§6707. Failure to furnish information regarding tax shelters

(a) Failure to register tax shelter

(1) Imposition of penalty

If a person who is required to register a tax shelter under section 6111(a)-

(A) fails to register such tax shelter on or before the date described in section 6111(a)(1), or

(B) files false or incomplete information with the Secretary with respect to such registration,

such person shall pay a penalty with respect to such registration in the amount determined under paragraph (2) or (3), as the case may be. No penalty shall be imposed under the preceding sentence with respect to any failure which is due to reasonable cause.

(2) Amount of penalty

Except as provided in paragraph (3), the penalty imposed under paragraph (1) with respect to any tax shelter shall be an amount equal to the greater of-

(A) 1 percent of the aggregate amount invested in such tax shelter, or

(B) $500.

(3) Confidential arrangements

(A) In general

In the case of a tax shelter (as defined in section 6111(d)), the penalty imposed under paragraph (1) shall be an amount equal to the greater of-

(i) 50 percent of the fees paid to all promoters of the tax shelter with respect to offerings made before the date such shelter is registered under section 6111, or

(ii) $10,000.

Clause (i) shall be applied by substituting "75 percent" for "50 percent" in the case of an intentional failure or act described in paragraph (1).

(B) Special rule for participants required to register shelter

In the case of a person required to register such a tax shelter by reason of section 6111(d)(3)-

(i) such person shall be required to pay the penalty under paragraph (1) only if such person actually participated in such shelter,

(ii) the amount of such penalty shall be determined by taking into account under subparagraph (A)(i) only the fees paid by such person, and

(iii) such penalty shall be in addition to the penalty imposed on any other person for failing to register such shelter.

(b) Failure to furnish tax shelter identification number

(1) Sellers, etc.

Any person who fails to furnish the identification number of a tax shelter which such person is required to furnish under section 6111(b)(1) shall pay a penalty of $100 for each such failure.

(2) Failure to include number on return

Any person who fails to include an identification number on a return on which such number is required to be included under section 6111(b)(2) shall pay a penalty of $250 for each such failure, unless such failure is due to reasonable cause.

(Added Pub. L. 98–369, div. A, title I, §141(b), July 18, 1984, 98 Stat. 680 ; amended Pub. L. 99–514, title XV, §§1532(a), 1533(a), Oct. 22, 1986, 100 Stat. 2750 ; Pub. L. 105–34, title X, §1028(b), (d), Aug. 5, 1997, 111 Stat. 927 , 928.)

Amendments

1997-Subsec. (a)(1). Pub. L. 105–34, §1028(d)(2), which directed the substitution of "paragraph (2) or (3), as the case may be" for "paragraph (2)" in subpar. (A) of par. (1), was executed by making the substitution in the concluding provisions of par. (1) to reflect the probable intent of Congress.

Subsec. (a)(2). Pub. L. 105–34, §1028(d)(1), substituted "Except as provided in paragraph (3), the penalty" for "The penalty".

Subsec. (a)(3). Pub. L. 105–34, §1028(b), added par. (3).

1986-Subsec. (a)(2). Pub. L. 99–514, §1532(a), amended par. (2) generally. Prior to amendment, par. (2) read as follows: "The penalty imposed under paragraph (1) with respect to any tax shelter shall be an amount equal to the greater of-

"(A) $500, or

"(B) the lesser of (i) 1 percent of the aggregate amount invested in such tax shelter, or (ii) $10,000.

The $10,000 limitation in subparagraph (B) shall not apply where there is an intentional disregard of the requirements of section 6111(a)."

Subsec. (b)(2). Pub. L. 99–514, §1533(a), substituted "$250" for "$50".

Effective Date of 1997 Amendment

Amendment by Pub. L. 105–34 applicable to any tax shelter, as defined in section 6111(d) of this title, interests in which are offered to potential participants after Secretary of the Treasury prescribes guidance with respect to meeting requirements added by amendments made by Pub. L. 105–34, §1028, see section 1028(e) of Pub. L. 105–34, set out as a note under section 6111 of this title.

Effective Date of 1986 Amendment

Section 1532(b) of Pub. L. 99–514 provided that: "The amendment made by this section [amending this section] shall apply to failures with respect to tax shelters interests in which are first offered for sale after the date of the enactment of this Act [Oct. 22, 1986]."

Section 1533(b) of Pub. L. 99–514 provided that: "The amendment made by this section [amending this section] shall apply to returns filed after the date of the enactment of this Act [Oct 22, 1986]."

Effective Date

Section applicable to tax shelters (within the meaning of section 6111 of this title), any interest in which is first sold to any investor after Aug. 31, 1984, see section 141(d) of Pub. L. 98–369, set out as a note under section 6111 of this title.