I 

111TH CONGRESS 

1ST SESSION H. R. 2143 

To amend the Internal Revenue Code of 1986 to allow the Secretary of 

the Treasury to not impose a penalty for failure to disclose reportable 

transactions when there is reasonable cause for such failure, to modify 

such penalty, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 28, 2009 

Mr. DONNELLY of Indiana (for himself, Mr. MORAN of Kansas, Mr. MOORE

of Kansas, and Mr. PLATTS) introduced the following bill; which was referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to allow the 

Secretary of the Treasury to not impose a penalty for 

failure to disclose reportable transactions when there is 

reasonable cause for such failure, to modify such penalty, 

and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 


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1 SECTION 1. NONIMPOSITION OF PENALTY FOR FAILURE TO 

2 DISCLOSE REPORTABLE TRANSACTIONS 

3 WHEN THERE IS REASONABLE CAUSE FOR 

4 SUCH FAILURE. 

5 (a) IN GENERAL.—Subsection (a) of section 6707A 

6 of the Internal Revenue Code of 1986 is amended by in7 serting ‘‘, unless it is shown that such failure is due to 

8 reasonable cause and not due to willful neglect’’ before the 

9 period. 

10 (b) CONFORMING AMENDMENTS.— 

11 (1) Subparagraph (C) of section 6664(d)(2) of 

12 the Internal Revenue Code of 1986 is amended by 

13 striking ‘‘was rescinded under section 6707A(d)’’ 

14 and inserting ‘‘was not imposed under section 

15 6707A(a)’’. 

16 (2) Section 6707A of such Code is amended by 

17 striking subsection (d) and redesignating subsections 

18 (e) and (f) as subsections (d) and (e), respectively. 

19 (3) Subsection (c) of section 6707 of such Code 

20 is amended to read as follows: 

21 ‘‘(c) RESCISSION AUTHORITY.— 

22 ‘‘(1) IN GENERAL.—The Commissioner of In23 ternal Revenue may rescind all or any portion of any 

24 penalty imposed by this section with respect to any 

25 violation if— 


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1 ‘‘(A) the violation is with respect to a re2 portable transaction other than a listed trans3 action, and 

4 ‘‘(B) rescinding the penalty would promote 

5 compliance with the requirements of this title 

6 and effective tax administration. 

7 ‘‘(2) NO JUDICIAL APPEAL.—Notwithstanding 

8 any other provision of law, any determination under 

9 this subsection may not be reviewed in any judicial 

10 proceeding. 

11 ‘‘(3) RECORDS.—If a penalty is rescinded under 

12 paragraph (1), the Commissioner shall place in the 

13 file in the Office of the Commissioner the opinion of 

14 the Commissioner with respect to the determination, 

15 including— 

16 ‘‘(A) a statement of the facts and cir17 cumstances relating to the violation, 

18 ‘‘(B) the reasons for the rescission, and 

19 ‘‘(C) the amount of the penalty re20 scinded.’’. 

21 (c) EFFECTIVE DATES.— 

22 (1) IN GENERAL.—Except as provided in para23 graph (2), the amendments made by this section 

24 shall apply to penalties assessed after January 1, 

25 2008. 


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1 (2) CONFORMING AMENDMENT.—The amend2 ment made by subsection (b)(3) shall take effect on 

3 the date of the enactment of this Act. 

4 SEC. 2. PROPORTIONALITY OF PENALTY. 

5 (a) IN GENERAL.—Subsection (b) of section 6707A 

6 of the Internal Revenue Code of 1986 is amended to read 

7 as follows: 

8 ‘‘(b) AMOUNT OF PENALTY.— 

9 ‘‘(1) IN GENERAL.—Except as provided in para10 graph (2), the amount of the penalty under sub11 section (a) with respect to a reportable transaction 

12 shall be the amount that is equal to 100 percent of 

13 the penalty that would be imposed under section 

14 6662A (without regard to subsection (c) thereof) if 

15 the taxpayer had a reportable transaction under16 statement (as defined in section 6662A(b)) with re17 spect to such transaction. 

18 ‘‘(2) LISTED TRANSACTION.—The amount of 

19 the penalty under subsection (a) with respect to a 

20 listed transaction shall be the amount that is equal 

21 to 200 percent of the penalty that would be imposed 

22 under section 6662A (without regard to subsection 

23 (c) thereof) if the taxpayer had a reportable trans24 action understatement (as defined in section 

25 6662A(b)) with respect to such transaction.’’. 


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1 (b) EFFECTIVE DATE.—The amendment made by 

2 this section shall apply to penalties assessed after January 

3 1, 2008. 

4 SEC. 3. ONE-TIME ASSESSMENT OF PENALTY. 

5 (a) IN GENERAL.—Subsection (a) of section 6707A 

6 of the Internal Revenue Code of 1986, as amended by sec7 tion 1, is amended by striking ‘‘Any person’’ and inserting 

8 ‘‘Any taxpayer’’. 

9 (b) CONFORMING AMENDMENTS.—Subsection (d) of 

10 section 6707A of the Internal Revenue Code of 1986, as 

11 redesignated by section 1, is amended by striking ‘‘per12 son’’ each place it appears and inserting ‘‘taxpayer’’. 

13 (c) EFFECTIVE DATE.—The amendments made by 

14 this section shall apply to penalties assessed after January 

15 1, 2008. 

Æ 


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