Frequently Asked Questions
Who is eligible for the Rollover Certification Penalty Protection?
Requires obtaining a contemporaneous certification from the taxpayer and having no actual knowledge that the certification is false.
How does the Rollover Certification Penalty Protection work?
Financial institutions and plan administrators are exempt from penalties for incorrect reporting of distributions if they relied on a taxpayer's certification regarding a rollover or exchange.
What law authorizes the Rollover Certification Penalty Protection?
The Rollover Certification Penalty Protection is authorized under IRC §6724(g) of the Internal Revenue Code (Title 26, United States Code).
Statutory Text — IRC §6724
Source: Internal Revenue Code, Title 26, United States Code
§ 6724. Waiver; definitions and special rules(a) Reasonable cause waiverNo 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.
(b) Payment of penaltyAny penalty imposed by this part shall be paid on notice and demand by the Secretary and in the same manner as tax.
(c) Special rule for failure to meet magnetic media requirementsNo penalty shall be imposed under section 6721 solely by reason of any failure to comply with the requirements of the regulations prescribed under section 6011(e)(2), except to the extent that such a failure occurs with respect to more than the applicable number (determined under section 6011(e)(5) with respect to the calendar year to which such returns relate) of information returns or with respect to a return described in section 6011(e)(4).
(d) DefinitionsFor purposes of this part—(1) Information returnThe term “information return” means—(A) any statement of the amount of payments to another person required by—(i) section 6041(a) or (b) (relating to certain information at source),
(ii) section 6042(a)(1) (relating to payments of dividends),
(iii) section 6044(a)(1) (relating to payments of patronage dividends),
(iv) section 6049(a) (relating to payments of interest),
(v) section 6050A(a) (relating to reporting requirements of certain fishing boat operators),
(vi) section 6050N(a) (relating to payments of royalties),
(vii) section 6051(d) (relating to information returns with respect to income tax withheld),
(viii) section 6050R (relating to returns relating to certain purchases of fish), or
(ix) section 110(d) (relating to qualified lessee construction allowances for short-term leases),
(B) any return required by—(i) section 6041A(a) or (b) (relating to returns of direct sellers),
(ii) section 6043A(a) (relating to returns relating to taxable mergers and acquisitions),
(iii) section 6045(a) or (d) (relating to returns of brokers),
(iv) section 6045B(a) (relating to returns relating to actions affecting basis of specified securities),
(v) section 6050H(a) or (h)(1) (relating to mortgage interest received in trade or business from individuals),
(vi) section 6050I(a) or (g)(1) (relating to cash received in trade or business, etc.),
(vii) section 6050J(a) (relating to foreclosures and abandonments of security),
(viii) section 6050K(a) (relating to exchanges of certain partnership interests),
(ix) section 6050L(a) (relating to returns relating to certain dispositions of donated property),
(x) section 6050P (relating to returns relating to the cancellation of indebtedness by certain financial entities),
(xi) section 6050Q (relating to certain long-term care benefits),
(xii) section 6050S (relating to returns relating to payments for qualified tuition and related expenses),
(xiii) section 6050T (relating to returns relating to credit for health insurance costs of eligible individuals),
Showing first 3,000 characters of full section text.