates), corrected returns filed (dates).
- The request. Ask for waiver of the penalty for the listed returns under IRC 6724(a) and Reg. 301.6724-1, and for the reduced tier on any items corrected within 30 days or by August 1.
- Declaration and signature. The statement must be signed under penalties of perjury by a person with authority.
Contest the count in the same letter if it's wrong. Attach the CP2100 listing with your annotations showing which accounts were corrected before the 972CG date.
Questions payers ask
We never received a CP2100 for these payees. Can we still be penalized?
Yes. The 972CG is driven by the IRS's own matching of your filed returns, not by whether a CP2100 was mailed. Your defense is the same: the solicitation record.
Does running IRS TIN matching before filing count as a solicitation?
No. TIN matching is verification, not solicitation; the solicitation is the W-9 request to the payee. But matching before payment is strong evidence of "ordinary business care," and it usually prevents the failure in the first place, which is better than defending it.
Is the penalty per payee or per return?
Per return, and separately per payee statement under 6722. One vendor with a wrong TIN on a 1099-NEC is one 6721 penalty and one 6722 penalty.
Can we get a first-time abatement like income-tax penalties?
First-time abatement doesn't apply to information-return penalties. Reasonable cause is the route.
The notice has thousands of items. Where do we start?
Sort by failure type. Late-filing items are usually a single event with a single explanation. TIN items need the payee-level solicitation log. If you can't reconstruct the log, ask for the reduced tier for anything you corrected and pay the rest; then fix onboarding so next year's notice is short.