On Demand Webinar

Getting IRS Penalties Waived

Webinar Details $219

  • Rated:
  • Webinar Length: 100 Minutes
  • Guest Speaker:   Steven Mercatante
  • Topic:   Taxation and Accounting
  • Credit:   CPE 2.0
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IRS Form 972-CG proposed penalty notices are an issue you must address. If you choose to ignore a 972-CG or just pay what the IRS proposes you could be setting up your organization for incurring fines each and every year. For that matter, can you, or your staff, recognize the considerable differences between a B-Notice and Proposed Penalty Notice? But knowing how to get an IRS proposed penalty is no easy matter—and doing it incorrectly could make matters worse.

Please join us on for 100-information packed minutes as tax expert Steven Mercatante, Esq., explains how to:

•    Identify the elements you need to include in an abatement letter
•    Discover how to use your compliance policies and procedures to successfully waive an IRS proposed penalty
•    Apply your unique facts and circumstances to the IRS "reasonable cause" test
•    Explore the significant differences between responding to a B-Notice and a Proposed Penalty Notice
•    Create the framework needed for getting a penalty waived
•    Assemble the crucial documentation that makes all the difference in whether a penalty is waived or not

  1. Introduction
  2. IRS Focus: The Tax Gap 00:01:16
  3. The Law Learn it, Know it, Live it 00:07:57
  4. What’s New Big 1099 Filing Changes Coming - Filing Changes 00:14:22
  5. What’s New Big 1099 Filing Changes Coming - FIRE and E-Filing 00:19:30
  6. What’s New Big 1099 Filing Changes Coming - New Processing Rules 00:22:30
  7. Documentation and Penalty Abatement Start with the W-9 00:28:40
  8. You Must Perform Your Form W-9 Solicitations as Part of Penalty Abatement 00:33:33
  9. Backup withholding Policies Mean Everything in Penalty Abatement 00:36:29
  10. Watch Out For Backup withholding Audits From Seemingly Unlikely Payment Situations 00:39:23
  11. If You Want to Abate Penalties You Better Be TIN Matching - IRS TIN Match Program 00:42:42
  12. If You Want to Abate Penalties You Better Be TIN Matching - Program Usage Tips 00:43:45
  13. If You Want to Abate Penalties You Better Be TIN Matching - Policies and Procedures 00:45:04
  14. Final Tips on TIN Match Program and Penalty Abatement 00:45:49
  15. Backup Withholding Policies Mean Everything in Penalty Abatement 00:48:31
  16. Backup Withholding and the New Form 1099-MISC Versus 1099-NEC 00:50:12
  17. Backup Withholding Policies Mean Everything in Penalty Abatement - Four Triggers 00:53:50
  18. Backup Withholding Policies Mean Everything in Penalty Abatement (cont’d) 00:54:54
  19. Backup Withholding Policies Mean Everything in Penalty Abatement - Example 00:55:43
  20. Backup Withholding Policies Mean Everything in Penalty Abatement - - Mistakes 00:56:08
  21. Backup Withholding: The Form 945 00:56:09
  22. Backup Withholding: The Form 945 (cont’d) 00:57:41
  23. B-Notice Response Best Practices 00:59:06
  24. B-Notice Response Best Practices (cont’d) 01:03:24
  25. B-Notice Response Best Practices - 1st Notice 01:05:15
  26. B-Notice Response Best Practices - 2nd Notice 01:06:37
  27. IRS Form 972CG Proposed Penalty Notice and Reasonable Cause “Proposed Penalty Notice” 01:09:00
  28. IRS Form 972CG Proposed Penalty Notice and Reasonable Cause - “Proposed Penalty Notice” Contents 01:13:26
  29. IRS Form 972CG Proposed Penalty Notice and Reasonable Cause - “Proposed Penalty Notice” Responding 01:14:07
  30. IRS Form 972CG Proposed Penalty Notice and Reasonable Cause - Overview 01:17:00
  31. IRS Form 972CG Proposed Penalty Notice and Reasonable Cause - Prepare 972CG Penalty Waiver Request Letter 01:18:05
  32. IRS Form 972CG Proposed Penalty Notice and Reasonable Cause - Reasonable Cause and Written Guidance 01:26:27
  33. IRS Form 972CG Proposed Penalty Notice and Reasonable Cause - What Happens Next? 01:35:04
  34. Protect Yourself 01:36:04
  35. Attendee Questions 01:37:03
  36. Presentation Closing 01:40:46
  • Audit 00:02:54, 00:14:06
  • Backup Withholding 00:11:08, 00:29:54, 00:33:56, 00:40:49, 00:51:13. 01:05:15
  • B-Notice 00:05:00, 00:59:31
  • CP-2100 00:33:51, 01:05:30
  • CP2100-A 01:05:32
  • Disregarded Entity 00:30:54
  • EIN 01:08:33
  • FATCA 00:30:01
  • FIRE - File Information Returns Electronically 00:15:39
  • Form 1042 00:40:47
  • Form 1042-S 00:40:47
  • Form 1099-B  00:42:42, 00:56:08
  • Form 1099-DIV  00:42:42, 00:56:08
  • Form 1099-INT  00:01:45, 00:42:42
  • Form 1099-K 00:42:42, 00:56:08
  • Form 1099-MISC 00:04:53, 00:28:06
  • Form 1099-NEC 00:04:52, 00:27:41, 00:51:06
  • Form 1099-OID 00:42:42, 00:56:08
  • Form 1099-PATR 00:42:42, 00:56:08
  • Form 1099-R 00:01:42, 00:42:42
  • Form 945 00:41:11, 00:56:11
  • Form 945-A 00:00:56:11
  • Form W-9 00:28:50, 00:29:40, 00:39:42, 00:59:24
  • IRC Section 3406(a) 00:08:32, 00:10:49, 00:34:40
  • IRC Section 6041(a) 00:08:30, 00:09:40
  • IRC Section 6109(a)(2) 00:08:31
  • IRC Section 6721 00:45:59, 01:17:01
  • IRC Section 6722 00:46:14, 01:17:02
  • IRC Section 6724 00:46:33, 01:17:03
  • IRS Letter 1948C 01:35:04
  • IRS Letter 854C 01:35:04
  • IRS Notice 972CG 01:09:05
  • Limited Liability Company (LLC) 00:31:05
  • Nonresident Alien (NRA)00:40:53
  • Reasonable Cause 00:24:46, 00:29:34, 01:00:28
  • Sole Proprietor 00:31:04, 01:08:30
  • Tax Gap 00:03:02
  • TIN 00:11:04, 00:29:45, 00:33:46
  • TIN Match Program 00:42:45, 00:44:10
  • Transmitter Control Code (TCC) 00:15:50
  • Vendor 00:32:03, 00:43:24

