26 U.S.C. § 6673 — Sanctions and costs awarded by courts

Page 3787 TITLE 26—INTERNAL REVENUE CODE § 6673 subsection (a) [amending this section and sections 6694 and 6703 of this title] shall take effect on the date of the enactment of this Act [Dec. 19, 1989].’’ EFFECTIVE DATE OF 1978 AMENDMENT Pub. L. 95–628, § 9(c), Nov. 10, 1978, 92 Stat. 3633, pro- vided that: ‘‘The amendments made by this section [amending this section and sections 7103 and 7421 of this title] shall apply with respect to penalties assessed more than 60 days after the date of the enactment of this Act [Nov. 10, 1978].’’ PUBLIC INFORMATION TO ENSURE EMPLOYEE AWARE- NESS OF RESPONSIBILITIES AND LIABILITIES UNDER TAX DEPOSITORY SYSTEM Pub. L. 104–168, title IX, § 904(b), July 30, 1996, 110 Stat. 1467, provided that: ‘‘(1) IN GENERAL.—The Secretary of the Treasury or the Secretary’s delegate (hereafter in this subsection referred to as the ‘Secretary’) shall take such actions as may be appropriate to ensure that employees are aware of their responsibilities under the Federal tax depository system, the circumstances under which em- ployees may be liable for the penalty imposed by sec- tion 6672 of the Internal Revenue Code of 1986, and the responsibility to promptly report to the Internal Rev- enue Service any failure referred to in subsection (a) of such section 6672. Such actions shall include— ‘‘(A) printing of a warning on deposit coupon book- lets and the appropriate tax returns that certain em- ployees may be liable for the penalty imposed by such section 6672, and ‘‘(B) the development of a special information packet. ‘‘(2) DEVELOPMENT OF EXPLANATORY MATERIALS.—The Secretary shall develop materials explaining the cir- cumstances under which board members of tax-exempt organizations (including voluntary and honorary mem- bers) may be subject to penalty under section 6672 of such Code. Such materials shall be made available to tax-exempt organizations. ‘‘(3) IRS INSTRUCTIONS.—The Secretary shall clarify the instructions to Internal Revenue Service employees on the application of the penalty under section 6672 of such Code with regard to voluntary members of boards of trustees or directors of tax-exempt organizations.’’ § 6673. Sanctions and costs awarded by courts (a) Tax court proceedings (1) Procedures instituted primarily for delay, etc. Whenever it appears to the Tax Court that— (A) proceedings before it have been insti- tuted or maintained by the taxpayer pri- marily for delay, (B) the taxpayer’s position in such pro- ceeding is frivolous or groundless, or (C) the taxpayer unreasonably failed to pursue available administrative remedies, the Tax Court, in its decision, may require the taxpayer to pay to the United States a penalty not in excess of $25,000. (2) Counsel’s liability for excessive costs Whenever it appears to the Tax Court that any attorney or other person admitted to practice before the Tax Court has multiplied the proceedings in any case unreasonably and vexatiously, the Tax Court may require— (A) that such attorney or other person pay personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct, or (B) if such attorney is appearing on behalf of the Commissioner of Internal Revenue, that the United States pay such excess costs, expenses, and attorneys’ fees in the same manner as such an award by a district court. (b) Proceedings in other courts (1) Claims under section 7433 Whenever it appears to the court that the taxpayer’s position in the proceedings before the court instituted or maintained by such taxpayer under section 7433 is frivolous or groundless, the court may require the tax- payer to pay to the United States a penalty not in excess of $10,000. (2) Collection of sanctions and costs In any civil proceeding before any court (other than the Tax Court) which is brought by or against the United States in connection with the determination, collection, or refund of any tax, interest, or penalty under this title, any monetary sanctions, penalties, or costs awarded by the court to the United States may be assessed