What the code is
Every information return penalty is assessed on the business civil-penalty module (MFT 13) as a transaction code 240 with a penalty reference number. "PRN 500 is used if the failure was identified on the Payer Master File (PMF) and is assessed by a campus function. PRN 600 is used if the failure was identified during an examination" (IRM 20.1.1.5.3). The 500 series encodes which of four failures the penalty combines: late filing, not filing electronically when required, a missing or incorrect payee TIN, and improper format. Fifteen combinations, 500 through 514 (Exhibit 20.1.1-4). The same three-digit code appears on the PMFOL summary screen as PENALTY REFERENCE CODE with a literal such as "505 TIN-LATE" (IRM 2.3.53.7).
Why the count of failures matters
"The request must identify the penalty or penalties for which relief is requested and address the reason(s) applicable to the penalty or penalties since each penalty is for a different type of failure" (IRM 20.1.1.3.5(5)). A code 505 response that explains the late filing and says nothing about the TINs has answered half the notice. And only one penalty is charged per return, at the highest applicable rate; waiving one failure drops the return to the next failure rather than to zero (IRM 4.19.25.7.2), which is what the cascade calculator shows.
The tiers and the caps
"Tier 1: Within 30 days after the due date; Tier 2: Between 31 days through August 1; Tier 3: After August 1" (Exhibit 20.1.1-4), at the inflation-adjusted rates on the figures page, with reduced maximums for a filer with gross receipts of $5 million or less and "in the case of intentional disregard, there is no reduced penalty rate or maximum penalty." First Time Abate does not apply to any code on this page that arises from Form 1099 series returns (IRM 20.1.1.3.3.2.1(8)); reasonable cause under IRC 6724 does.