26 U.S.C. § 6695 — Other assessable penalties with respect to

Page 3799 TITLE 26—INTERNAL REVENUE CODE § 6695 who is an income tax return preparer with respect to such return or claim, such person shall pay a penalty of $100 with respect to such return or claim.’’ Subsec. (b). Pub. L. 101–239, § 7732(a), substituted ‘‘Willful or reckless conduct’’ for ‘‘Willful understate- ment of liability’’ in heading and amended text gen- erally. Prior to amendment, text read as follows: ‘‘If any part of any understatement of liability with re- spect to any return or claim for refund is due to a will- ful attempt in any manner to understate the liability for a tax by a person who is an income tax return pre- parer with respect to such return or claim, such person shall pay a penalty of $500 with respect to such return or claim. With respect to any return or claim, the amount of the penalty payable by any person by reason of this subsection shall be reduced by the amount of the penalty paid by such person by reason of subsection (a).’’ Subsec. (c)(1). Pub. L. 101–239, § 7737(a), inserted at end ‘‘Nothing in this paragraph shall be construed to pro- hibit any counterclaim for the remainder of such pen- alty in a proceeding begun as provided in paragraph (2).’’ Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2015 AMENDMENT Pub. L. 114–113, div. Q, title II, § 210(b), Dec. 18, 2015, 129 Stat. 3085, provided that: ‘‘The amendment made by this section [amending this section] shall apply to re- turns prepared for taxable years ending after the date of the enactment of this Act [Dec. 18, 2015].’’ EFFECTIVE DATE OF 2008 AMENDMENT Pub. L. 110–343, div. C, title V, § 506(b), Oct. 3, 2008, 122 Stat. 3880, provided that: ‘‘The amendment made by this section [amending this section] shall apply— ‘‘(1) in the case of a position other than a position described in subparagraph (C) of section 6694(a)(2) of the Internal Revenue Code of 1986 (as amended by this section), to returns prepared after May 25, 2007, and ‘‘(2) in the case of a position described in such sub- paragraph (C), to returns prepared for taxable years ending after the date of the enactment of this Act [Oct. 3, 2008].’’ EFFECTIVE DATE OF 2007 AMENDMENT Amendment by Pub. L. 110–28 applicable to returns prepared after May 25, 2007, see section 8246(c) of Pub. L. 110–28, set out as a note under section 6060 of this title. EFFECTIVE DATE OF 1989 AMENDMENT Pub. L. 101–239, title VII, § 7732(b), Dec. 19, 1989, 103 Stat. 2402, provided that: ‘‘The amendment made by subsection (a) [amending this section] shall apply with respect to documents prepared after December 31, 1989.’’ § 6695. Other assessable penalties with respect to the preparation of tax returns for other per- sons (a) Failure to furnish copy to taxpayer Any person who is a tax return preparer with respect to any return or claim for refund who fails to comply with section 6107(a) with respect to such return or claim shall pay a penalty of $50 for such failure, unless it is shown that such failure is due to reasonable cause and not due to willful neglect. The maximum penalty imposed under this subsection on any person with respect to documents filed during any calendar year shall not exceed $25,000. (b) Failure to sign return Any person who is a tax return preparer with respect to any return or claim for refund, who is required by regulations prescribed by the Sec- retary to sign such return or claim, and who fails to comply with such regulations with re- spect to such return or claim shall pay a penalty of $50 for such failure, unless it is shown that such failure is due to reasonable cause and not due to willful neglect. The maximum penalty imposed under this subsection on any person with respect to documents filed during any cal- endar year shall not exceed $25,000. (c) Failure to furnish identifying number Any person who is a tax return preparer with respect to any return or claim for refund and who fails to comply with section 6109(a)(4) with respect to such return or claim shall pay a pen- alty of $50 for such failure, unless it is shown that such failure is due to reasonable cause and not due to willful neglect. The maximum pen- alty imposed under this subsection on any per- son with respect to documents filed during any calendar year shall not exceed $25,000. (d) Failure to retain copy or list Any person who is a tax return preparer with respect to any return or claim for refund who fails to comply with section 6107(b) with respect to such return or claim shall pay a penalty of $50 for each such failure, unless it is shown that such failure is due to reasonable cause