Internal Revenue Code:Sec. 6662A. Imposition of accuracy-related penalty on understatements with respect to reportable transactions

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Contents

Location in Internal Revenue Code


     TITLE 26 - INTERNAL REVENUE CODE
      Subtitle F - Procedure and Administration
       CHAPTER 68 - ADDITIONS TO THE TAX, ADDITIONAL AMOUNTS, AND
             ASSESSABLE PENALTIES
         Subchapter A - Additions to the Tax and Additional Amounts
          PART II - ACCURACY-RELATED AND FRAUD PENALTIES
        

Statute


SEC. 6662A. IMPOSITION OF ACCURACY-RELATED PENALTY ON UNDERSTATEMENTS 
            WITH RESPECT TO REPORTABLE TRANSACTIONS.

    (a) Imposition of Penalty.--If a taxpayer has a reportable 
     transaction understatement for any taxable year, there shall be added to 
     the tax an amount equal to 20 percent of the amount of such 
     understatement.
    (b) Reportable Transaction Understatement.--For purposes of this 
     section--
       (1) In general.--The term `reportable transaction 
        understatement' means the sum of--
          (A) the product of--
             (i) the amount of the increase (if any) in 
                 taxable income which results from a difference 
                 between the proper tax treatment of an item to 
                 which this section applies and the taxpayer's 
                 treatment of such item (as shown on the taxpayer's 
                 return of tax), and
             (ii) the highest rate of tax imposed by 
                 section 1 (section 11 in the case of a taxpayer 
                 which is a corporation), and
          (B) the amount of the decrease (if any) in the 
            aggregate amount of credits determined under subtitle A 
            which results from a difference between the taxpayer's 
            treatment of an item to which this section applies (as 
            shown on the taxpayer's return of tax) and the proper 
            tax treatment of such item.
        For purposes of subparagraph (A), any reduction of the excess of 
        deductions allowed for the taxable year over gross income for 
        such year, and any reduction in the amount of capital losses 
        which would (without regard to section 1211) be allowed for such 
        year, shall be treated as an increase in taxable income.
       (2) Items to which section applies.--This section shall 
        apply to any item which is attributable to--
          (A) any listed transaction, and
          (B) any reportable transaction (other than a 
            listed transaction) if a significant purpose of such 
            transaction is the avoidance or evasion of Federal 
            income tax.

    (c) Higher Penalty for <<NOTE: Applicability.>> Nondisclosed 
     Listed and Other Avoidance Transactions.--Subsection (a) shall be 
     applied by substituting `30 percent' for `20 percent' with respect to 
     the portion of any reportable transaction understatement with respect to 
     which the requirement of section 6664(d)(2)(A) is not met.

    (d) Definitions of 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).
    (e) Special Rules.--
       (1) Coordination with penalties, etc., on other 
        understatements.--In the case of an understatement (as defined 
        in section 6662(d)(2))--
          (A) the amount of such understatement (determined 
            without regard to this paragraph) shall be increased by 
            the aggregate amount of reportable transaction 
            understatements for purposes of determining whether such 
            understatement is a substantial understatement under 
            section 6662(d)(1), and
          (B) the <<NOTE: Applicability.>> addition to tax 
            under section 6662(a) shall apply only to the excess of 
            the amount of the substantial understatement (if any) 
            after the application of subparagraph (A) over the 
            aggregate amount of reportable transaction 
            understatements.
       (2) Coordination with other penalties.--
          (A) Coordination with fraud penalty.--This section 
            shall not apply to any portion of an understatement on 
            which a penalty is imposed under section 6663.
          (B) Coordination with gross valuation misstatement 
            penalty.--This section shall not apply to any portion of 
            an understatement on which a penalty is imposed under 
            section 6662 if the rate of the penalty is determined 
            under section 6662(h).
       (3) Special rule for amended returns.--Except as provided 
        in regulations, in no event shall any tax treatment included 
        with an amendment or supplement to a return of tax be taken into 
        account in determining the amount of any reportable transaction 
        understatement if the amendment or supplement is filed after the 
        earlier of the date the taxpayer is first contacted by the 
        Secretary regarding the examination of the return or such other 
        date as is specified by the Secretary.''.

 

Sources

    Pub. L. 108-357, Sec. 812, establishes this section.  

 

Miscellaneous


                                 AMENDMENTS
2005 - P.L. 109-135, Section 403
 (x) Amendments Related to Section 812 of the Act.--
            (2) Paragraph (2) of section 6662A(e) is amended to read as 
        follows:
            ``(2) Coordination with other penalties.--
                    ``(A) Coordination with fraud penalty.--This section 
                shall not apply to any portion of an understatement on 
                which a penalty is imposed under section 6663.
                    ``(B) Coordination with gross valuation misstatement 
                penalty.--This section shall not apply to any portion of 
                an understatement on which a penalty is imposed under 
                section 6662 if the rate of the penalty is determined 
                under section 6662(h).''.

                           EFFECTIVE DATES
2005 - P.L. 109-135, Section 403(x)
(3) Subsection (f) of section 812 of the American Jobs 
        Creation Act of 2004 is <<NOTE: 26 USC 6662 note.>> amended to 
        read as follows:
    ``(f) Effective Dates.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to taxable years 
        ending after the date of the enactment of this Act.
            ``(2) Disqualified opinions.--Section 6664(d)(3)(B) of the 
        Internal Revenue Code of 1986 (as added by subsection (c)) shall 
        not apply to the opinion of a tax advisor if--
                    ``(A) the opinion was provided to the taxpayer 
                before the date of the enactment of this Act,
                    ``(B) the opinion relates to one or more 
                transactions all of which were entered into before such 
                date, and
                    ``(C) the tax treatment of items relating to each 
                such transaction was included on a return or statement 
                filed by the taxpayer before such date.''.


References

                   SECTION REFERRED TO IN OTHER SECTIONS
     
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