Many employers and health plans are sending SSN solicitations to comply with the 6055/6056 information reporting requirements. One issue that has arisen is whether the $50 penalty under Code Section 6723 applies to the individuals who fail to furnish a SSN to his/her employer or health plan.
Under the SSN solicitation regulations of Code Section 6724, the regulations provide that when soliciting a SSN in writing that the solicitation should mention the possibility of a $50 IRS penalty. The $50 IRS penalty can be imposed under Code Section 6723, which allows the IRS to penalize anyone who does not provide a SSN to another person when it is required. The issue is that it’s not clear whether Section 6723 actually applies in this situation. When the IRS finalized the information reporting requirements for employers and health plans, the IRS amended the penalty regulations under Sections 6721 and 6722 to include the information reporting requirements under Sections 6055/6056. Those two sections of the Code form the basis of the penalties on employers and health plans for not filing the required information reporting forms with the IRS and individuals. However, in the information reporting final regulations, the IRS made no mention of the penalties on individuals under Code Section 6723 and did not amend the underlying regulations. This could be due to the fact that Code Section 6723 is generic in nature, and the IRS thought no amendments were needed because Code Section 6723 automatically applies. Alternatively, it could be due to the fact that the IRS does not intend on applying the $50 penalty in this case. In the end, the SSN solicitation regulations do require the $50 penalty language to be included in a written solicitation, and therefore including such statement in the SSN solicitation letter is correct, regardless of whether the IRS in fact would apply the penalty. Further, if an employer or health plan excludes such statement from a SSN solicitation, the IRS could claim the SSN solicitation was not valid.
Disclaimer
While we are pleased to have you contact us by telephone, surface mail, electronic mail, or by facsimile transmission, contacting Kilpatrick Townsend & Stockton LLP or any of its attorneys does not create an attorney-client relationship. The formation of an attorney-client relationship requires consideration of multiple factors, including possible conflicts of interest. An attorney-client relationship is formed only when both you and the Firm have agreed to proceed with a defined engagement.
DO NOT CONVEY TO US ANY INFORMATION YOU REGARD AS CONFIDENTIAL UNTIL A FORMAL CLIENT-ATTORNEY RELATIONSHIP HAS BEEN ESTABLISHED.
If you do convey information, you recognize that we may review and disclose the information, and you agree that even if you regard the information as highly confidential and even if it is transmitted in a good faith effort to retain us, such a review does not preclude us from representing another client directly adverse to you, even in a matter where that information could be used against you.
