26 USC § 6700 - Promoting abusive tax shelters, etc. | Title 26 - Internal Revenue Code | U.S. Code

USCPrelim is a preliminary release and may be subject to further revision before it is released again as a final version.

Current through Pub. L. 112-143, except 112-141. (See Public Laws for the current Congress.)

(a) Imposition of penalty

Any person who—

(1)

(A) organizes (or assists in the organization of)—

(i) a partnership or other entity,

(ii) any investment plan or arrangement, or

(iii) any other plan or arrangement, or

(B) participates (directly or indirectly) in the sale of any interest in an entity or plan or arrangement referred to in subparagraph (A), and

(2) makes or furnishes or causes another person to make or furnish (in connection with such organization or sale)—

(A) a statement with respect to the allowability of any deduction or credit, the excludability of any income, or the securing of any other tax benefit by reason of holding an interest in the entity or participating in the plan or arrangement which the person knows or has reason to known is false or fraudulent as to any material matter, or

(B) a gross valuation overstatement as to any material matter,

shall pay, with respect to each activity described in paragraph (1), a penalty equal to the $1,000 or, if the person establishes that it is lesser, 100 percent of the gross income derived (or to be derived) by such person from such activity. For purposes of the preceding sentence, activities described in paragraph (1)(A) with respect to each entity or arrangement shall be treated as a separate activity and participation in each sale described in paragraph (1)(B) shall be so treated. Notwithstanding the first sentence, if an activity with respect to which a penalty imposed under this subsection involves a statement described in paragraph (2)(A), the amount of the penalty shall be equal to 50 percent of the gross income derived (or to be derived) from such activity by the person on which the penalty is imposed.

(b) Rules relating to penalty for gross valuation overstatements

(1) Gross valuation overstatement defined

For purposes of this section, the term “gross valuation overstatement” means any statement as to the value of any property or services if—

(A) the value so stated exceeds 200 percent of the amount determined to be the correct valuation, and

(B) the value of such property or services is directly related to the amount of any deduction or credit allowable under chapter 1 to any participant.

(2) Authority to waive

The Secretary may waive all or any part of the penalty provided by subsection (a) with respect to any gross valuation overstatement on a showing that there was a reasonable basis for the valuation and that such valuation was made in good faith.

(c) Penalty in addition to other penalties

The penalty imposed by this section shall be in addition to any other penalty provided by law.

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(a) Imposition of penalty

Any person who—

(1)

(A) organizes (or assists in the organization of)—

(i) a partnership or other entity,

(ii) any investment plan or arrangement, or

(iii) any other plan or arrangement, or

(B) participates (directly or indirectly) in the sale of any interest in an entity or plan or arrangement referred to in subparagraph (A), and

(2) makes or furnishes or causes another person to make or furnish (in connection with such organization or sale)—

(A) a statement with respect to the allowability of any deduction or credit, the excludability of any income, or the securing of any other tax benefit by reason of holding an interest in the entity or participating in the plan or arrangement which the person knows or has reason to known is false or fraudulent as to any material matter, or

(B) a gross valuation overstatement as to any material matter,

shall pay, with respect to each activity described in paragraph (1), a penalty equal to the $1,000 or, if the person establishes that it is lesser, 100 percent of the gross income derived (or to be derived) by such person from such activity. For purposes of the preceding sentence, activities described in paragraph (1)(A) with respect to each entity or arrangement shall be treated as a separate activity and participation in each sale described in paragraph (1)(B) shall be so treated. Notwithstanding the first sentence, if an activity with respect to which a penalty imposed under this subsection involves a statement described in paragraph (2)(A), the amount of the penalty shall be equal to 50 percent of the gross income derived (or to be derived) from such activity by the person on which the penalty is imposed.

(b) Rules relating to penalty for gross valuation overstatements

(1) Gross valuation overstatement defined

For purposes of this section, the term “gross valuation overstatement” means any statement as to the value of any property or services if—

(A) the value so stated exceeds 200 percent of the amount determined to be the correct valuation, and

(B) the value of such property or services is directly related to the amount of any deduction or credit allowable under chapter 1 to any participant.

(2) Authority to waive

The Secretary may waive all or any part of the penalty provided by subsection (a) with respect to any gross valuation overstatement on a showing that there was a reasonable basis for the valuation and that such valuation was made in good faith.

(c) Penalty in addition to other penalties

The penalty imposed by this section shall be in addition to any other penalty provided by law.

