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Sec. 6707. Failure To Furnish Information Regarding Reportable Transactions

I.R.C. § 6707(a) In General
If a person who is required to file a return under section 6111(a) with respect to any reportable transaction--
I.R.C. § 6707(a)(1)
fails to file such return on or before the date prescribed therefor, or
I.R.C. § 6707(a)(2)
files false or incomplete information with the Secretary with respect to such transaction,
such person shall pay a penalty with respect to such return in the amount determined under subsection (b).
I.R.C. § 6707(b) Amount Of Penalty
I.R.C. § 6707(b)(1) In General
Except as provided in paragraph (2), the penalty imposed under subsection (a) with respect to any failure shall be $50,000.
I.R.C. § 6707(b)(2) Listed Transactions
The penalty imposed under subsection (a) with respect to any listed transaction shall be an amount equal to the greater of--
I.R.C. § 6707(b)(2)(A)
$200,000, or
I.R.C. § 6707(b)(2)(B)
50 percent of the gross income derived by such person with respect to aid, assistance, or advice which is provided with respect to the listed transaction before the date the return is filed under section 6111.
Subparagraph (B) shall be applied by substituting “75 percent” for “50 percent” in the case of an intentional failure or act described in subsection (a).
I.R.C. § 6707(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.
I.R.C. § 6707(d) Reportable And Listed Transactions
For purposes of this section, the terms “reportable 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, and amended Pub. L. 99-514, title XV, 1532(a), 1533(a), Oct. 22, 1986, 100 Stat. 2750; Pub. L. 105-34, title X, Sec. 1028, Aug. 5, 1997, 111 Stat 788; Pub. L. 108-357, title VIII, Sec. 816(a), Oct. 22, 2004, 118 Stat. 1418.)
Background Notes
Amendments
2004--Sec. 6707. Pub. L. 108-357, Sec. 816(a), amended Sec. 6707. Before amendment, it read as follows:
“Sec. 6707. Failure to furnish information regarding tax shelters
“(a) Failure to register tax shelter
“(1) Imposition of penalty
“If a person who is required to register a tax shelter under section 6111(a)--
“(A) fails to register such tax shelter on or before the date described in section 6111(a)(1), or
“(B) files false or incomplete information with the Secretary with respect to such registration,
“such person shall pay a penalty with respect to such registration in the amount determined under paragraph (2) or (3), as the case may be. No penalty shall be imposed under the preceding sentence with respect to any failure which is due to reasonable cause.
“(2) Amount of penalty
“Except as provided in paragraph (3), the penalty imposed under paragraph (1) with respect to any tax shelter shall be an amount equal to the greater of--
“(A) 1 percent of the aggregate amount invested in such tax shelter, or
“(B) $500.
“(3) Confidential arrangements.--
“(A) In general.--
“In the case of a tax shelter (as defined in section 6111(d)), the penalty imposed under paragraph (1) shall be an amount equal to the greater of--
“(i) 50 percent of the fees paid to all promoters of the tax shelter with respect to offerings made before the date such shelter is registered under section 6111, or
“(ii) $10,000.
“Clause (i) shall be applied by substituting ‘75 percent’ for ‘50 percent’ in the case of an intentional failure or act described in paragraph (1).
“(B) Special rule for participants required to register shelter.--
“In the case of a person required to register such a tax shelter by reason of section 6111(d)(3)--
“(i) such person shall be required to pay the penalty under paragraph (1) only if such person actually participated in such shelter,
“(ii) the amount of such penalty shall be determined by taking into account under subparagraph (A)(i) only the fees paid by such person, and
“(iii) such penalty shall be in addition to the penalty imposed on any other person for failing to register such shelter.
“(b) Failure to furnish tax shelter identification number
“(1) Sellers, etc.
“Any person who fails to furnish the identification number of a tax shelter which such person is required to furnish under section 6111(b)(1) shall pay a penalty of $100 for each such failure.
“(2) Failure to include number on return
“Any person who fails to include an identification number on a return on which such number is required to be included under section 6111(b)(2) shall pay a penalty of $250 for each such failure, unless such failure is due to reasonable cause.”
1997--Subsec. (a)(1). Pub. L. 105-34, Sec. 1028(d)(2), substituted “paragraph (2) or (3), as the case may be” for “paragraph (2)”.
Subsec. (a)(2). Pub. L. 105-34, Sec. 1028(d)(1), substituted “Except as provided in paragraph (3), the penalty” for “The penalty”.
Subsec. (a)(3). Pub. L. 105-34, Sec. 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.
The $10,000 limitation in subparagraph (B) shall not apply where there is an intentional disregard of the requirements of section 6111(a).”
Subsec. (b)(2). Pub. L. 99-514, 1533(a), substituted “$250” for “$50”.
EFFECTIVE DATE OF 2004 AMENDMENT
Amendment by Sec. 816(a) of Pub. L. 108-357 applicable to returns the due date for which is after the date of the enactment of this Act [Enacted: Oct. 22, 2004].
EFFECTIVE DATE OF 1997 AMENDMENTS
Amendments by Sec. 1028 by Pub. L. 105-34 applicable to any tax shelter (as defined in section 6111(d) of the Internal Revenue Code of 1986, as amended by this section) interests in which are offered to potential participants after the Secretary of the Treasury prescribes guidance with respect to meeting requirements added by such amendments.
Effective Date of 1986 Amendment
Section 1532(b) of Pub. L. 99-514 provided that: “The amendment made by this section [amending this section] shall apply to failures 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].”
Section 1533(b) of Pub. L. 99-514 provided that: “The amendment made by this section [amending this section] shall apply to returns filed after the date of the enactment of this Act [Oct 22, 1986].”
REPORT ON TAX SHELTER PENALTIES AND CERTAIN OTHER ENFORCEMENT ACTIONS
Section 2103 of Pub. L. 111-240 provided:
“(a) In General.—The Commissioner of Internal Revenue, in consultation with the Secretary of the Treasury, shall submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate an annual report on the penalties assessed by the Internal Revenue Service during the preceding year under each of the following provisions of the Internal Revenue Code of 1986:
“(1) Section 6662A (relating to accuracy-related penalty on understatements with respect to reportable transactions).
“(2) Section 6700(a) (relating to promoting abusive tax shelters).
“(3) Section 6707 (relating to failure to furnish information regarding reportable transactions).
“(4) Section 6707A (relating to failure to include reportable transaction information with return).
“(5) Section 6708 (relating to failure to maintain lists of advisees with respect to reportable transactions).
“(b) Additional Information.—The report required under subsection (a) shall also include information on the following with respect to each year:
“(1) Any action taken under section 330(b) of title 31, United States Code, with respect to any reportable transaction (as defined in section 6707A(c) of the Internal Revenue Code of 1986).
“(2) Any extension of the time for assessment of tax enforced, or assessment of any amount under such an extension, under paragraph (10) of section 6501(c) of the Internal Revenue Codeof 1986.
“(c) Date of Report.—The first report required under subsection (a) shall be submitted not later than December 31, 2010.”
REPORT
Pub. L. 108-357, Sec. 811(d) provided that:
“The Commissioner of Internal Revenue shall annually report to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate--
“(1) a summary of the total number and aggregate amount of penalties imposed, and rescinded, under section 6707A of the Internal Revenue Code of 1986, and
“(2) a description of each penalty rescinded under section 6707(c) of such Code and the reasons therefor.”
Effective Date
Section applicable to tax shelters (within the meaning of section 6111 of this title), any interest in which is first sold to any investor after Aug. 31, 1984, see section 141(d) of Pub. L. 98-369, set out as a note under section 6111 of this title.