TC 200: Penalty for Failure to Furnish an Identifying Number

What the code actually does

TC 200 assesses a penalty for a missing identification number. IRS Document 6209, Section 8A titles it “Taxpayer Identification” and describes it as assessing a “penalty against taxpayer for failure to furnish requested identifying numbers.” It is an individual-account code.

The statute behind it is IRC 6723, and IRM 20.1.7.10 sets out what it reaches: “in the case of a failure of a person to comply with a specified information reporting requirement, the penalty is $50 per failure up to a maximum of $100,000 per year.” The specified requirements are a notice of partnership exchange under IRC 6050K, and the IRC 6109 duty “to include the person’s TIN or another person’s TIN on a return, statement or document (other than an information return), or to furnish a TIN to another person.” That parenthetical is the boundary of this penalty: information returns and payee statements are penalised under other provisions, so TC 200 covers the ordinary documents where a number was simply left out.

It is not indexed, and it multiplies

Two features of the computation matter more than the headline rate. The first is that this penalty stands still while its neighbours grow. IRM 20.1.7.3 states plainly that “penalties under IRC 6723 are not subject to annual inflationary adjustments,” which distinguishes it from most of the information return penalties in the same chapter. The $50 figure is the $50 figure, and a practitioner reaching for a current-year revenue procedure to find an adjusted rate will not find one.

The second is that failures are counted per requirement rather than per document. IRM 20.1.7.10 explains that “multiple penalties are imposed with respect to a document with multiple instances of failures to comply with any one of these requirements. For example, if two TINs are required to be included on a return, two $50 penalties are imposed.” Against that it provides a limit worth knowing: “no more than one penalty per document will be imposed if the failure relates to only one of the requirements” but could be penalised both for failing to comply timely and for failing to include all the required information. So counting the failures correctly is the first arithmetic check, and it cuts in both directions.

The exception that decides most cases

The strongest defence here is not reasonable cause but that the failure does not count. IRM 20.1.7.10.1 provides that “an inconsequential error or omission is not considered a failure to comply with a specified information reporting requirement. Therefore, the penalty shall not be assessed,” and it defines the term functionally: “inconsequential” means “any failure that does not make it difficult for the IRS to put the information to its intended use or prevent a payee from timely receiving correct information and reporting it on their return.”

That is a usable standard rather than a platitude, and it is framed around consequence rather than fault. Reasonable cause is separately available — IRM 20.1.7.12 governs waivers under IRC 6724, and the chapter notes a penalty “will be waived if it can be shown the error was due to reasonable cause and not due to willful neglect,” with 26 CFR 301.6724-1 supplying the general provisions. But the inconsequential-error argument is stronger where it fits, because it does not require explaining the client’s conduct at all. It is also worth checking whether the penalty concerns an alimony-related requirement: the IRM records that the Tax Cuts and Jobs Act repealed IRC 215 for instruments executed after December 31, 2018, and that the associated penalty “is not assessable” for those instruments.

What TC 200 gets confused with

TC 200 gets confused with the information return penalties under IRC 6721 and IRC 6722, which occupy the same IRM chapter and are also described as penalties for missing or wrong information. The dividing line is in the statute the IRM quotes: IRC 6723 reaches documents “other than an information return or payee statement.” Those other two provisions are indexed for inflation, carry much larger figures, and are administered through the Notice 972CG process. Misfiling a TC 200 into that framework leads a practitioner to the wrong notice, the wrong rate, and the wrong reply channel.

It is also read as a penalty for the taxpayer’s own missing number on their own return, which is usually not the setting. The duty reaches supplying another person’s TIN on a return, statement or document, and furnishing a TIN to another person on request — so the typical case involves numbers the client was obliged to collect or pass on. Establishing which requirement was missed is what makes the per-failure count, and therefore the amount, checkable, and any abatement will post as TC 201.

The practitioner’s actual next step

Identify the specific requirement that was missed, because the penalty is counted per requirement and the count drives the amount.

Do not look for an inflation-adjusted rate. IRC 6723 penalties are expressly not indexed, so $50 per failure and a $100,000 annual cap are the current figures.

Test the inconsequential-error exception first, since it asks only whether the omission impeded the IRS or a payee — not whether the client was at fault.

Fall back to the IRC 6724 reasonable-cause waiver where the error did have consequence, and note that prior penalties under IRC 6721, 6722 or 6723 weigh against the client in that analysis.

Check whether the requirement was alimony-related, since the penalty is not assessable for separation instruments executed after December 31, 2018, and confirm what was actually assessed with the IRS Transcript Decoder.