PRN 549: 10 percent of the larger wage gap, no maximum
The intentional disregard penalty under IRC 6721(e) is "Imposed on employers who do not comply with our requests to file correct Forms W-2." The statute allows the greater of a per-form amount or 10 percent of the aggregate amount required to be reported, but the CAWR manual uses one method only: "For the purpose of this program, use only the 10 percent of the aggregate amount method due to a problem with the data appearing in the number of employees field on the Form 94X returns and CATRS." The computation adds Social Security wages and tips, compares that and Medicare wages to the W-2 fields, and the instruction is to "Assess the 10 percent Penalty on the larger discrepancy." "There is no maximum to the Intentional Disregard penalty" (IRM 4.19.4.3.1.1(1) and (2), June 11, 2025). The estimator follows that arithmetic exactly. It assesses automatically when a Letter 98-C goes unanswered: "The Intentional Disregard Penalty automatically assesses when the BMF posts status code 91" (IRM 4.19.4.3.1(5)), and when a payment arrives with no explanation (IRM 4.19.4.3(9)).
The manual withholds PRN 549 from federal and quasi-federal agencies, defunct or bankrupt entities, quarters filed under IRC 6020(b) that have not been amended, cases where "The only wage field out of balance is Total Compensation," and subsidiaries with employment code S (IRM 4.19.4.3.1.1(3), 4.19.4.4(14) Note). The estimator does not test for those.
PRN 550: the maximum per-form rate, two-form minimum
The late-filing penalty under IRC 6721(a) is assessed "in the reply phase, when original Forms W-2 filed in response to SSA-CAWR correspondence are received. These forms are always subject to the maximum penalty of $290.00 ($280 for tax years 2020-2021, $270 for tax years 2018-2019, $100 for tax years 2010 through 2014 and $50.00 for SSA CAWR tax years 2009 and prior) for each Form W-2 unless the Form W-2 shows no FIT, Social Security tax, Medicare tax, and only reports Total Compensation" (IRM 4.19.4.3.1.2(1)). The manual's list states no rate for tax years 2015 through 2017; the estimator says so rather than guess. The floor is in the chart: "Assess Late Filing Penalty if you have two or more Form W-2" (IRM 4.19.4.3.1.3(3), Apr. 10, 2024). A partial reply draws both penalties, PRN 550 on the forms received and PRN 549 on the remaining discrepancy, and W-2s that push wages above the 94X figures draw the extra tax as well (same chart).
W-2s are treated as late originals when "the taxpayer does not state the Form W-2 were previously submitted OR ... states [they] were previously submitted and further BMFOLU and SSA (ORS or ERQY) research does not support the claim" (IRM 4.19.4.3.1.2(2)). No PRN 550 attaches to W-2Cs submitted in response, to forms confirmed timely filed, or to the entities excluded from PRN 549 (IRM 4.19.4.3.1.2(3)). W-2s postmarked "within 10 days of the CP 215 notice date" convert PRN 549 on those forms to PRN 550 (IRM 4.19.4.6.1(8)).
The assessment path by amount
"Penalties of less than $25,000.00 automatically assess on IDRS. Penalties of between $25,000.00 and $999,999.99 are held in a re-sequencing file until after PCD ... Penalties of 1 million dollars or more do not automatically assess" and are reviewed with the Large Corporation program (IRM 4.19.4.3.1(5)). Any tax or civil penalty of $100,000 or more needs a supervisor's signature, and a potential tax assessment of $100,000 or more requires "subsequent contact" before assessment (IRM 4.19.4.4(12)). A tolerance below which no penalty is assessed exists but is redacted in the public manual (IRM 4.19.4.2.14(4) Note, (5) and (6)); so is Exhibit 4.19.4-4, the "Tax and Penalty Assessment Guide." The estimator reports the manual's arithmetic, not the redacted tolerance.
Neither penalty is eligible for First Time Abate: "DO NOT abate PRN 549 or 550 penalties based on First Time Abate" (IRM 4.19.4.3.1(1) Note). Reasonable cause under Treas. Reg. 301.6724-1 is the only relief, and once you reply the examiner's evaluation requires written supervisory approval under IRC 6751(b) before the penalty is asserted (IRM 4.19.4.7.1(2) to (7)).