26 USC 6662A - Imposition of accuracy-related penalty on understatements with respect to reportable transactions

U.S Code last checked for updates: Nov 26, 2024

§ 6662A.

Imposition of accuracy-related penalty on understatements with respect to reportable transactions

(a)

Imposition of penalty

(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 nondisclosed listed and other avoidance transactions

(d)

Definitions of reportable and listed transactions

(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 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

(B)

Coordination with certain increased underpayment penalties

(3)

Special rule for amended returns

(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; Pub. L. 113–295, div. A, title II, § 220(w), Dec. 19, 2014, 128 Stat. 4036.)

cite as: 26 USC 6662A