and not due to willful neglect. The maximum penalty imposed under this subsection on any person with respect to any return period shall not ex- ceed $25,000. (e) Failure to file correct information returns Any person required to make a return under section 6060 who fails to comply with the re- quirements of such section shall pay a penalty of $50 for— (1) each failure to file a return as required under such section, and (2) each failure to set forth an item in the return as required under section, unless it is shown that such failure is due to rea- sonable cause and not due to willful neglect. The maximum penalty imposed under this sub- section on any person with respect to any return period shall not exceed $25,000. (f) Negotiation of check Any person who is a tax return preparer who endorses or otherwise negotiates (directly or through an agent) any check made in respect of the taxes imposed by this title which is issued to a taxpayer (other than the tax return pre- parer) shall pay a penalty of $500 with respect to each such check. The preceding sentence shall not apply with respect to the deposit by a bank (within the meaning of section 581) of the full amount of the check in the taxpayer’s account in such bank for the benefit of the taxpayer. (g) Failure to be diligent in determining eligi- bility for certain tax benefits Any person who is a tax return preparer with respect to any return or claim for refund who fails to comply with due diligence requirements imposed by the Secretary by regulations with respect to determining— (1) eligibility to file as a head of household (as defined in section 2(b)) on the return, or Page 3800 TITLE 26—INTERNAL REVENUE CODE § 6695 (2) eligibility for, or the amount of, the cred- it allowable by section 24, 25A(a)(1), or 32, shall pay a penalty of $500 for each such failure. (h) Adjustment for inflation (1) In general In the case of any failure relating to a re- turn or claim for refund filed in a calendar year beginning after 2014, each of the dollar amounts under subsections (a), (b), (c), (d), (e), (f), and (g) shall be increased by an amount equal to such dollar amount multiplied by the cost-of-living adjustment determined under section 1(f)(3) for the calendar year determined by substituting ‘‘calendar year 2013’’ for ‘‘cal- endar year 2016’’ in subparagraph (A)(ii) there- of. (2) Rounding If any amount adjusted under paragraph (1)— (A) is not less than $5,000 and is not a mul- tiple of $500, such amount shall be rounded to the next lowest multiple of $500, and (B) is not described in subparagraph (A) and is not a multiple of $5, such amount shall be rounded to the next lowest multiple of $5. (Added Pub. L. 94–455, title XII, § 1203(f), Oct. 4, 1976, 90 Stat. 1692; amended Pub. L. 95–600, title VII, § 701(cc)(1), Nov. 6, 1978, 92 Stat. 2923; Pub. L. 98–369, div. A, title I, § 179(b)(2), July 18, 1984, 98 Stat. 718; Pub. L. 99–44, § 1(b), May 24, 1985, 99 Stat. 77; Pub. L. 101–239, title VII, § 7733(a)–(d), Dec. 19, 1989, 103 Stat. 2402, 2403; Pub. L. 105–34, title X, § 1085(a)(2), Aug. 5, 1997, 111 Stat. 956; Pub. L. 110–28, title VIII, § 8246(a)(2)(G)(i), (ii), May 25, 2007, 121 Stat. 202; Pub. L. 112–41, title V, § 501(a), Oct. 21, 2011, 125 Stat. 459; Pub. L. 113–295, div. B, title II, § 208(c), Dec. 19, 2014, 128 Stat. 4073; Pub. L. 114–113, div. Q, title II, § 207(a), Dec. 18, 2015, 129 Stat. 3082; Pub. L. 115–97, title I, §§ 11001(b), 11002(d)(1)(MM), Dec. 22, 2017, 131 Stat. 2058, 2060; Pub. L. 115–141, div. U, title IV, § 401(a)(299)(C), (309), (310), Mar. 23, 2018, 132 Stat. 1198, 1199.) INFLATION ADJUSTED ITEMS FOR CERTAIN YEARS For inflation adjustment of certain items in this section, see Revenue Procedures listed in a table under section 1 of this title. Editorial Notes AMENDMENTS 2018—Subsec. (h)(1). Pub. L. 115–141, § 401(a)(299)(C), in- serted ‘‘an amount equal to’’ after ‘‘increased by’’ and ‘‘for the calendar year’’ after ‘‘section 1(f)(3)’’. Subsec. (h)(2). Pub. L. 115–141, § 401(a)(309), substituted ‘‘paragraph (1)’’ for ‘‘subparagraph (A)’’ in introductory provisions. Subsec. (h)(2)(B). Pub. L. 115–141, § 401(a)(310), sub- stituted ‘‘subparagraph (A)’’ for ‘‘clause (i)’’. 2017—Subsec. (g). Pub. L. 115–97, § 11001(b), amended subsec. (g) generally. Prior to amendment, text read as follows: ‘‘Any person who is a tax return preparer with respect to any return or claim for refund who fails to comply with due diligence requirements imposed by the Secretary by regulations with respect to determining eligibility for, or the amount of, the credit allowable by section 24, 25A(a)(1), or 32 shall pay a penalty of $500 for each such failure.’’ Subsec. (h)(1). Pub. L. 115–97, § 11002(d)(1)(MM), sub- stituted ‘‘for ‘calendar year 2016’ in subparagraph (A)(ii)’’ for ‘‘for ‘calendar year 1992’ in subparagraph (B)’’. 2015—Subsec. (g). Pub. L. 114–113 inserted ‘‘child tax credit; American Opportunity Tax Credit; and’’ before ‘‘earned income credit’’ in heading and substituted ‘‘section 24, 25A(a)(1), or 32’’ for ‘‘section 32’’ in text. 2014—Subsec. (h). Pub. L. 113–295 added subsec. (h). 2011—Subsec. (g). Pub. L. 112–41 substituted ‘‘$500’’ for ‘‘$100’’. 2007—Pub. L. 110–28, § 8246(a)(2)(G)(i)(I), struck out ‘‘income’’ before ‘‘tax’’ in section catchline. Subsecs. (a) to (d). Pub. L. 110–28, § 8246(a)(2)(G)(i)(II), substituted ‘‘a tax return preparer’’ for ‘‘an income tax return preparer’’. Subsec. (f). Pub. L. 110–28, § 8246(a)(2)(G)(i)(II), (ii), substituted ‘‘a tax return preparer’’ for ‘‘an income tax return preparer’’, ‘‘this title’’ for ‘‘subtitle A’’, and ‘‘the tax return preparer’’ for ‘‘the income tax return preparer’’. Subsec. (g). Pub. L. 110–28, § 8246(a)(2)(G)(i)(II), sub- stituted ‘‘a tax return preparer’’ for ‘‘an income tax re- turn preparer’’. 1997—Subsec. (g). Pub. L. 105–34 added subsec. (g). 1989—Subsecs. (a) to (c). Pub. L. 101–239, § 7733(a)–(c), substituted ‘‘$50’’ for ‘‘$25’’ and inserted at end ‘‘The maximum penalty imposed under this subsection on any person with respect to documents filed during any calendar year shall not exceed $25,000.’’ Subsec. (e). Pub. L. 101–239, § 7733(d), substituted ‘‘re- turns’’ for ‘‘return’’ in heading and amended text gen- erally. Prior to amendment, text read as follows: ‘‘Any person required to make a return under section 6060 who fails to comply with the requirements of such sec- tion shall pay a penalty of— ‘‘(1) $100 for each failure to file a return as required under such section, and ‘‘(2) $5 for each failure to set forth an item in the return as required under such section, unless it is shown that such failure is due to reasonable cause and not due to willful neglect. The maximum penalty imposed under this subsection on any person with respect to any return period shall not exceed $20,000.’’ 1985—Subsec. (b). Pub. L. 99–44 repealed Pub. L. 98–369, § 179(b)(2), which amended subsec. (b), and pro- vided that the Internal Revenue Code of 1954 [now 1986] [this title] shall be applied and administered as if sec- tion 179(b)(2) (and the amendments made by such sec- tion) had not been enacted. See 1984 Amendment note and Effective Date of 1985 Amendment note below. 1984—Subsec. (b). Pub. L. 98–369 amended subsec. (b) generally, substituting provisions dealing with failure to inform taxpayer of certain recordkeeping require- ments of section 274(d) of this title or to sign returns, for provisions dealing with failure to sign returns. See 1985 Amendment note above. 1978—Subsec. (f). Pub. L. 95–600 inserted provision re- lating to deposits by a bank. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2017 AMENDMENT Amendment by section 11001(b) of Pub. L. 115–97 ap- plicable to taxable years beginning after Dec. 31, 2017, see section 11001(c) of Pub. L. 115–97, set out as a note under section 1 of this title. Amendment by section 11002(d)(1)(MM) of Pub. L. 115–97 applicable to taxable years beginning after Dec. 31, 2017, see section 11002(e) of Pub. L. 115–97, set out as a note under section 1 of this title. EFFECTIVE DATE OF 2015 AMENDMENT Pub. L. 114–113, div. Q, title II, § 207(c), Dec. 18, 2015, 129 Stat. 3083, provided that: ‘‘The amendment made by this section [amending this section] shall apply to tax- able years beginning after December 31, 2015.’’ EFFECTIVE DATE OF 2014 AMENDMENT Amendment by Pub. L. 113–295 applicable to returns or claims for refund filed after Dec. 31, 2014, see section Page 3801 TITLE 26—INTERNAL REVENUE CODE § 6696 208(h) of Pub. L. 113–295, set out as a note under section 6651 of this title. EFFECTIVE DATE OF 2011 AMENDMENT Amendment by Pub. L. 112–41 applicable to returns required to be filed after Dec. 31, 2011, see section 501(b) of Pub. L. 112–41, set out in a note under section 3805 of Title 19, Customs Duties. EFFECTIVE DATE OF 2007 AMENDMENT Amendment by Pub. L. 110–28 applicable to returns prepared after May 25, 2007, see section 8246(c) of Pub. L. 110–28, set out as a note under section 6060 of this title. EFFECTIVE DATE OF 1997 AMENDMENT Amendment by Pub. L. 105–34 applicable to taxable years beginning after Dec. 31, 1996, see section 1085(e)(1) of Pub. L. 105–34, set out as a note under section 32 of this title. EFFECTIVE DATE OF 1989 AMENDMENT Pub. L. 101–239, title VII, § 7733(e), Dec. 19, 1989, 103 Stat. 2403, provided that: ‘‘The amendments made by this section [amending this section] shall apply to doc- uments prepared after December 31, 1989.’’ EFFECTIVE DATE OF 1985 AMENDMENT Amendment by Pub. L. 99–44 effective as if included in the amendments made by section 179(b) of Pub. L. 98–369, see section 6(a) of Pub. L. 99–44, set out as a note under section 274 of this title. EFFECTIVE DATE OF 1984 AMENDMENT Amendment by Pub. L. 98–369 applicable to taxable years beginning after Dec. 31, 1984, see section 179(d)(2) of Pub. L. 98–369, set out as an Effective Date note under section 280F of this title. EFFECTIVE DATE OF 1978 AMENDMENT Pub. L. 95–600, title VII, § 701(cc)(3), Nov. 6, 1978, 92 Stat. 2924, provided that: ‘‘The amendments made by this subsection [amending this section and section 7701 of this title] shall apply to documents prepared after December 31, 1976.’’ REPEAL OF REGULATIONS COVERING SUBSTANTIATION BY ADEQUATE CONTEMPORANEOUS RECORDS Regulations issued before May 24, 1985, to carry out the amendment of subsec. (b) of this section by section 179(b)(2) of Pub. L. 98–369 to have no force and effect, see section 1(c) of Pub. L. 99–44, set out as a note under section 274 of this title. § 6695A. Substantial and gross valuation misstatements attributable to incorrect ap- praisals (a) Imposition of penalty If— (1) a person prepares an appraisal of the value of property and such person knows, or reasonably should have known, that the ap- praisal would be used in connection with a re- turn or a claim for refund, and (2) the claimed value of the property on a re- turn or claim for refund which is based on such appraisal results in a substantial valu- ation misstatement under chapter 1 (within the meaning of section 6662(e)), a substantial estate or gift tax valuation understatement (within the meaning of section 6662(g)), or a gross valuation misstatement (within the meaning of section 6662(h)), with respect to such property, then such person shall pay a penalty in the amount determined under subsection (b). (b) Amount of penalty The amount of the penalty imposed under sub- section (a) on any person with respect to an ap- praisal shall be equal to the lesser of— (1) the greater of— (A) 10 percent of the amount of the under- payment (as defined in section 6664(a)) at- tributable to the misstatement described in subsection (a)(2), or (B) $1,000, or (2) 125 percent of the gross income received by the person described in subsection (a)(1) from the preparation of the appraisal. (c) Exception No penalty shall be imposed under subsection (a) if the person establishes to the satisfaction of the Secretary that the value established in the appraisal was more likely than not the prop- er value. (Added Pub. L. 109–280, title XII, § 1219(b)(1), Aug. 17, 2006, 120 Stat. 1084; amended Pub. L. 110–172, §§ 3(e)(1), 11(a)(40), Dec. 29, 2007, 121 Stat. 2474, 2488.) Editorial Notes CODIFICATION Section 1219(b)(1) of Pub. L. 109–280, which directed the addition of section 6695A at the end of part I of sub- chapter B of chapter 68, without specifying the act to be amended, was executed by adding section 6695A at the end of part I of subchapter B of chapter 68 of this title, which consists of the Internal Revenue Code of 1986, to reflect the probable intent of Congress. AMENDMENTS 2007—Subsec. (a). Pub. L. 110–172, § 11(a)(40), des- ignated the words ‘‘then such person shall pay a pen- alty in the amount determined under subsection (b).’’, appearing in par. (2), as concluding provisions of sub- sec. (a). Subsec. (a)(2). Pub. L. 110–172, § 3(e)(1), inserted ‘‘a substantial estate or gift tax valuation understatement (within the meaning of section 6662(g)),’’ before ‘‘or a gross valuation misstatement’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2007 AMENDMENT Amendment by section 3(e)(1) of Pub. L. 110–172 effec- tive as if included in the provisions of the Pension Pro- tection Act of 2006, Pub. L. 109–280, to which such amendment relates, see section 3(j) of Pub. L. 110–172, set out as a note under section 170 of this title. EFFECTIVE DATE Section applicable to appraisals prepared with re- spect to returns or submissions filed after Aug. 17, 2006, with special rule for certain easements, see section 1219(e)(2), (3) of Pub. L. 109–280, set out as an Effective Date of 2006 Amendments note under section 170 of this title. § 6696. Rules applicable with respect to sections 6694, 6695, and 6695A (a) Penalties to be additional to any other pen- alties The penalties provided by sections 6694, 6695, and 6695A shall be in addition to any other pen- alties provided by law.