(a)

1. (1) A penalty shall be imposed for failure to file correct information returns, as required by this part, and that penalty shall be determined in accordance with Section 6721 of the Internal Revenue Code, relating to failure to file correct information returns.
2. (2) Section 6721(e) of the Internal Revenue Code, relating to penalty in case of intentional disregard, is modified to the extent that the reference to Section 6041A(b) of the Internal Revenue Code, relating to direct sales of five thousand dollars ($5,000) or more, does not apply.

(b)

1. (1) A penalty shall be imposed for failure to furnish correct payee statements as required by this part, and that penalty shall be determined in accordance with Section 6722 of the Internal Revenue Code, relating to failure to furnish correct payee statements.
2. (2) Section 6722(c) of the Internal Revenue Code, relating to exception for de minimis failures, is modified to the extent that the references to Sections 6041A(b) and 6041A(e) of the Internal Revenue Code, relating to direct sales of five thousand dollars ($5,000) or more, and statements to be furnished to persons with respect to whom information is required to be furnished, does not apply.

(d)

1. (1) The provisions of Section 6724 of the Internal Revenue Code, relating to waiver; definitions, and special rules, apply, except as otherwise provided.

2. (2) Section 6724(d)(1) of the Internal Revenue Code, relating to information return, is modified as follows:

   1. (A) The following references are substituted:

      1. (i) Subdivision (a) of Section 18640, in lieu of Section 6044(a)(1) of the Internal Revenue Code.
      2. (ii) Subdivision (a) of Section 18644, in lieu of Section 6050A(a) of the Internal Revenue Code, relating to reports.
   2. (B) References to Sections 4101(d), 6041(b), 6041A(b), 6045(d), 6051(d), and 6053(c)(1) of the Internal Revenue Code do not apply.

   3. (C) The term “information return” also includes both of the following:

      1. (i) The return required by paragraph (1) of subdivision (g) of Section 18662.
      2. (ii) The return required by subdivision (a) of Section 18631.7.

3. (3) Section 6724(d)(2) of the Internal Revenue Code, relating to payee statement, is modified as follows:

   1. (A) The following references are substituted:

      1. (i) Subdivision (b) of Section 18640, in lieu of Section 6044(e) of the Internal Revenue Code, relating to statements to be furnished to persons with respect to whom information is required.
      2. (ii) Subdivision (b) of Section 18644, in lieu of Section 6050A(b) of the Internal Revenue Code, relating to written statement.
   2. (B) References to Sections 6031(b), 6037(b), 6041A(e), 6045(d), 6051(d), 6053(b), and 6053(c) of the Internal Revenue Code shall not apply.
   3. (C) The term “payee statement” shall also include the statement required by paragraph (2) of subdivision (g) of Section 18662.