§ 6701. Penalties for aiding and abetting understatement of tax liability

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1982

   Pub. L. 97–248 title III § 324(a) · 96 Stat. 324

   Enacted · 26 U.S.C. § 6701

   Added Pub. L. 97–248, title III, § 324(a), Sept. 3, 1982, 96 Stat. 615

   Source evidence

   Code source credit
   Added Pub. L. 97–248, title III, § 324(a), Sept. 3, 1982, 96 Stat. 615

   Enacted provision · exact public law section
   (a) General Rule.— Subchapter B of chapter 68 (relating to assessable penalties) is amended by inserting after section 6700 the following new section: “SEC. 6701. PENALTIES FOR AIDING AND ABETTING UNDERSTATEMENT OF TAX LIABILITY. “(a) Imposition of Penalty.— Any person— “(1) who aids or assists in, procures, or advises with respect to, the preparation or presentation of any portion of a return, affidavit, claim, or other document in connection with any matter arising under the internal revenue laws, “(2) who knows that such portion will be used in connection with any material matter arising under the internal revenue laws, and “(3) who knows that such portion (if so used) will result in an understatement of the liability for tax of another person, shall pay a penalty with respect to each such document in the amount determined under subsection (b). “(b) Amount of Penalty.— “(1) In general.— Except as provided in paragraph (2), the amount of the penalty imposed by subsection (a) shall be $1,000. “(2) Corporations.— If the return, affidavit, claim, or other document relates to the tax liability of a corporation, the amount of the penalty imposed by subsection (a) shall be $10,000. “(3) Only 1 penalty per person per period.— If any person is subject to a penalty under subsection (a) with respect to any document relating to any taxpayer for any taxable period (or where there is no taxable period, any taxable event), such person shall not be subject to a penalty under subsection (a) with respect to any other document relating to such taxpayer for such taxable period (or event). “(c) Activities of Subordinates.— “(1) In general.— For purposes of subsection (a), the term ‘procures’ includes— “(A) ordering (or otherwise causing) a subordinate to do an act, and “(B) knowing of, and not attempting to prevent, participation by a subordinate in an act. “(2) Subordinate.— For purposes of paragraph (1), the term ‘subordinate’ means any other person (whether or not a director, officer, employee, or agent of the taxpayer involved) over whose activities the person has direction, supervision, or control. “(d) Taxpayer Not Required to Have Knowledge.— Subsection (a) shall apply whether or not the understatement is with the knowledge or consent of the persons authorized or required to present the return, affidavit, claim, or other document. “(e) Certain Actions Not Treated as Aid or Assistance.— For purposes of subsection (a)(1), a person furnishing typing, reproducing, or other mechanical assistance with respect to a document shall not be treated as having aided or assisted in the preparation of such document by reason of such assistance. “(f) Penalty in Addition to Other Penalties.— “(1) In general.— Except as provided by paragraph (2), the penalty imposed by this section shall be in addition to any other penalty provided by law. “(2) Coordination with return preparer penalties.— No penalty shall be assessed under subsection (a) or (b) of section 6694 on any person with respect to any document for which a penalty is assessed on such person under subsection (a).”

2. 1989

   Improved Penalty Administration and Compliance Tax Act

   Pub. L. 101–239 § 7735(a)(1) · 103 Stat. 2106

   Struck · 26 U.S.C. § 6701(a)(1)

   Pub. L. 101–239, § 7735(a)(1), struck out “in connection with any matter arising under the internal revenue laws” after “other document”

   Source evidence

   Code amendment note
   Subsec. (a)(1). Pub. L. 101–239, § 7735(a)(1), struck out “in connection with any matter arising under the internal revenue laws” after “other document”.

   Enacted provision · exact public law section
   (1) by striking “in connection with any matter arising under the internal revenue laws” in paragraph (1),

   Effective date note
   Pub. L. 101–239, title VII, § 7735(c), Dec. 19, 1989, 103 Stat. 2404, provided that: “The amendments made by this section [amending this section] shall take effect on December 31, 1989.”

3. 1989

   Improved Penalty Administration and Compliance Tax Act

   Pub. L. 101–239 § 7735(a)(2) · 103 Stat. 2106

   Inserted · 26 U.S.C. § 6701(a)(2)

   Pub. L. 101–239, § 7735(a)(2), inserted “(or has reason to believe)” after “who knows”

   Source evidence

   Code amendment note
   Subsec. (a)(2). Pub. L. 101–239, § 7735(a)(2), inserted “(or has reason to believe)” after “who knows”.

   Enacted provision · exact public law section
   (2) by striking “who knows” in paragraph (2) and inserting “who knows (or has reason to believe)”, and

   Effective date note
   Pub. L. 101–239, title VII, § 7735(c), Dec. 19, 1989, 103 Stat. 2404, provided that: “The amendments made by this section [amending this section] shall take effect on December 31, 1989.”

4. 1989

   Improved Penalty Administration and Compliance Tax Act

   Pub. L. 101–239 § 7735(a)(3) · 103 Stat. 2106

   Substituted · 26 U.S.C. § 6701(a)(3)

   Pub. L. 101–239, § 7735(a)(3), substituted “would result” for “will result”

   Source evidence

   Code amendment note
   Subsec. (a)(3). Pub. L. 101–239, § 7735(a)(3), substituted “would result” for “will result”.

   Enacted provision · exact public law section
   (3) by striking “will result” in paragraph (3) and inserting “would result”.

   Effective date note
   Pub. L. 101–239, title VII, § 7735(c), Dec. 19, 1989, 103 Stat. 2404, provided that: “The amendments made by this section [amending this section] shall take effect on December 31, 1989.”

5. 1989

   Improved Penalty Administration and Compliance Tax Act

   Pub. L. 101–239 § 7735(b)(2) · 103 Stat. 2106

   Substituted · 26 U.S.C. § 6701(f)(1)

   Pub. L. 101–239, § 7735(b)(2), substituted “paragraphs (2) and (3)” for “paragraph (2)”

   Source evidence

   Code amendment note
   Subsec. (f)(1). Pub. L. 101–239, § 7735(b)(2), substituted “paragraphs (2) and (3)” for “paragraph (2)”.

   Enacted provision · exact public law section
   (2) Technical amendment.— Paragraph (1) of section 6701(C) is amended by striking “paragraph (2)” and inserting “paragraphs (2) and (3)”.

   Effective date note
   Pub. L. 101–239, title VII, § 7735(c), Dec. 19, 1989, 103 Stat. 2404, provided that: “The amendments made by this section [amending this section] shall take effect on December 31, 1989.”

6. 1989

   Improved Penalty Administration and Compliance Tax Act

   Pub. L. 101–239 § 7735(b)(1) · 103 Stat. 2106

   Added · 26 U.S.C. § 6701(f)(3)

   Pub. L. 101–239, § 7735(b)(1), added par. (3)

   Source evidence

   Code amendment note
   Subsec. (f)(3). Pub. L. 101–239, § 7735(b)(1), added par. (3).

   Enacted provision · exact public law section
   (1) In general.— Subsection ® of section 6701 is amended by adding at the end thereof the following new paragraph: “(3) Coordination with section 6700.— No penalty shall be assessed under section 6700 on any person with respect to any document for which a penalty is assessed on such person under subsection (a).”

   Effective date note
   Pub. L. 101–239, title VII, § 7735(c), Dec. 19, 1989, 103 Stat. 2404, provided that: “The amendments made by this section [amending this section] shall take effect on December 31, 1989.”

6 of 6 references resolved to an enrolled provision