26 U.S.C. § 6658 — Coordination with title 11

Page 3772 TITLE 26—INTERNAL REVENUE CODE § 6657 tion] shall apply to deposits required to be made after December 31, 2001.’’ EFFECTIVE DATE OF 1996 AMENDMENT Pub. L. 104–168, title III, § 304(b), July 30, 1996, 110 Stat. 1459, provided that: ‘‘The amendment made by subsection (a) [amending this section] shall apply to deposits required to be made after the date of the en- actment of this Act [July 30, 1996].’’ Amendment by section 701(c)(3) of Pub. L. 104–168 ap- plicable in case of proceedings commenced after July 30, 1996, see section 701(d) of Pub. L. 104–168, set out as a note under section 6404 of this title. EFFECTIVE DATE OF 1989 AMENDMENT Pub. L. 101–239, title VII, § 7742(c), Dec. 19, 1989, 103 Stat. 2405, provided that: ‘‘The amendments made by this section [amending this section] shall apply to de- posits required to be made after December 31, 1989.’’ EFFECTIVE DATE OF 1986 AMENDMENT Pub. L. 99–509, title VIII, § 8001(b), Oct. 21, 1986, 100 Stat. 1951, provided that: ‘‘The amendment made by subsection (a) [amending this section] shall apply to penalties assessed after the date of the enactment of this Act [Oct. 21, 1986].’’ EFFECTIVE DATE OF 1981 AMENDMENT Pub. L. 97–34, title VII, § 724(c), Aug. 13, 1981, 95 Stat. 345, provided that: ‘‘The amendments made by this sec- tion [amending this section and sections 5684 and 5761 of this title] shall apply to returns filed after the date of the enactment of this Act [Aug. 13, 1981].’’ EFFECTIVE DATE OF 1969 AMENDMENT Amendment by Pub. L. 91–172 applicable with respect to deposits the time for making of which is after Dec. 31, 1969, see section 943(d) of Pub. L. 91–172, set out as a note under section 6651 of this title. § 6657. Bad checks If any instrument in payment, by any com- mercially acceptable means, of any amount re- ceivable under this title is not duly paid, in ad- dition to any other penalties provided by law, there shall be paid as a penalty by the person who tendered such instrument, upon notice and demand by the Secretary, in the same manner as tax, an amount equal to 2 percent of the amount of such instrument, except that if the amount of such instrument is less than $1,250, the penalty under this section shall be $25 or the amount of such instrument, whichever is the lesser. This section shall not apply if the person tendered such instrument in good faith and with reasonable cause to believe that it would be duly paid. (Aug. 16, 1954, ch. 736, 68A Stat. 826; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 100–647, title V, § 5071(a), Nov. 10, 1988, 102 Stat. 3681; Pub. L. 110–28, title VIII, § 8245(a), May 25, 2007, 121 Stat. 200; Pub. L. 111–198, § 3(a), July 2, 2010, 124 Stat. 1356.) Editorial Notes AMENDMENTS 2010—Pub. L. 111–198, § 3(a)(2), substituted ‘‘such in- strument’’ for ‘‘such check’’ wherever appearing. Pub. L. 111–198, § 3(a)(1), substituted ‘‘If any instru- ment in payment, by any commercially acceptable means, of any amount’’ for ‘‘If any check or money order in payment of any amount’’. 2007—Pub. L. 110–28 substituted ‘‘$1,250’’ for ‘‘$750’’ and ‘‘$25’’ for ‘‘$15’’. 1988—Pub. L. 100–647 substituted ‘‘2’’ for ‘‘1’’, ‘‘$750’’ for ‘‘$500’’, and ‘‘$15’’ for ‘‘$5’’. 1976—Pub. L. 94–455 struck out ‘‘or his delegate’’ after ‘‘Secretary’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Pub. L. 111–198, § 3(b), July 2, 2010, 124 Stat. 1356, pro- vided that: ‘‘The amendments made by this section [amending this section] shall apply to instruments ten- dered after the date of the enactment of this Act [July 2, 2010].’’ EFFECTIVE DATE OF 2007 AMENDMENT Pub. L. 110–28, title VIII, § 8245(b), May 25, 2007, 121 Stat. 200, provided that: ‘‘The amendments made by this section [amending this section] apply to checks or money orders received after the date of the enactment of this Act [May 25, 2007].’’ EFFECTIVE DATE OF 1988 AMENDMENT Pub. L. 100–647, title V, § 5071(b), Nov. 10, 1988, 102 Stat. 3681, provided that: ‘‘The amendment made by subsection (a) [amending this section] shall apply to checks or money orders received after the date of the enactment of this Act [Nov. 10, 1988].’’ § 6658. Coordination with title 11 (a) Certain failures to pay tax No addition to the tax shall be made under section 6651, 6654, or 6655 for failure to make timely payment of tax with respect to a period during which a case is pending under title 11 of the United States Code— (1) if such tax was incurred by the estate and the failure occurred pursuant to an order of the court finding probable insufficiency of funds of the estate to pay administrative ex- penses, or (2) if— (A) such tax was incurred by the debtor be- fore the earlier of the order for relief or (in the involuntary case) the appointment of a trustee, and (B)(i) the petition was filed before the due date prescribed by law (including extensions) for filing a return of such tax, or (ii) the date for making the addition to the tax occurs on or after the day on which the petition was filed. (b) Exception for collected taxes Subsection (a) shall not apply to any liability for an addition to the tax which arises from the failure to pay or deposit a tax withheld or col- lected from others and required to be paid to the United States. (Added Pub. L. 96–589, § 6(e)(1), Dec. 24, 1980, 94 Stat. 3408.) Editorial Notes PRIOR PROVISIONS A prior section 6658, act Aug. 16, 1954, ch. 736, 68A Stat. 826, authorized inclusion as part of the tax a 25 percent penalty in cases of violations or attempted vio- lations of section 6851 of this title, prior to repeal by Pub. L. 96–167, § 6(a), Dec. 29, 1979, 93 Stat. 1276. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective Oct. 1, 1979, but not applicable to proceedings under Title 11, Bankruptcy, commenced be- Page 3773 TITLE 26—INTERNAL REVENUE CODE § 6662 fore Oct. 1, 1979, see section 7(e) of Pub. L. 96–589, set out as an Effective Date of 1980 Amendment note under section 108 of this title. [§§ 6659 to 6661. Repealed. Pub. L. 101–239, title VII, § 7721(c)(2), Dec. 19, 1989, 103 Stat. 2399] Section 6659, added Pub. L. 97–34, title VII, § 722(a)(1), Aug. 13, 1981, 95 Stat. 341; amended Pub. L. 97–448, title I, § 107(a)(1), (2), Jan. 12, 1983, 96 Stat. 2391; Pub. L. 98–369, div. A, title I, § 155(c)(1), title VII, § 721(x)(4), July 18, 1984, 98 Stat. 693, 971, related to additions to tax in case of valuation overstatements for purposes of the income tax. A prior section 6659 was renumbered section 6662 of this title. Section 6659A, added Pub. L. 99–514, title XI, § 1138(a), Oct. 22, 1986, 100 Stat. 2486, related to additions to tax in case of overstatements of pension liabilities. Section 6660, added Pub. L. 98–369, div. A, title I, § 155(c)(2)(A), July 18, 1984, 98 Stat. 694; amended Pub. L. 99–514, title XVIII, §§ 1811(d), 1899A(57), Oct. 22, 1986, 100 Stat. 2833, 2961, related to additions to tax in case of valuation understatements for purposes of estate or gift taxes. A prior section 6660 was renumbered section 6662 of this title. Section 6661, added Pub. L. 97–248, title III, § 323(a), Sept. 3, 1982, 96 Stat. 613; amended Pub. L. 97–354, § 5(a)(42), Oct. 19, 1982, 96 Stat. 1697; Pub. L. 98–369, div. A, title VII, § 714(h)(3), July 18, 1984, 98 Stat. 962; Pub. L. 99–509, title VIII, § 8002(a), (c), Oct. 21, 1986, 100 Stat. 1951; Pub. L. 99–514, title XV, § 1504(a), Oct. 22, 1986, 100 Stat. 2743, related to substantial understatements of li- ability. