26 U.S.C. § 6707 — Failure to furnish information regarding

Page 3809 TITLE 26—INTERNAL REVENUE CODE § 6707 § 6705. Failure by broker to provide notice to payors (a) In general Any person required under section 3406(d)(2)(B) to provide notice to any payor who willfully fails to provide such notice to such payor shall pay a penalty of $500 for each such failure. (b) Penalty in addition to other penalties Any penalty imposed by this section shall be in addition to any other penalty provided by law. (Added Pub. L. 98–67, title I, § 104(c)(1), Aug. 5, 1983, 97 Stat. 379.) Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective with respect to payments made after Dec. 31, 1983, see section 110(a) of Pub. L. 98–67, set out as an Effective Date of 1983 Amendment note under section 31 of this title. § 6706. Original issue discount information re- quirements (a) Failure to show information on debt instru- ment In the case of a failure to set forth on a debt instrument the information required to be set forth on such instrument under section 1275(c)(1), unless it is shown that such failure is due to reasonable cause and not to willful ne- glect, the issuer shall pay a penalty of $50 for each instrument with respect to which such a failure exists. (b) Failure to furnish information to Secretary Any issuer who fails to furnish information re- quired under section 1275(c)(2) with respect to any issue of debt instruments on the date pre- scribed therefor (determined with regard to any extension of time for filing) shall pay a penalty equal to 1 percent of the aggregate issue price of such issue, unless it is shown that such failure is due to reasonable cause and not willful ne- glect. The amount of the penalty imposed under the preceding sentence with respect to any issue of debt instruments shall not exceed $50,000 for such issue. (c) Deficiency procedures not to apply Subchapter B of chapter 63 (relating to defi- ciency procedures for income, estate, gift, and certain excise taxes) shall not apply in respect of the assessment or collection of any penalty imposed by this section. (Added Pub. L. 98–369, div. A, title I, § 41(c)(1), July 18, 1984, 98 Stat. 555.) Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective on day 30 days after July 18, 1984, see section 44(h) of Pub. L. 98–369, set out as a note under section 1271 of this title. § 6707. Failure to furnish information regarding reportable transactions (a) In general If a person who is required to file a return under section 6111(a) with respect to any report- able transaction— (1) fails to file such return on or before the date prescribed therefor, or (2) files false or incomplete information with the Secretary with respect to such trans- action, such person shall pay a penalty with respect to such return in the amount determined under subsection (b). (b) Amount of penalty (1) In general Except as provided in paragraph (2), the pen- alty imposed under subsection (a) with respect to any failure shall be $50,000. (2) Listed transactions The penalty imposed under subsection (a) with respect to any listed transaction shall be an amount equal to the greater of— (A) $200,000, or (B) 50 percent of the gross income derived by such person with respect to aid, assist- ance, or advice which is provided with re- spect to the listed transaction before the date the return is filed under section 6111. Subparagraph (B) shall be applied by sub- stituting ‘‘75 percent’’ for ‘‘50 percent’’ in the case of an intentional failure or act described in subsection (a). (c) Rescission authority The provisions of section 6707A(d) (relating to authority of Commissioner to rescind penalty) shall apply to any penalty imposed under this section. (d) Reportable and listed transactions For purposes of this section, the terms ‘‘re- portable transaction’’ and ‘‘listed transaction’’ have the respective meanings given to such terms by section 6707A(c). (Added Pub. L. 98–369, div. A, title I, § 141(b), July 18, 1984, 98 Stat. 680; amended Pub. L. 99–514, title XV, §§ 1532(a), 1533(a), Oct. 22, 1986, 100 Stat. 2750; Pub. L. 105–34, title X, § 1028(b), (d), Aug. 5, 1997, 111 Stat. 927, 928; Pub. L. 108–357, title VIII, § 816(a), Oct. 22, 2004, 118 Stat. 1583.) Editorial Notes AMENDMENTS 2004—Pub. L. 108–357 amended section catchline and text generally, substituting provisions relating to pen- alty for failure to furnish information regarding report- able transactions for provisions relating to penalty for failure to furnish information regarding tax shelters. 1997—Subsec. (a)(1). Pub. L. 105–34, § 1028(d)(2), which directed the substitution of ‘‘paragraph (2) or (3), as the case may be’’ for ‘‘paragraph (2)’’ in subpar. (A) of par. (1), was executed by making the substitution in the concluding provisions of par. (1) to reflect the probable intent of Congress. Subsec. (a)(2). Pub. L. 105–34, § 1028(d)(1), substituted ‘‘Except as provided in paragraph (3), the penalty’’ for ‘‘The penalty’’. Subsec. (a)(3). Pub. L. 105–34, § 1028(b), added par. (3). 1986—Subsec. (a)(2). Pub. L. 99–514, § 1532(a), amended par. (2) generally. Prior to amendment, par. (2) read as follows: ‘‘The penalty imposed under paragraph (1) with respect to any tax shelter shall be an amount equal to the greater of— ‘‘(A) $500, or ‘‘(B) the lesser of (i) 1 percent of the aggregate amount invested in such tax shelter, or (ii) $10,000. Page 3810 TITLE 26—INTERNAL REVENUE CODE § 6707A The $10,000 limitation in subparagraph (B) shall not apply where there is an intentional disregard of the re- quirements of section 6111(a).’’ Subsec. (b)(2). Pub. L. 99–514, § 1533(a), substituted ‘‘$250’’ for ‘‘$50’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2004 AMENDMENT Pub. L. 108–357, title VIII, § 816(c), Oct. 22, 2004, 118 Stat. 1584, provided that: ‘‘The amendments made by this section [amending this section] shall apply to re- turns the due date for which is after the date of the en- actment of this Act [Oct. 22, 2004].’’ EFFECTIVE DATE OF 1997 AMENDMENT Amendment by Pub. L. 105–34 applicable to any tax shelter, as defined in section 6111(d) of this title, inter- ests in which are offered to potential participants after Secretary of the Treasury prescribes guidance with re- spect to meeting requirements added by amendments made by Pub. L. 105–34, § 1028, see section 1028(e) of Pub. L. 105–34, set out as a note under section 6111 of this title. EFFECTIVE DATE OF 1986 AMENDMENT Pub. L. 99–514, title XV, § 1532(b), Oct. 22, 1986, 100 Stat. 2750, provided that: ‘‘The amendment made by this section [amending this section] shall apply to fail- ures with respect to tax shelters interests in which are first offered for sale after the date of the enactment of this Act [Oct. 22, 1986].’’ Pub. L. 99–514, title XV, § 1533(b), Oct. 22, 1986, 100 Stat. 2750, provided that: ‘‘The amendment made by this section [amending this section] shall apply to re- turns filed after the date of the enactment of this Act [Oct 22, 1986].’’ EFFECTIVE DATE Section applicable to tax shelters (within the mean- ing of section 6111 of this title), any interest in which is first sold to any investor after Aug. 31, 1984, see sec- tion 141(d) of Pub. L. 98–369, set out as a note under sec- tion 6111 of this title. § 6707A. Penalty for failure to include reportable transaction information with return (a) Imposition of penalty Any person who fails to include on any return or statement any information with respect to a reportable transaction which is required under section 6011 to be included with such return or statement shall pay a penalty in the amount de- termined under subsection (b). (b) Amount of penalty (1) In general Except as otherwise provided in this sub- section, the amount of the penalty under sub- section (a) with respect to any reportable transaction shall be 75 percent of the decrease in tax shown on the return as a result of such transaction (or which would have resulted from such transaction if such transaction were respected for Federal tax purposes). (2) Maximum penalty The amount of the penalty under subsection (a) with respect to any reportable transaction shall not exceed— (A) in the case of a listed transaction, $200,000 ($100,000 in the case of a natural per- son), or (B) in the case of any other reportable transaction, $50,000 ($10,000 in the case of a natural person). (3) Minimum penalty The amount of the penalty under subsection (a) with respect to any transaction shall not be less than $10,000 ($5,000 in the case of a nat- ural person). (c) Definitions For purposes of this section: (1) Reportable transaction The term ‘‘reportable transaction’’ means any transaction with respect to which infor- mation is required to be included with a re- turn or statement because, as determined under regulations prescribed under section 6011, such transaction is of a type which the Secretary determines as having a potential for tax avoidance or evasion. (2) Listed transaction The term ‘‘listed transaction’’ means a re- portable transaction which is the same as, or substantially similar to, a transaction specifi- cally identified by the Secretary as a tax avoidance transaction for purposes of section 6011. (d) Authority to rescind penalty (1) In general The Commissioner of Internal Revenue may rescind all or any portion of any penalty im- posed by this section with respect to any vio- lation if— (A) the violation is with respect to a re- portable transaction other than a listed transaction, and (B) rescinding the penalty would promote compliance with the requirements of this title and effective tax administration. (2) No judicial appeal Notwithstanding any other provision of law, any determination under this subsection may not be reviewed in any judicial proceeding. (3) Records If a penalty is rescinded under paragraph (1), the Commissioner shall place in the file in the Office of the Commissioner the opinion of the Commissioner with respect to the determina- tion, including— (A) a statement of the facts and cir- cumstances relating to the violation, (B) the reasons for the rescission, and (C) the amount of the penalty rescinded. (e) Penalty reported to SEC In the case of a person— (1) which is required to file periodic reports under section 13 or 15(d) of the Securities Ex- change Act of 1934 or is required to be consoli- dated with another person for purposes of such reports, and (2) which— (A) is required to pay a penalty under this section with respect to a listed transaction, (B) is required to pay a penalty under sec- tion 6662A with respect to any reportable transaction at a rate prescribed under sec- tion 6662A(c), or (C) is required to pay a penalty under sec- tion 6662(h) with respect to any reportable transaction and would (but for section