Audit: A formal examination of an organization's or individual's accounts or financial situation

B-Notice: A notice from the IRS stating that one or more tax ID numbers were missing from a 1099 or do not match the IRS records.

Backup Withholding: Backup withholding is the tax that is levied on investment income, at an established tax rate, as the investor withdraws it. Backup withholding helps to ensure that government tax-collecting agencies (such as the IRS or Canada Revenue Agency) will be able to receive income taxes owed to them from investors' earnings. (www.investopedia.com)

CP-2100: It is a notice that tells a payer that he or she may be responsible for backup withholding. It isaccompanied by a listing of missing, incorrect, and/or not currently issued payee TINs. Largevolume filers will receive a CD or DVD data file CP2100, mid-size filers receive a paper CP2100, andsmall filers receive a paper CP2100A.

CP2100-A: It is a notice that tells a payer that he or she may be responsible for backup withholding. It isaccompanied by a listing of missing, incorrect, and/or not currently issued payee TINs. Largevolume filers will receive a CD or DVD data file CP2100, mid-size filers receive a paper CP2100, andsmall filers receive a paper CP2100A.

Disregarded Entity: A disregarded entity refers to a business entity with one owner that is not recognized for tax purposes as an entity separate from its owner. A single-member LLC ( “SMLLC”), for example, is considered to be a disregarded entity. (www.pntax.com)

EIN: The Employer Identification Number, also known as the Federal Employer Identification Number or the Federal Tax Identification Number, is a unique nine-digit number assigned by the Internal Revenue Service to business entities operating in the United States for the purposes of identification.

