26 C.F.R. § 6a.6652(g)-1
on or before the date prescribed therefor (determined with regard to any extension of time for filing), the person failing to meet such requirement shall pay $25 for each day during which such failure continues.
Example (1). Domestic corporation X is required under section 6039C (a) to make a return for calendar year 1982. X does not file such return on or before May 15, 1983 as required under § 6a.6039C-1(c). The failure to file the return for calendar year 1982 continues throughout calendar years 1983, 1984, 1985, and 1986. The failure to file is not due to reasonable cause and no security has been furnished in lieu of filing. The maximum penalty which can be imposed on X for failure to file the 1982 return is $25,000, determined as follows:
| Penalty incurred in given year | Cumulative penalty for failure to file 1982 return | |
| Total penalty incurred in 1983 ($25 per day * 230 days) | $5,750 | $5,750 |
| Total penalty incurred in 1984 (a leap year): ($25 per day * 366 days) | 9,150 | 14,900 |
| Total penalty incurred in 1985 ($25 per day * 365 days) | 9,125 | 24,025 |
| Total penalty incurred in 1986 (lesser of $25 per day * 365 days or $975 (remaining penalty which may be imposed)) | 975 | 25,000 |
Example (2). The facts are the same as in example (1) except that X also fails to file a return under section 6039C (a) for calendar year 1983. The failure to file its return for calendar year 1983 continues throughout calendar years 1984, 1985, 1986 and 1987. The total penalty which may be imposed on X for failure to file its return for calendar year 1983 is $25,000. The amount of penalty which can be imposed on X in calendar years 1984, 1985, 1986 and 1987 is determined as follows:
| Penalty for 1982 failure | Penalty for 1983 failure | Total penalty for given year | |
| Penalty incurred in 1984 (a leap year): | |||
| For failure to file 1982 return ($25 per day * 366 days) | $9,150 | ||
| For failure to file 1983 return ($25 per day * 230 days) | $5,750 | ||
| Total | $14,900 | ||
| Penalty incurred in 1985: | |||
| For failure to file 1982 return ($25 per day * 365 days) | 9,125 | ||
| For failure to file 1983 return ($25 per day * 365 days) | 9,125 | ||
| Total | 18,250 | ||
| Penalty incurred in 1986: | |||
| For failure to file 1982 return (lesser of $25 per day * 365 days or $975 (remaining penalty which may be imposed)) | 975 | ||
| For failure to file 1983 return ($25 per day * 365 days) | 9,125 | ||
| Total | 10,100 | ||
| Penalty incurred in 1987: For failure to file 1983 return (lesser of $25 per day * 365 days or $1,000 (remaining penalty which may be imposed)) | 1,000 | ||
| Total | 1,000 |
Example (3). Foreign corporation Y is required under section 6039C(b)(1) to make a return for calendar year 1982. In addition, Y is required under section 6039C(b)(3) to furnish statements to each substantial investor in U.S. real property interests. Y has 10 such substantial investors. Y does not file such return on or before May 15, 1983 as required under § 6a.6039C-1(c), nor does it furnish the required statements on or before January 31, 1983 as required under § 6a.6039C-3(h). The failure to file the return for calendar year 1982 and to furnish the required statements for 1982 continues throughout calendar years 1984 and 1985. The failure to meet the requirements of section 6039C(b) are not due to reasonable cause and no security has been furnished in lieu of filing. The total penalty which can be imposed on Y for failure to file the return and statements required under section 6039C(b) for calendar year 1982 is $25,000. The amount of penalty incurred by Y in calendar year 1983 for failure to file the return and statements for calendar year 1982 is $25,000, determined as follows:
| Penalty incurred in 1982: | |
| For failure to file return ($25 per day * 230 days) | $5,750 |
| For each failure to furnish a statement required by section 6039C(b)(3) ($25 per day * 10 statements * the 334 days from February 1, 1983 to December 31, 1983 ($83,500) but not more than $19,250 (which when added to $5,750 would total $25,000)) | 19,250 |
| Total | 25,000 |
Since Y has incurred the maximum penalty for failure to file its return and statements required for 1982 by the end of calendar year 1983, no further penalty for these failures is imposed.
Example (4). Under section 6039C(c) foreign person Y is required to make a return for calendar year 1982. Y does not file such return on May 15, 1983 and the failure is not due to reasonable cause. No security has been furnished in lieu of filing. All properties owned by Y in 1982 are U.S. real property interests. Y purchased property M in January 1982 when its fair market value was $10,000. In March, Y purchased property N when its fair market value was $15,000. In November, Y sold property M for $20,000. The fair market value of property N on December 31, 1982, was $20,000. The total of the fair market values of M and N (M as of the date of its sale and N as of December 31, 1982) is $40,000. The maximum penalty which may be imposed on Y for failure to meet the requirements of section 6093C(c) for any calendar year is the lesser of $25,000 or 5 percent of the aggregate of the fair market values of the U.S. real property interests owned by Y at any time during such calendar year. Since $2,000 (5 percent of $40,000) is less than $5,750 ($25 times 230 days, the number of days in calendar year 1983 for which the failure continues), the maximum penalty which may be imposed on Y in 1983 is $2,000. Since the maximum penalty for the failure to file the 1982 return is incurred in 1983, no amount may be imposed for Y's continuing failure to file the return for calendar year 1982 during calendar years after 1983.
26 C.F.R. §6a.6652(g)-1