26 U.S.C. § 6704 — Failure to keep records necessary to meet

Page 3808 TITLE 26—INTERNAL REVENUE CODE § 6704 tion is in force may be enjoined by a pro- ceeding in the proper court. Nothing in this paragraph shall be construed to prohibit any counterclaim for the remainder of such pen- alty in a proceeding begun as provided in para- graph (2). (2) Person must bring suit in district court to determine his liability for penalty If, within 30 days after the day on which his claim for refund of any partial payment of any penalty under section 6700 or 6701 is denied (or, if earlier, within 30 days after the expiration of 6 months after the day on which he filed the claim for refund), the person fails to begin a proceeding in the appropriate United States district court for the determination of his li- ability for such penalty, paragraph (1) shall cease to apply with respect to such penalty, effective on the day following the close of the applicable 30-day period referred to in this paragraph. (3) Suspension of running of period of limita- tions on collection The running of the period of limitations pro- vided in section 6502 on the collection by levy or by a proceeding in court in respect of any penalty described in paragraph (1) shall be sus- pended for the period during which the Sec- retary is prohibited from collecting by levy or a proceeding in court. (Added Pub. L. 97–248, title III, § 322(a), Sept. 3, 1982, 96 Stat. 612; amended Pub. L. 101–239, title VII, §§ 7736(a), 7737(a), Dec. 19, 1989, 103 Stat. 2404.) Editorial Notes AMENDMENTS 1989—Subsec. (c)(1). Pub. L. 101–239, § 7737(a), inserted at end ‘‘Nothing in this paragraph shall be construed to prohibit any counterclaim for the remainder of such penalty in a proceeding begun as provided in paragraph (2).’’ Pub. L. 101–239, § 7736(a), substituted ‘‘section 6700 or 6701’’ for ‘‘section 6700, 6701, or 6702’’. Subsec. (c)(2). Pub. L. 101–239, § 7736(a), substituted ‘‘section 6700 or 6701’’ for ‘‘section 6700, 6701, or 6702’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1989 AMENDMENT Pub. L. 101–239, title VII, § 7736(b), Dec. 19, 1989, 103 Stat. 2404, provided that: ‘‘The amendment made by subsection (a) [amending this section] shall apply to re- turns filed after December 31, 1989.’’ EFFECTIVE DATE Pub. L. 97–248, title III, § 322(c), Sept. 3, 1982, 96 Stat. 613, provided that: ‘‘The amendments made by this sec- tion [enacting this section] shall take effect on the day after the date of the enactment of this Act [Sept. 3, 1982].’’ § 6704. Failure to keep records necessary to meet reporting requirements under section 6047(d) (a) Liability for penalty Any person who— (1) has a duty to report or may have a duty to report any information under section 6047(d), and (2) fails to keep such records as may be re- quired by regulations prescribed under section 6047(d) for the purpose of providing the nec- essary data base for either current reporting or future reporting, shall pay a penalty for each calendar year for which there is any failure to keep such records. (b) Amount of penalty (1) In general The penalty of any person for any calendar year shall be $50, multiplied by the number of individuals with respect to whom such failure occurs in such year. (2) Maximum amount The penalty under this section of any person for any calendar year shall not exceed $50,000. (c) Exceptions (1) Reasonable cause No penalty shall be imposed by this section on any person for any failure which is shown to be due to reasonable cause and not to will- ful neglect. (2) Inability to correct previous failure No penalty shall be imposed by this section on any failure by a person if such failure is at- tributable to a prior failure which has been pe- nalized under this section and with respect to which the person has made all reasonable ef- forts to correct the failure. (3) Pre-1983 failures No penalty shall be imposed by this section on any person for any failure which is attrib- utable to a failure occurring before January 1, 1983, if the person has made all reasonable ef- forts to correct such pre-1983 failure. (Added Pub. L. 97–248, title III, § 334(c)(1), Sept. 3, 1982, 96 Stat. 627; amended Pub. L. 99–514, title XVIII, § 1848(e)(1), Oct. 22, 1986, 100 Stat. 2857.) Editorial Notes AMENDMENTS 1986—Pub. L. 99–514 substituted ‘‘section 6047(d)’’ for ‘‘section 6047(e)’’ in section catchline and in subsec. (a). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1986 AMENDMENT Amendment by Pub. L. 99–514 effective, except as oth- erwise provided, as if included in the provisions of the Tax Reform Act of 1984, Pub. L. 98–369, div. A, to which such amendment relates, see section 1881 of Pub. L. 99–514, set out as a note under section 48 of this title. EFFECTIVE DATE Section effective Jan. 1, 1985, see section 334(e)(3) of Pub. L. 97–248, set out as a note under section 3405 of this title. PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989 For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Pub. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L. 99–514, as amended, set out as a note under section 401 of this title. 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.