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Sec. 6695A. Substantial And Gross Valuation Misstatements Attributable To Incorrect Appraisals

I.R.C. § 6695A(a) Imposition Of Penalty
If—
I.R.C. § 6695A(a)(1)
a person prepares an appraisal of the value of property and such person knows, or reasonably should have known, that the appraisal would be used in connection with a return or a claim for refund, and
I.R.C. § 6695A(a)(2)
the claimed value of the property on a return or claim for refund which is based on such appraisal results in a substantial valuation 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).
I.R.C. § 6695A(b) Amount Of Penalty
The amount of the penalty imposed under subsection (a) on any person with respect to an appraisal shall be equal to the lesser of—
I.R.C. § 6695A(b)(1)
the greater of—
I.R.C. § 6695A(b)(A)
10 percent of the amount of the underpayment (as defined in section 6664(a)) attributable to the misstatement described in subsection (a)(2), or
I.R.C. § 6695A(b)(A)(B)
$1,000, or
I.R.C. § 6695A(b)(2)
125 percent of the gross income received by the person described in subsection (a)(1) from the preparation of the appraisal.
I.R.C. § 6695A(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 proper value.
(Added by Pub. L. 109-280, title XII, Sec. 1219(b)(1), Aug. 17, 2006; and amended by Pub. L. 110-172, Sec. 3(e)(1), 11(a)(40), Dec. 29, 2007, 121 Stat. 2473.)
BACKGROUND NOTES
AMENDMENTS
2007 - Subsec. (a)(2). Pub. L. 110-172, Sec. 3(e)(1), amended par. (2) by inserting “a substantial estate or gift tax valuation understatement (within the meaning of section 6662(g)),” before “or a gross valuation misstatement”.
Subsec. (a)(2). Pub. L. 110-172, Sec. 11(a)(40), amended par. (2) by inserting a paragraph break before “then such person”.
EFFECTIVE DATE OF 2007 AMENDMENTS
Amendment by Sec. 3(e)(1) of Pub. L. 110-172 effective as if included in the Pension Protection Act of 2006 [Pub. L. 109-280, Sec. 1219] to which it relates.
Amendment by Sec. 11(a)(40) of Pub. L. 110-172 effective on the date of the enactment of this Act [Enacted: Dec. 29, 2007].
EFFECTIVE DATE
Effective for appraisals prepared with respect to returns or submissions filed after the date of the enactment of this Act [Enacted: Aug. 17, 2006]. Section 1219(e)(3) of Pub. L. 109-280 provided the following special rule:
“(3) SPECIAL RULE FOR CERTAIN EASEMENTS- In the case of a contribution of a qualified real property interest which is a restriction with respect to the exterior of a building described in section 170(h)(4)(C)(ii) of the Internal Revenue Code of 1986, and an appraisal with respect to the contribution, the amendments made by subsections (a) and (b) shall apply to returns filed after July 25, 2006.