FATCA: FATCA was enacted in 2010 by Congress to target non-compliance by U.S. taxpayers using foreign accounts. FATCA requires foreign financial institutions (FFIs) to report to the IRS information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. (www.treasury.gov). FACTA (Fair and Accurate Credit Transactions Act) is an amendment to FCRA (Fair Credit Reporting Act ) that was added, primarily, to protect consumers from identity theft. The Act stipulates requirements for information privacy, accuracy and disposal and limits the ways consumer information can be shared.

FIRE - File Information Returns Electronically: The IRS FIRE system is the electronic network used to accept and process most types of filing forms. Technically, it stands for File Information Returns Electronically.

Form 1042: Form 1042, also "Annual Withholding Tax Return for U.S. Source Income of Foreign Persons", is used to report tax withheld on certain income of foreign persons.

Form 1042-S: Form 1042-S is used to report amounts paid to foreign persons (including persons presumed to be foreign) who are subject to income tax withholding. For an individual taxpayer, Form 1042-S is a document provided to you (and the IRS) by the payer of the income reported.

Form 1099 MISC: The Form 1099-MISC is an Internal Revenue Service (IRS) tax return document used to report miscellaneous payment?s made to nonemployee individuals, such as independent contractors, during the calendar year. (www.shrm.org)

Form 1099-B: Proceeds From Broker and Barter Exchange Transactions is an Internal Revenue Service (IRS) tax form that is issued by brokers or barter exchanges. The form lists the gains or losses of all broker or barter exchange transactions.

Form 1099-DIV : Form 1099-DIV: Dividends and Distributions is an Internal Revenue Service (IRS) form sent to investors who receive distributions from any type of investment during a calendar year. Investors can receive multiple 1099-DIVs. Each Form 1099-DIV should be reported on an investor's tax filing.

Form 1099-INT: Form 1099-INT is the IRS tax form used to report interest income. The form is issued by all payers of interest income to investors at year end and includes a breakdown of all types of interest income and related expenses. Payers must issue Form 1099-INTs for any party to whom they paid at least $10 of interest during the year.

Form 1099-K: A payment settlement entity (PSE) must file Form 1099-K for payments made in settlement of reportable payment transactions for each calendar year. A PSE makes a payment in settlement of a reportable payment transaction, that is, any payment card or third party network transaction, if the PSE submits the instruction to transfer funds to the account of the participating payee to settle the reportable payment transaction.

Form 1099-OID: Form 1099-OID is a tax form intended to be submitted to the Internal Revenue Service by the holder of debt instruments which were discounted at purchase to report the taxable difference between the instruments' actual value and the discounted purchase price.

Form 1099-PATR: File Form 1099-PATR, Taxable Distributions Received FromCooperatives, for each person to whom the cooperative has paidat least $10 in patronage dividends and other distributionsdescribed in section 6044(b), or from whom you withheld anyfederal income tax under the backup withholding rulesregardless of the amount of the payment.

Form 1099-R: Form 1099-R is a tax form from the Internal Revenue Service (IRS) for reporting distributions from annuities, profit-sharing plans, retirement plans, IRAs, insurance contracts, or pensions.

Form 945: IRS Form 945 is titled Annual Return of Withheld Federal Income Tax. Form 945 is used to report withheld federal income tax from nonpayroll payments, including distributions from qualified retirement plans.

Form 945-A: Use this form to report your federal tax liability (based on the dates payments were made or wages were paid) for the following tax returns.*Forms 945 and 945-X for federal income tax withholding on nonpayroll payments.*Forms CT-1 and CT-1 X for both employee and employer Tier I taxes and employer Tier II taxes.*Forms 944 and 944-X for federal income tax withheld plus both employee and employer social security and Medicare taxes.

Form W-9: Form W-9 (officially, the "Request for Taxpayer Identification Number and Certification") is used in the United States income tax system by a third party who must file an information return with the Internal Revenue Service (IRS). It requests the name, address, and taxpayer identification information of a taxpayer (in the form of a Social Security Number or Employer Identification Number). - Wikipedia (https://en.m.wikipedia.org/)

IRC Section 3406(a): Requires that, under certain circumstances, including the payee's failure to provide a TIN, the payer must perform backup withholding.

