Information Reporting Penalty Safe Harbor

[Lee B]

Copied from The Tax Advisor:

"Under the de minimis rules, added by the Protecting Americans From Tax Hikes (PATH) Act, P.L. 114-113, payers are not required to correct an error on an information return or payee statement and are not subject to penalties for failure to file a correct information return or payee statement if the error relates to an incorrect dollar amount and is no more than $100 ($25 for withholdings)."

Good, a common sense ruling from the IRS

[Medlin Software, Dennis]

Most likely because the counters decided those numbers were at or below their break even point for investigation. No matter the reason, it is good. My first accounting class had a story of a perfectionist who spent a long time finding a penny error, and their pride led to their firing. For me, I took that to heart and when I was counting for others, came up with a threahold which I would not investigate beyond a few minutes of hunting the obvious. Over time, the “adjustments” usually washed. 

[BulldogTom]

8 hours ago, Medlin Software, Dennis said:

My first accounting class had a story of a perfectionist who spent a long time finding a penny error, and their pride led to their firing. For me, I took that to heart and when I was counting for others, came up with a threahold which I would not investigate beyond a few minutes of hunting the obvious. Over time, the “adjustments” usually washed. 

The accountant in me rebels at that statement.   I have always lived by the motto "keep track of the pennies and the dollars will follow".   I think it shows professionalism that your reconciliations tie out, to the penny.  When I see recons that are close, but not exact, I question whether the accounting person is competent.   Just like spelling and grammar errors on a resume, it says something.

However, I do know when to throw in the towel and just write it off to Misc Expense when the amount in question is small and I can't identify the reason for the variance.

Tom
Longview, TX

[Medlin Software, Dennis]

3 hours ago, BulldogTom said:

The accountant in me rebels at that statement.   I have always lived by the motto "keep track of the pennies and the dollars will follow".   I think it shows professionalism that your reconciliations tie out, to the penny.  When I see recons that are close, but not exact, I question whether the accounting person is competent.   Just like spelling and grammar errors on a resume, it says something.

However, I do know when to throw in the towel and just write it off to Misc Expense when the amount in question is small and I can't identify the reason for the variance.

Tom
Longview, TX

I have a well work list of my search for mistakes process.  But I do not go beyond that for pennies (or depending on the client, some amount, usually $100).  They do not appreciate paying for my time to find pennies. The majority of the time, it was not an entry error, it was an error with the client's records, such as a check record.

We all live with such "close" enough. IRS has been doing it for a long time (rounding withholding, rounding on tax returns). No refund/collection unless asked of the 941 (and likely others) were not more than $1. I am sure there are more, not just the new announcement.