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF REPEAL Repeal applicable to returns the due date for which (determined without regard to extensions) is after Dec. 31, 1989, see section 7721(d) of Pub. L. 101–239, set out as an Effective Date of 1989 Amendment note under sec- tion 461 of this title. PART II—ACCURACY-RELATED AND FRAUD PENALTIES Sec. 6662. Imposition of accuracy-related penalty on un- derpayments. 6662A. Imposition of accuracy-related penalty on un- derstatements with respect to reportable transactions. 6663. Imposition of fraud penalty. 6664. Definitions and special rules. Editorial Notes AMENDMENTS 2004—Pub. L. 108–357, title VIII, § 812(e)(2), Oct. 22, 2004, 118 Stat. 1580, added items 6662 and 6662A and struck out former item 6662 ‘‘Imposition of accuracy- related penalty’’. 1989—Pub. L. 101–239, title VII, § 7721(a), Dec. 19, 1989, 103 Stat. 2395, added part heading and analysis of sec- tions. § 6662. Imposition of accuracy-related penalty on underpayments (a) Imposition of penalty If this section applies to any portion of an un- derpayment of tax required to be shown on a re- turn, there shall be added to the tax an amount equal to 20 percent of the portion of the under- payment to which this section applies. (b) Portion of underpayment to which section applies This section shall apply to the portion of any underpayment which is attributable to 1 or more of the following: (1) Negligence or disregard of rules or regu- lations. (2) Any substantial understatement of in- come tax. (3) Any substantial valuation misstatement under chapter 1. (4) Any substantial overstatement of pension liabilities. (5) Any substantial estate or gift tax valu- ation understatement. (6) Any disallowance of claimed tax benefits by reason of a transaction lacking economic substance (within the meaning of section 7701(o)) or failing to meet the requirements of any similar rule of law. (7) Any undisclosed foreign financial asset understatement. (8) Any inconsistent estate basis. (9) Any overstatement of the deduction pro- vided in section 170(p). (10) Any disallowance of a deduction by rea- son of section 170(h)(7). This section shall not apply to any portion of an underpayment on which a penalty is imposed under section 6663. Except as provided in para- graph (1) or (2)(B) of section 6662A(e), this sec- tion shall not apply to the portion of any under- payment which is attributable to a reportable transaction understatement on which a penalty is imposed under section 6662A. (c) Negligence For purposes of this section, the term ‘‘neg- ligence’’ includes any failure to make a reason- able attempt to comply with the provisions of this title, and the term ‘‘disregard’’ includes any careless, reckless, or intentional disregard. (d) Substantial understatement of income tax (1) Substantial understatement (A) In general For purposes of this section, there is a sub- stantial understatement of income tax for any taxable year if the amount of the under- statement for the taxable year exceeds the greater of— (i) 10 percent of the tax required to be shown on the return for the taxable year, or (ii) $5,000. (B) Special rule for corporations In the case of a corporation other than an S corporation or a personal holding company (as defined in section 542), there is a substan- tial understatement of income tax for any taxable year if the amount of the under- statement for the taxable year exceeds the lesser of— (i) 10 percent of the tax required to be shown on the return for the taxable year (or, if greater, $10,000), or (ii) $10,000,000. (C) Special rule for taxpayers claiming sec- tion 199A deduction In the case of any taxpayer who claims any deduction allowed under section 199A for