IRC Section 501(a): Section 501 of the U.S. tax code outlines which types of nonprofit organizations are tax exempt. The section of this code that provides for exemption is section 501(a), which states that organizations are exempt from some federal income taxes if they fall under sections 501(c) or 501(d), or under section 401(a).

IRC Section 6041(a): Provides that persons engaged in trade or business must report certain payments on an information return.

IRC Section 6109(a)(2): Requires that a payee provide a TIN to the payer when the payment will be reportable on an information return.

IRC Section 6721: If an employer fails to file a correct Information, return by the due date, and cannot show reasonable cause, the employer may be subject to a penalty as provided under IRC Section 6721.

IRC Section 6722: IRC Sec. 6722 authorizes a civil penalty for failing to provide payees with correct copies of statements furnished to the IRS.

IRC Section 6724: I.R.C. § 6724(a) Reasonable Cause Waiver — No penalty shall be imposed under this part with respect to any failure if it is shown that such failure is due to reasonable cause and not to willful neglect.

IRS Letter 1948C : The IRS may issue Letter 1948C to ask for additional explanation or information to support the request to waive the proposed penalty. If the filer doesn't respond by the time indicated on the letter, the IRS will deny the waiver request and assess the proposed penalty.

IRS Letter 854C: The IRS sent Letter 854C to inform you that your request for penalty waiver or abatement has been fully or partially denied.

IRS Notice 972CG: The IRS started mailing 972CG penalty notices in July 2013 regarding 1099's with missing or incorrect TIN/Name Combinations. A 972CG is a NOTICE OF PROPOSED CIVIL PENALTY. A simple way to prevent this costly penalty is to verify that your information is correct prior to filing.

Limited liability company (LLC): An LLC is a corporate structure where members cannot be held accountable for the company’s debts or liabilities. This can shield business owners from losing their entire life savings if, for example, someone were to sue the company. Can be a single member (much like a sole proprietor) or a multi-member. It shares certain traits of both corporations as well as partnerships or sole proprietorships. It is not a corporation.

Nonresident Alien (NRA): This income is taxed at a flat 30% rate, unless a tax treaty specifies a lower rate. Nonresident aliens must file and pay any tax due using Form 1040NR, U.S. Nonresident Alien Income Tax Return or Form 1040NR-EZ, U.S. Income Tax Return for Certain Nonresident Aliens with No Dependents.

Reasonable Cause : Reasonable cause is based on all the facts and circumstances in your situation. The IRS will consider any reason which establishes that you used all ordinary business care and prudence to meet your federal tax obligations but were nevertheless unable to do so.

Sole Proprietor: A business that legally has no separate existence from its owner. The sole proprietorship is the simplest business form under which one can operate a business. The sole proprietorship is not a legal entity. It simply refers to a person who owns the business and is personally responsible for its debts.

TIN: A Taxpayer Identification Number is an identifying number used for tax purposes in the United States and in other countries under the Common Reporting Standard. In the United States, it is also known as a Tax Identification Number or Federal Taxpayer Identification Number.

TIN Match Program: TIN Matching is part of a suite of Internet-based pre-filing e-services that allows “authorized payers” the opportunity to match 1099 payee information against IRS records prior to filing information returns.

Tax Gap: The gross tax gap is the difference between true tax liability for a given tax year and the amount that is paid on time. It is comprised of the nonfiling gap, the underreporting gap, and the underpayment (or remittance) gap.

Transmitter Control Code (TCC): The Transmitter Control Code (TCC) is an identifier that the IRS uses to distinguish different electronic filing companies. It's necessary when you need to file for a correction. Getting a TCC depends on how you file your 1099 forms

Vendor: A vendor is a person or business that supplies goods or services to a company. Another term for the vendor is the supplier. In many situations, a company presents the vendor with a purchase order stating the goods or services needed, the price, delivery date, and other terms.


Guest Speaker

  • Steven Mercatante

CPE Credit

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