Notice 972CG Reasonable Cause Statement Template (TIN Penalties)

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Template from tincompliance.com. A written statement in response to IRS Notice 972CG requesting waiver of proposed penalties under IRC §6721/§6722 for missing or incorrect TINs, under IRC §6724(a) and Treas. Reg. §301.6724-1. Respond within 45 days of the notice date (60 if outside the U.S.). Attach the solicitation log and copies of B-Notices sent. 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)

Dear Sir or Madam:

[Company] respectfully requests that the penalties proposed in the above notice for information returns with missing or incorrect taxpayer identification numbers be waived because the failures were due to reasonable cause and not willful neglect, as provided in IRC §6724(a) and Treas. Reg. §301.6724-1. [If applicable: We agree to the penalties for the [number] returns identified as filed late and have enclosed payment / request that those items be assessed at the reduced tier for corrections filed within 30 days / by August 1.]

1. Summary of the failures

The notice proposes penalties on [number] returns for missing or incorrect name/TIN combinations. [Number] of these have since been corrected by [describe: corrected returns filed on date / payee provided corrected W-9]. [Number] relate to payees who did not respond to our solicitations.

2. The failures were due to events beyond our control

Under Treas. Reg. §301.6724-1(c)(6), a payee's failure to provide a correct TIN is an event beyond the filer's control where the filer acted in a responsible manner. In each case, the incorrect or missing TIN resulted from information furnished, or not furnished, by the payee.

3. We acted in a responsible manner — solicitations made

Treas. Reg. §301.6724-1(e) and (f) provide that a filer acts in a responsible manner with respect to missing and incorrect TINs by making the required solicitations. [Company] made the following solicitations (see enclosed log, Exhibit A):

Initial solicitation: a Form W-9 was requested from each payee at account opening / before the first payment, as shown in the enclosed log.
First annual solicitation: for accounts with a missing TIN, a further request was made by December 31 of the year the account was opened [or January 31 of the following year for December accounts].
Second annual solicitation: for accounts still missing a TIN, a further request was made by December 31 of the following year.
For incorrect TINs identified on IRS Notice CP2100/CP2100A dated [date], a First B-Notice [and Second B-Notice] with Form W-9 [or agency-validation instructions] was mailed to each listed payee on [date], within 15 business days of the notice, and backup withholding was begun on [date] for payees who did not respond (Exhibit B).

4. We acted in a responsible manner — before and after the failure

Before filing, [Company] [describe controls: verified name/TIN combinations through the IRS TIN Matching Program / a third-party matching service on (date); maintained written vendor-onboarding procedures requiring a signed W-9 before setup; etc.]. After receiving the IRS notice, [Company] corrected the returns within 30 days of discovery / issued B-Notices as described above, and has [describe process improvements].

5. Request

For the reasons above, [Company] requests that the proposed penalty of $[amount] for the [number] returns listed in Exhibit A be waived in full. [If applicable: We further request that the [number] returns corrected on [date] be assessed at the $60 / $130 tier applicable to corrections made within 30 days / by August 1.]

Enclosures: Exhibit A — payee solicitation log; Exhibit B — copies of B-Notices and mailing records; Exhibit C — annotated CP2100 listing; [Exhibit D — corrected returns].

Declaration

Under penalties of perjury, I declare that I have examined this statement, including accompanying documents, and to the best of my knowledge and belief it is true, correct and complete.

______________________________

[Name], [Title]

[Company]

[Phone] · [Email]

How to use it

Respond within 45 days of the Notice 972CG date (60 if outside the U.S.). More
Attach the solicitation log and copies of every B-Notice; without them the statement is a narrative, not evidence. More
Have it signed under penalties of perjury by someone with authority, and have your adviser review it.

A general-purpose starting point, not legal advice. Your facts, and your counsel, control what you send.

Reasonable-cause statement for Notice 972CG (missing or incorrect TINs)

1. Summary of the failures

2. The failures were due to events beyond our control

3. We acted in a responsible manner — solicitations made

4. We acted in a responsible manner — before and after the failure

5. Request

How to use it