26 U.S. Code § 6662A - Imposition of accuracy-related penalty on understatements with respect to reportable transactions
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(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
(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.
(c) Higher penalty for nondisclosed listed and other avoidance transactions
(d) Definitions of reportable and listed transactions
(e) Special rules
(1) Coordination with penalties, etc., on other understatements
(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
(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.
(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.
 See References in Text note below.
Source(Added Pub. L. 108–357, title VIII, § 812(a),Oct. 22, 2004, 118 Stat. 1577; amended Pub. L. 109–135, title IV, § 403(x)(2),Dec. 21, 2005, 119 Stat. 2629; Pub. L. 111–152, title I, § 1409(b)(3),Mar. 30, 2010, 124 Stat. 1069.)
References in Text
Section 6664 (d)(2)(A), referred to in subsec. (c), was redesignated as section 6664 (d)(3)(A) by Pub. L. 111–152, title I, § 1409(c)(2)(A),Mar. 30, 2010, 124 Stat. 1069.
Section 1409(b)(3) ofPub. L. 111–152, which directed the amendment of section 6662A without specifying the act to be amended, was executed to this section, which is section 6662A of the Internal Revenue Code of 1986, to reflect the probable intent of Congress. See 2010 Amendment note below.
2010—Subsec. (e)(2)(B). Pub. L. 111–152substituted “certain increased underpayment penalties” for “gross valuation misstatement penalty” in heading and “subsections (h) or (i) ofsection 6662” for “section 6662 (h)” in text. See Codification note above.
2005—Subsec. (e)(2). Pub. L. 109–135reenacted heading without change and amended text generally. Prior to amendment, text read as follows:
“(A) Application of fraud penalty.—References to an underpayment in section 6663 shall be treated as including references to a reportable transaction understatement.
“(B) No double penalty.—This section shall not apply to any portion of an understatement on which a penalty is imposed under section 6663.
“(C) Coordination with valuation penalties.—
“(i) Section 6662 (e).—Section 6662 (e) shall not apply to any portion of an understatement on which a penalty is imposed under this section.
“(ii) Section 6662 (h).—This section shall not apply to any portion of an understatement on which a penalty is imposed under section 6662 (h).”
Effective Date of 2010 Amendment
Amendment by Pub. L. 111–152applicable to underpayments attributable to transactions entered into after Mar. 30, 2010, see section 1409(e)(2) ofPub. L. 111–152, set out as a note under section 6662 of this title.
Effective Date of 2005 Amendment
Amendment by Pub. L. 109–135effective as if included in the provision of the American Jobs Creation Act of 2004, Pub. L. 108–357, to which such amendment relates, see section 403(nn) ofPub. L. 109–135, set out as a note under section 26 of this title.
Section applicable to taxable years ending after Oct. 22, 2004, see section 812(f) ofPub. L. 108–357, set out as an Effective Date of 2004 Amendment note under section 6662 of this title.
Report on Tax Shelter Penalties and Certain Other Enforcement Actions
“(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).
“(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 Code of 1986.
“(c) Date of Report.—The first report required under subsection (a) shall be submitted not later than December 31, 2010.”