Source

(Added Pub. L. 97–248, title III, § 320(a),Sept. 3, 1982, 96 Stat. 611; amended Pub. L. 98–369, div. A, title I, § 143(a),July 18, 1984, 98 Stat. 682; Pub. L. 101–239, title VII, § 7734(a),Dec. 19, 1989, 103 Stat. 2403; Pub. L. 108–357, title VIII, § 818(a),Oct. 22, 2004, 118 Stat. 1584.)

Amendments

2004—Subsec. (a). Pub. L. 108–357inserted at end of concluding provisions “Notwithstanding the first sentence, if an activity with respect to which a penalty imposed under this subsection involves a statement described in paragraph (2)(A), the amount of the penalty shall be equal to 50 percent of the gross income derived (or to be derived) from such activity by the person on which the penalty is imposed.”

1989—Subsec. (a). Pub. L. 101–239, § 7734(a)(3), added concluding provision and struck out former concluding provision which read as follows: “shall pay a penalty equal to the greater of $1,000 or 20 percent of the gross income derived or to be derived by such person from such activity.”

Subsec. (a)(1)(B). Pub. L. 101–239, § 7734(a)(1), inserted “(directly or indirectly)” after “participates”.

Subsec. (a)(2). Pub. L. 101–239, § 7734(a)(2), inserted “or causes another person to make or furnish” after “makes or furnishes” in introductory provisions.

1984—Subsec. (a). Pub. L. 98–369substituted “20 percent” for “10 percent”.

Effective Date of 2004 Amendment

Pub. L. 108–357, title VIII, § 818(b),Oct. 22, 2004, 118 Stat. 1584, provided that: “The amendment made by this section [amending this section] shall apply to activities after the date of the enactment of this Act [Oct. 22, 2004].”

Effective Date of 1989 Amendment

Section 7734(b) ofPub. L. 101–239provided that: “The amendment made by subsection (a) [amending this section] shall apply to activities after December 31, 1989.”

Effective Date of 1984 Amendment

Section 143(c) ofPub. L. 98–369provided that: “The amendments made by this section [amending this section and section 7408 of this title] shall take effect on the day after the date of the enactment of this Act [July 18, 1984].”

Effective Date

Section 320(c) ofPub. L. 97–248provided that: “The amendments made by this section [enacting this section] shall take effect on the day after the date of the enactment of this Act [Sept. 3, 1982].”

The table below lists the classification updates, since Jan. 3, 2012, for this section. Updates to a broader range of sections may be found at the update page for containing chapter, title, etc.

The most recent Classification Table update that we have noticed was Thursday, March 14, 2013

An empty table indicates that we see no relevant changes listed in the classification tables. If you suspect that our system may be missing something, please double-check with the Office of the Law Revision Counsel.

How To Use

Multiple entries for a section are listed most recent first, within the section.

The Session Year indicates which session of Congress was responsible for the changes classified. The Congress number forms the first part of the Public Law number; each Congress has two sessions.

Abbreviations used in the Description of Change column:

An empty field implies a standard amendment.
"new" means a new section or new note, or all new text of an existing section or note.
"nt" means note.
"nt [tbl]" means note [table].
"prec" means preceding.
"fr" means a transfer from another section.
"to" means a transfer to another section.
"omitted" means the section is omitted.
"repealed" means the section is repealed.
"nt ed change" and "ed change" - See the Editorial Classification Change Table [pdf].

The Public Law field is linked to the development of the law in the Thomas system at the Library of Congress.

The Statutes at Large field is linked to the text of the law, in the context of its volume of the Statutes at Large, at the Government Printing Office. Please note that it takes a while for these pages to get posted, so for very recent legislation, you need to look at the "enrolled" version at the Thomas site.

The Statutes at Large references have been rendered in the format used as page numbers in the Public Law web pages to which we link, to facilitate copy-paste into browser "find on this (web) page" tools. We are still working on a more direct link facility.

For serious comparison work, we suggest copying all or a portion of the Public Law text into your favorite text editor, for convenient content traversal and window control.

Sections with change type "new" are a special case, still under development. All are now listed, at the title level only.

You will find that occassionally a specific update you notice in a Public Law listed in a classification table will already have made it into the Code. We assume this is an artifact of the LRC edit process. The LII does not edit the LRC content.

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General Reference

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You can look for information about what it is and is not, which titles are positive law, the schedule of Supplements, etc. Under download you can find the source data we use here (GPO locator files), as well as, PDF files that look just like the paper books (these may be rather large).

Refer to the Thomas site for changes that have not yet made it into the classification tables.

26 USC	Description of Change	Session Year	Public Law	Statutes at Large

26 USC § 6700 - Promoting abusive tax shelters, etc.

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