972CG penalty cascade calculator

The penalty estimator shows what the IRS proposes. This shows what happens when you win part of it: because only one penalty is charged per return, a return relieved of its TIN failure drops into the late-filing tier that still applies, and the recalculated penalty is higher than most payers expect.

Basis IRM 4.19.25.7.2 (one penalty per return, order of evaluation, worked example); IRM 20.1.7.3.3; Rev. Proc. 2023-34, 2024-40, 2025-32 amountsPrivacy runs in your browser; nothing you enter is sent or stored

Year the returns were due

Small filer (average gross receipts $5 million or less)

Returns on the notice

Late-filing tier charged

Of those, returns with a missing or incorrect TIN

Of those, returns filed on paper when e-filing was required

Returns not legally required (below threshold)

Removed from the count entirely (IRM 20.1.7.12.2.7).

Reasonable cause accepted for the TIN failures

Reasonable cause accepted for late filing

Waiver accepted for the paper-filing failure

Assumes the TIN and paper failures were not cured by August 1, so they carry the top-tier rate, which is how they appear on a 972CG. Caps are the calendar-year maximums for the filer size.

Why a partial win is not a proportional win

"Only one penalty per information return filed incorrectly can be assessed" (IRM 4.19.25.7.2). The examiner evaluates failures in order of value: late filing, then missing or incorrect TIN, then paper filing when e-filing was required, and charges the highest that applies. When you win reasonable cause on one failure, the return does not leave the penalty; the examiner "must consider" the next failure on the same return (IRM 20.1.7.3.3).

The IRM's worked example (IRM 4.19.25.7.2): a small business e-files 500 Forms 1099-DIV late in late April, 50 with bad TINs. Proposed: 50 at the top-tier rate plus 450 at the 30-day rate. The TIN failures are waived, lateness is not. Recalculated: all 500 at the 30-day rate, not 450. The defaults above reproduce that example at 2026 rates.

Address every failure code on the notice. A response that argues only the expensive failure leaves the cheap one standing under every return.

Rates used

Returns due in	Within 30 days	By August 1	After August 1 (also TIN and paper failures)	Top-tier maximum, large / small
2027	$60	$130	$340	$4,191,500 / $1,397,000
2026	$60	$130	$340	$4,098,500 / $1,366,000
2025	$60	$130	$330	$3,987,000 / $1,329,000