Section 6662A: Imposition of accuracy-related penalty on understatements with respect to reportable transactions
Internal Revenue Code
§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.
(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.
(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 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)(3)(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).
(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 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.
(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 certain increased underpayment penalties
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 subsections (h) or (i) of section 6662.
(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.
Section 1409(b)(3) of
Effective Date of 2010 Amendment
Effective Date of 2005 Amendment
Section applicable to taxable years ending after Oct. 22, 2004, see section 812(f) of
Report on Tax Shelter Penalties and Certain Other Enforcement Actions
"(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).
"(1) Any action taken under section 330(b) [now 330(c)] of
"(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 Code of 1986.