Updated October 18, 2026. Quick answer: The instructions for Form 8971 describe penalties for filing or furnishing incorrect forms, a reasonable cause exception, and a separate penalty for beneficiaries who report inconsistent basis. They also require a supplement when property is acquired later or information changes. The sections below quote each rule.
Penalties in general
“An executor may be subject to penalties for failure to file and/or furnish correct Forms 8971 and Schedules A even if there was no tax due on the estate tax return.” The filing itself is explained on the Form 8971 page.
Failure to file a correct Form 8971
“If an executor required to file Form 8971 fails to file with the IRS a correct and complete Form 8971 (or supplement) by the due date and doesn’t show reasonable cause, a penalty may be imposed.” “Only one penalty will apply to each Form 8971 required to be filed.” “The initial Form 8971 and each supplement to that Form 8971 is a separate filing.” “The amount of the penalty depends on when the correct Form 8971 is filed and is subject to adjustment for inflation.” The instructions send you to the IRS information return penalties page for amounts.
Failure to furnish a correct Schedule A
“If an executor required to file Form 8971 fails to furnish to a beneficiary a correct and complete Schedule A (or supplement) by the due date and doesn’t show reasonable cause, a penalty may be imposed.” “The penalty applies to each Schedule A and each supplement to that Schedule A required to be furnished.”
Errors that are never inconsequential
On Form 8971: “Errors and omissions that are never inconsequential are those related to a TIN, a beneficiary’s surname, and the value of the asset the beneficiary is receiving from the estate.”
On Schedule A: “Errors and omissions that are never inconsequential are those related to the value of the asset the beneficiary is receiving from the estate and those related to a significant item in a beneficiary’s address.”
The de minimis dollar rule
“An error in dollar amount on Form 8971 is de minimis if the difference between any single incorrect amount and the correct amount is not more than $100.” “An error in dollar amount on Schedule A is de minimis if the difference between any single incorrect amount and the correct amount is not more than $100.” The instructions add that the Schedule A exception can be switched off: “This exception does not apply if the beneficiary to whom the Schedule A was furnished elects to have the exception not apply to the Schedule A.”
Reasonable cause
“The penalties for failing to file correct Form 8971 (or supplement) and Schedules A with the IRS and for failing to furnish correct Schedules A (or supplements) to beneficiaries won’t apply to any failure that is shown to be due to reasonable cause and not to willful neglect.”
Penalties for inconsistent filing
These fall on beneficiaries. “Beneficiaries who report basis in property that is inconsistent with the amount on the Schedule A may be liable for a 20% accuracyrelated penalty under section 6662.” “Beneficiaries who report a basis in property acquired from a decedent that is 200% or more of the correct amount may be liable for a 40% penalty for a gross valuation misstatement under section 6662(h), instead of the 20% penalty.” Basis after a death is discussed on the step-up can also be a step-down page.
Supplementing Forms 8971 and Schedules A
“An executor is required to file with the IRS a supplement to any previously filed Form(s) 8971 and to furnish to each affected beneficiary a Schedule A (or supplement) if:” “A beneficiary acquires property that is not excepted property”, or “There is a change to the information required to be reported on a Form 8971, including Schedules A (or supplements), that causes the information as previously reported to be incorrect or incomplete.”
“On both the supplemental Form 8971 and each supplemental Schedule A, the “Supplemental Filing” box should be checked.” “Only information that has changed should be reported.”
For property acquired late: “the executor must furnish a Schedule A to that beneficiary with regard to that acquired property on or before January 31 of the year following the beneficiary’s acquisition of that property.” For changes, the instructions go on: “Therefore, for changes occurring as a result of supplementing the estate tax return, the due date of the supplemental reporting is 30 days after the filing date of the supplemental information.” “An executor’s duty to supplement continues to apply until final value (see Final value defined, later) is determined for all property subject to reporting or, if later, until all property subject to reporting has been acquired by a beneficiary.”
What to enter and where it comes from
A supplement repeats the form with the changed facts only. A changed value, for example, is one of the listed triggers: “The supplementing of an estate tax return to report a corrected estate tax value (see Estate tax value, later) of property that was previously reported.” The line entries are covered on the Part I, Part II and Schedule A pages.
Where it goes next
The supplement goes to the IRS, and the supplemental Schedule A goes to each affected beneficiary. The form itself says “Submit Form 8971 with a copy of each completed Schedule A to the IRS.” The mailing address is on the who must file, when to file and excepted property page.
Edition and line numbers
This page reads Form 8971 (Rev. August 2025), Schedule A (Form 8971) dated August 2025, and the Instructions for Form 8971 and Schedule A (Rev. August 2025). Those are the current files irs.gov served on 2026-10-18. The form carries the caption “(Rev. August 2025)” and the instructions carry “(Rev. August 2025)”. Check the revision date printed on your own Form 8971 and Schedule A, and use that revision’s line numbers, because a different revision can number or word its lines differently.
Common mistakes
- Assuming a zero tax bill means no penalty. The instructions say “An executor may be subject to penalties for failure to file and/or furnish correct Forms 8971 and Schedules A even if there was no tax due on the estate tax return.”
- Treating a TIN or surname slip as minor. The instructions say “Errors and omissions that are never inconsequential are those related to a TIN, a beneficiary’s surname, and the value of the asset the beneficiary is receiving from the estate.”
- Not supplementing after a change. The instructions say “Only information that has changed should be reported.” once the supplement is due.
Related: Form 8971, step-up can also be a step-down, Form 706, estate planning checklist, and Form 8971 who must file.
Sources
- Instructions for Form 8971 and Schedule A (Rev. August 2025): https://www.irs.gov/pub/irs-pdf/i8971.pdf
- Form 8971, Information Regarding Beneficiaries Acquiring Property From a Decedent (Rev. August 2025): https://www.irs.gov/pub/irs-pdf/f8971.pdf
Read from the IRS documents linked above on October 18, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.