Template from tincompliance.com. A cover statement for a Notice 972CG response, organized in the order the IRS penalty unit evaluates it under IRM 4.19.25.8 and IRM 20.1.7.12: the formalities the examiner checks first, every failure type on the notice, the two responsible-manner questions, the mitigating factor or event beyond the filer's control, and the solicitation record for TIN failures. Use it on its own or as the cover for the detailed TIN or late-filing reasonable-cause statements. First Time Abate does not apply to information return penalties (IRM 4.19.25.8(1)); do not cite it. Respond within 45 days (60 outside the U.S.). Not legal advice; have your adviser review.
[Company legal name]
EIN: [00-0000000]
[Address]
[Date]
Internal Revenue Service
[Address shown on Notice 972CG]
Re: Notice 972CG dated [notice date]; proposed penalty under IRC 6721 for tax year [year], Forms [1099-NEC / 1099-MISC / other]
Request for waiver of penalty for reasonable cause under IRC 6724(a) and Treas. Reg. 301.6724-1
Dear Sir or Madam:
[Company] [disagrees / disagrees in part] with the penalties proposed in the above notice and requests that they be waived because the failures were due to reasonable cause and not willful neglect. This statement addresses each failure listed on the notice. It is signed under penalties of perjury by an officer of [Company].
1. Failures on the notice and the position taken on each
The IRS charges only one penalty per return but evaluates failures in order: late filing, then missing or incorrect TIN, then paper filing when e-filing was required. A return relieved of one failure is re-tested under the next (IRM 4.19.25.7.2, IRM 20.1.7.3.3). Address every failure code, including the ones you are not disputing.
Failure on notice | Returns | Proposed amount | Position |
Filed late (tier [1/2/3]) | [count] | $[amount] | [Waiver requested, section 3 / Agreed / Disputed count: see section 6] |
Missing or incorrect TIN | [count] | $[amount] | [Waiver requested, section 5] |
Paper when e-filing required | [count] | $[amount] | [Waiver requested / Agreed / Not applicable] |
2. How the failure was discovered and what [Company] did about it
Question one in the examiner's test: did the filer react timely on discovering the error? Give dates.
[Company] learned of the failure on [date] when [the notice arrived / a CP2100 listed the accounts / an internal review found the error]. Within [number] days [Company] [obtained corrected TINs from [count] payees / filed corrected returns on [date] / began backup withholding on [date] / filed the returns on [date]]. [If corrections were made within 30 days of an IRS letter, say so; IRM 20.1.7.8.2 treats prompt correction after notice as evidence against intentional disregard.]
3. What [Company] changed so the failure will not recur
Question two: did the filer take action to prevent recurrence? If this section is missing, the examiner checks your next year's filing and answers it for you (IRM 4.19.25.8(7)). If you received a 972CG in a prior year, show that the error rate fell.
Since [date], [Company] has [adopted IRS TIN Matching for every new payee before the first payment / moved vendor onboarding to a process that requires a completed Form W-9 before setup / adopted a filing calendar with an internal deadline of [date] / moved to electronic filing through IRIS]. For the [next] filing season, [Company] filed [count] returns [on time / with [count] TIN mismatches, compared with [count] in the year covered by this notice].
4. Mitigating factor or event beyond [Company]'s control
Choose from the list the examiner is given (IRM 4.19.25.8(8) to (11); IRM 20.1.7.12.1(11) to (23)) and attach what each requires. Compliance history must be considered even if you do not raise it, but raise it. Reliance on a vendor requires that the vendor itself had reasonable cause and that you supplied the data well before the due date. Records-unavailable events require the two-week test and, for death or illness, the person with sole authority to file. Mailing to the wrong address is not reasonable cause on its own.
[Choose and complete:]
- Compliance history: [Company] has filed information returns for [number] years and has not previously been assessed a penalty under IRC 6721 [or: a penalty proposed for [year] was waived]. [This is the first year [Company] was required to file Form [type].]
- Event beyond [Company]'s control: [describe the event, its dates, and why it prevented timely or correct filing; attach documentary evidence such as a death certificate, physician's statement, insurance report, or vendor correspondence].
- Reliance on a service provider: [Company] engaged [provider] on [date] after [describe the selection], transmitted complete data on [date], [number] days before the due date, and the provider failed to file because [reason]. [Attach the provider's statement of its own reasonable cause.]
- Erroneous written IRS advice: a copy of the advice, showing the IRS employee's name and the date received, and a copy of [Company]'s request stating the facts, are attached.
5. Missing and incorrect TINs: the solicitation record
For TIN failures the examiner applies the solicitation rules of Treas. Reg. 301.6724-1(e) and (f) and pulls your 972CG history. Annual solicitations claimed by electronic means are denied on sight (IRM 4.19.25.8.3(4) to (5)). Publication 1586 says not to attach the solicitations themselves unless asked; describe them and keep copies ready for a Letter 1948-C.
[Company] acted in a responsible manner with respect to each payee by making the solicitations the regulations require. The initial solicitation was made [at account opening / before the first payment] by [mail / electronic request / telephone]. Each annual solicitation was made by [mail / telephone] and, where mailed, consisted of a letter stating that the payee is subject to a $50 penalty under IRC 6723 for failing to furnish a TIN, a Form W-9, and a return envelope. For payees listed on a CP2100 for [year], a B-Notice was mailed within 15 business days of the notice date, which satisfies the annual solicitation for that year (IRM 20.1.7.12.2.4). The schedule below gives the date and method of every solicitation for each listed payee, taken from [Company]'s solicitation log maintained at the time.
Notice line | Payee | Initial solicitation | First annual | Second annual / B-Notice |
1 | [Payee] | [date], [method] | [date], mail | [date], mail / B-Notice [date] |
2 | [Payee] | [date], [method] | [date], telephone | [date], mail |
Where a listed return reflects information the payee furnished, the incorrect TIN resulted from the payee's failure, and [Company] furnished the payee everything needed to supply the correct TIN. Documentary evidence is available on request.
6. Corrections to the notice [delete if none apply]
- Filer size: the notice applies the [large / small] filer maximum. [Company]'s average annual gross receipts for [years], net of returns and allowances, were $[amount] [aggregated with [affiliates] as a controlled group], which is [under / over] $5,000,000. The [small / large] filer limits apply.
- Returns not required: [count] of the listed returns reported amounts below the reporting threshold for Form [type] and were not required to be filed. They should be removed from the count (IRM 20.1.7.12.2.7).
- Timeliness: the returns were [filed electronically on [date]; the FIRE/IRIS acknowledgment is attached / mailed by certified mail on [date]; the receipt is attached]. [The notice charges tier [3]; the filing date falls within tier [2].]
- Extension: Form 8809 was filed on [date]; the acknowledgment is attached. No approval letter is issued for extensions.
- Duplicates: [count] returns were transmitted twice; the original transmission on [date] was timely and the duplicate should not be penalized (IRM 4.19.25.8.1(8)).
7. Request
[Company] requests that the proposed penalty be waived in full [or: waived as to the [TIN / late-filing] failures, with the remaining penalty recalculated as set out in section 1]. If any part of the request is denied, [Company] requests a written explanation and the opportunity to appeal.
Please direct questions to [name, title], [phone], [email].
Under penalties of perjury, I declare that I have examined this statement, including the accompanying schedules and exhibits, and to the best of my knowledge and belief it is true, correct and complete.
[Signature]
[Name], [Title: an officer of the company, or a partner]
[Date]
Enclosures: [FIRE/IRIS acknowledgments; certified mail receipt; Form 8809 acknowledgment; evidence of the event in section 4; gross-receipts figures; solicitation log extract]