by the Secretary and, upon notice and demand, may be collected in the same manner as a tax. (3) Sanctions and costs awarded by a court of appeals In connection with any appeal from a pro- ceeding in the Tax Court or a civil proceeding described in paragraph (2), an order of a United States Court of Appeals or the Su- preme Court awarding monetary sanctions, penalties or court costs to the United States may be registered in a district court upon fil- ing a certified copy of such order and shall be enforceable as other district court judgments. Any such sanctions, penalties, or costs may be assessed by the Secretary and, upon notice and demand, may be collected in the same manner as a tax. (Aug. 16, 1954, ch. 736, 68A Stat. 828; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 97–248, title II, § 292(b), (d)(2)(A), Sept. 3, 1982, 96 Stat. 574; Pub. L. 99–514, title XV, § 1552(a), Oct. 22, 1986, 100 Stat. 2753; Pub. L. 100–647, title VI, § 6241(b), Nov. 10, 1988, 102 Stat. 3748; Pub. L. 101–239, title VII, § 7731(a), Dec. 19, 1989, 103 Stat. 2400.) Editorial Notes AMENDMENTS 1989—Pub. L. 101–239 substituted ‘‘Sanctions and costs awarded by courts’’ for ‘‘Damages assessable for insti- tuting proceedings before the Court primarily for delay, etc.’’ in section catchline and amended text gen- erally, making changes in substance and structure of subsecs. (a) and (b). 1988—Pub. L. 100–647 struck out ‘‘Tax’’ after ‘‘before the’’ in section catchline, designated existing provi- sions as subsec. (a), and added subsec. (b). 1986—Pub. L. 99–514 substituted ‘‘, that the taxpayer’s position in such proceeding is frivolous or groundless, or that the taxpayer unreasonably failed to pursue available administrative remedies’’ for ‘‘or that the taxpayer’s position in such proceedings is frivolous or groundless’’. 1982—Pub. L. 97–248, § 292(d)(2)(A), substituted ‘‘pri- marily for delay, etc.’’ for ‘‘merely for delay’’ after ‘‘Tax Court’’ in section catchline. Subsec. (a). Pub. L. 97–248, § 292(b), substituted ‘‘or maintained by the taxpayer primarily for delay or that Page 3788 TITLE 26—INTERNAL REVENUE CODE § 6674 the taxpayer’s position in such proceedings is frivolous or groundless, damages in an amount not in excess of $5,000’’ for ‘‘by the taxpayer merely for delay, damages in an amount not in excess of $500’’ in first sentence. 1976—Pub. L. 94–455 struck out ‘‘or his delegate’’ after ‘‘Secretary’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1989 AMENDMENT Pub. L. 101–239, title VII, § 7731(d), Dec. 19, 1989, 103 Stat. 2402, provided that: ‘‘The amendments made by this section [amending this section and section 7482 of this title] shall apply to positions taken after Decem- ber 31, 1989, in proceedings which are pending on, or commenced after such date.’’ EFFECTIVE DATE OF 1988 AMENDMENT Pub. L. 100–647, title VI, § 6241(d), Nov. 10, 1988, 102 Stat. 3749, provided that: ‘‘The amendments made by this section [enacting section 7433 of this title and amending this section] shall apply to actions by offi- cers or employees of the Internal Revenue Service after the date of the enactment of this Act [Nov. 10, 1988].’’ EFFECTIVE DATE OF 1986 AMENDMENT Pub. L. 99–514, title XV, § 1552(b), Oct. 22, 1986, 100 Stat. 2753, provided that: ‘‘The amendment made by subsection (a) [amending this section] shall apply to proceedings commenced after the date of the enact- ment of this Act [Oct. 22, 1986].’’ EFFECTIVE DATE OF 1982 AMENDMENT Amendment by Pub. L. 97–248 applicable to any ac- tion or proceeding in the Tax Court commenced after Dec. 31, 1982, or pending in the Tax Court on the day 120 days after July 18, 1984, see section 292(e)(2) of Pub. L. 97–248, as amended, set out as an Effective Date note under section 7430 of this title. § 6674. Fraudulent statement or failure to furnish statement to employee In addition to the criminal penalty provided by section 7204, any person required under the provisions of section 6051 or 6053(b) to furnish a statement to an employee who willfully fur- nishes a false or fraudulent statement, or who willfully fails to furnish a statement in the manner, at the time, and showing the informa- tion required under section 6051 or 6053(b), or regulations prescribed thereunder, shall for each such failure be subject to a penalty under this subchapter of $50, which shall be assessed and collected in the same manner as the tax on em- ployers imposed by section 3111. (Aug. 16, 1954, ch. 736, 68A Stat. 828; Pub. L. 89–97, title III, § 313(e)(2)(C), July 30, 1965, 79 Stat. 385.) Editorial Notes AMENDMENTS 1965—Pub. L. 89–97 substituted ‘‘6051 or 6053(b)’’ for ‘‘6051’’ wherever appearing. