Correcting 1095-Cs after Notice 972CG
After a Notice 972CG proposes §6721 penalties, filing corrections does two jobs at once: it sets the penalty tier (each tier turns on when the correction happened), and it supplies evidence for the reasonable-cause statement. Here are the mechanics, the timing windows, and the limits of what corrections can do.
Why corrections matter twice
§6721 penalty tiers are timing tiers: the per-return amount depends on how quickly the failure was corrected. A correction filed within 30 days of the due date computes at the lowest tier; one filed after August 1 (or never) computes at the highest. Correcting while the 972CG response window is open can move a failure into a lower tier — the correction date is a line item in the recomputation.
Corrections also feed prong (B) of the reasonable-cause test: Reg. §301.6724-1 treats correction ordinarily within 30 days of discovery as the benchmark for responsible conduct after the failure. The correction receipts you keep become evidence in the written statement.
Sources: Reg. §301.6724-1; IRS — Information Return Penalties. Full walkthrough: How to answer Notice 972CG, step by step.
The correction mechanics
For Forms 1095-C, a correction is a three-part filing under the IRS Instructions for Forms 1094-C and 1095-C:
- Mark "X" in the CORRECTED checkbox at the top of each corrected Form 1095-C.
- Include a Form 1094-C transmittal with the correction filing. The 1094-C itself is not marked corrected.
- Furnish a copy of the corrected 1095-C to the employee.
Corrections filed electronically generally must be e-filed. For returns due in 2024 and later, filers with 10 or more returns must e-file (T.D. 9972 lowered the old 250-return threshold). Log the filing date of every correction — each correction's date determines its tier.
Sources: IRS — Instructions for Forms 1094-C and 1095-C; IRM Exhibit 20.1.7-4.
Timing and the three tier windows
The per-return tiers are keyed to the calendar year the return was due in, not the tax year on the form. Using the 2025 due-year rates (Rev. Proc. 2023-34):
- $60 per return — corrected within 30 days of the due date.
- $130 per return — corrected after 30 days but on or before August 1.
- $330 per return — corrected after August 1, or never.
The same three-window structure applies to other due years at different rates (2024: $60/$120/$310; 2026: $60/$130/$340). Annual caps by business size can cap the product of returns × tier. Full tables: What is Letter 972CG?.
Sources: IRS — Information Return Penalties; Rev. Proc. 2023-34; Rev. Proc. 2024-40; Rev. Proc. 2022-38.
What corrections can't do
- They don't stop the clock. The 972CG response is still due by the response date printed on the notice (or the Letter 1948-C extended date). Corrections and the written statement proceed in parallel; the packet references corrections already filed.
- They don't fix the §6722 side. Penalties for failure to furnish correct payee statements (the employee copy) are separate exposure at the same rates — furnishing the corrected copy is part of the job.
- They don't touch 226-J. A Letter 226-J response is a separate ESRP reconciliation (Form 14764 plus a corrected 14765 matrix) under §4980H. See 226-J vs. 972CG.
Common questions
No. The written response is still due by the response date printed on the notice — corrections change the penalty-tier math and support the reasonable-cause statement, but they do not withdraw the notice or extend the deadline.
The date the corrected return is filed. The three tiers turn on when the correction happened: within 30 days of the due date; after 30 days but on or before August 1; or after August 1 (or never). Log the filing date of each correction.
No. The "X" goes in the CORRECTED checkbox at the top of each corrected Form 1095-C. A new Form 1094-C transmittal accompanies the correction filing, but the 1094-C itself is not marked corrected.
Corrections filed electronically generally must be e-filed. For returns due in 2024 and later, filers with 10 or more returns must e-file (T.D. 9972 lowered the old 250-return threshold).
No. A Letter 226-J response is a separate ESRP reconciliation — Form 14764 plus a corrected 14765 matrix — under a different statute (§4980H, not §6721). The corrected codes may flow into the 14765 matrix, but the response vehicles are separate.
This guide is general information, not legal or tax advice. Statutes and IRS pages change — verify against the sources linked above.