Tax & Accounting Blog

Penalties for Failure to Comply with NRA Withholding and 1042-S Information Reporting – Part 4: Penalty for Late Forms 1042-S for the Recipient

ONESOURCE, Tax Information Reporting, W-8 & W-9 Foreign Reporting, Withholding Management February 13, 2012

If a withholding agent fails to provide correct Forms 1042-S to recipients when due and cannot show reasonable cause, the withholding agent may be subject to a penalty for each failure. The IRS may also impose the penalty for failure to include all required information or for furnishing incorrect information on Form 1042-S.

The penalty is based on when the correct Form 1042-S is submitted and the number of forms filed as described in Part 3 of this series of posts. However, if a recipient statement is provided before August 1 for which the payer provides reasonable cause, the recipient statement shall be treated as if timely filed. The number of statements to which this de minimis rule applies may not exceed 10, or .5 percent of the total number of recipient statements required to be filed by the payer, whichever is greater.