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1965 AMENDMENT Amendment by section 313 of Pub. L. 89–97 applicable only with respect to tips received by employees after 1965, see section 313(f) of Pub. L. 89–97, set out as a note under section 6053 of this title. § 6675. Excessive claims with respect to the use of certain fuels (a) Civil penalty In addition to any criminal penalty provided by law, if a claim is made under section 6416(a)(4) (relating to certain sales of gasoline), section 6420 (relating to gasoline used on farms), 6421 (relating to gasoline used for certain non- highway purposes or by local transit systems), or 6427 (relating to fuels not used for taxable purposes) for an excessive amount, unless it is shown that the claim for such excessive amount is due to reasonable cause, the person making such claim shall be liable to a penalty in an amount equal to whichever of the following is the greater: (1) Two times the excessive amount; or (2) $10. (b) Excessive amount defined For purposes of this section, the term ‘‘exces- sive amount’’ means in the case of any person the amount by which— (1) the amount claimed under section 6416(a)(4), 6420, 6421, or 6427, as the case may be, for any period, exceeds (2) the amount allowable under such section for such period. (c) Assessment and collection of penalty For assessment and collection of penalty provided by subsection (a), see section 6206. (Added Apr. 2, 1956, ch. 160, § 3, 70 Stat. 90; amended June 29, 1956, ch. 462, title II, § 208(d)(2), 70 Stat. 396; Pub. L. 89–44, title II, § 202(c)(3)(A), June 21, 1965, 79 Stat. 139; Pub. L. 91–258, title II, § 207(d)(8), May 21, 1970, 84 Stat. 249; Pub. L. 95–618, title II, § 233(b)(2)(D), Nov. 9, 1978, 92 Stat. 3191; Pub. L. 97–424, title V, § 515(b)(11)(A)–(C), Jan. 6, 1983, 96 Stat. 2182; Pub. L. 109–59, title XI, § 11163(d)(2), (3), Aug. 10, 2005, 119 Stat. 1975.) Editorial Notes AMENDMENTS 2005—Subsec. (a). Pub. L. 109–59, § 11163(d)(2), inserted ‘‘section 6416(a)(4) (relating to certain sales of gaso- line),’’ after ‘‘made under’’ in introductory provisions. Subsec. (b)(1). Pub. L. 109–59, § 11163(d)(3), inserted ‘‘6416(a)(4),’’ after ‘‘under section’’. 1983—Pub. L. 97–424, § 515(b)(11)(C), struck out ‘‘or lu- bricating oil’’ after ‘‘fuels’’ in section catchline. Subsec. (a). Pub. L. 97–424, § 515(b)(11)(A), struck out ‘‘6424 (relating to lubricating oil used for certain non- taxable purposes),’’ after ‘‘systems),’’. Subsec. (b)(1). Pub. L. 97–424, § 515(b)(11)(B), struck out ‘‘6424,’’ after ‘‘6421,’’. 1978—Subsec. (a). Pub. L. 95–618 substituted ‘‘used for certain nontaxable purposes’’ for ‘‘not used in highway motor vehicles’’. 1970—Pub. L. 91–258, § 207(d)(8)(A), substituted ‘‘fuels’’ for ‘‘gasoline’’ in section catchline. Subsec. (a). Pub. L. 91–258, § 207(d)(8)(B), inserted ref- erence to section 6427 relating to fuels not used for tax- able purposes. Subsec. (b)(1). Pub. L. 91–258, § 207(d)(8)(C), inserted reference to section 6427. 1965—Pub. L. 89–44, § 202(c)(3)(A)(i), inserted ‘‘or lubri- cating oil’’ after ‘‘gasoline’’ in section catchline. Subsec. (a). Pub. L. 89–44, § 202(c)(3)(A)(ii), inserted reference to claims made under section 6424. Subsec. (b)(1). Pub. L. 89–44, § 202(c)(3)(A)(iii), inserted reference to amounts claimed under section 6424. 1956—Act June 29, 1956, § 208(d)(2)(A), substituted ‘‘with respect to the use of certain gasoline’’ for ‘‘for gasoline used on farms’’ in section catchline.