II 

111TH CONGRESS 

1ST SESSION S. 2771 

To amend the Internal Revenue Code of 1986 to limit the penalty for 

failure to disclose reportable transactions based on resulting tax benefits, 

and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

NOVEMBER 16, 2009 

Mr. BAUCUS (for himself, Mr. GRASSLEY, and Mr. CRAPO) introduced the 

following bill; which was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to limit the 

penalty for failure to disclose reportable transactions 

based on resulting tax benefits, 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, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Small Business Pen5 alty Relief Act of 2009’’. 


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1 SEC. 2. LIMITATION ON PENALTY FOR FAILURE TO DIS2 CLOSE REPORTABLE TRANSACTIONS BASED 

3 ON RESULTING TAX BENEFITS. 

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

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

6 as follows: 

7 ‘‘(b) AMOUNT OF PENALTY.— 

8 ‘‘(1) IN GENERAL.—Except as otherwise pro9 vided in this subsection, the amount of the penalty 

10 under subsection (a) with respect to any reportable 

11 transaction shall be 75 percent of the decrease in 

12 tax shown on the return as a result of such trans13 action (or which would have resulted from such 

14 transaction if such transaction were respected for 

15 Federal tax purposes). 

16 ‘‘(2) MAXIMUM PENALTY.—The amount of the 

17 penalty under subsection (a) with respect to any re18 portable transaction shall not exceed— 

19 ‘‘(A) in the case of a listed transaction, 

20 $200,000 ($100,000 in the case of a natural 

21 person), 

22 ‘‘(B) in the case of any other reportable 

23 transaction, $50,000 ($10,000 in the case of a 

24 natural person). 

25 ‘‘(3) MINIMUM PENALTY FOR LISTED TRANS26 ACTIONS.—In the case of a listed transaction, the 


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1 amount of the penalty under subsection (a) with re2 spect to such transaction shall not be less than 

3 $10,000 ($5,000 in the case of a natural person).’’. 

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

5 this section shall apply to penalties assessed after Decem6 ber 31, 2006. 

7 SEC. 3. REPORT ON TAX SHELTER PENALTIES AND CER8 TAIN OTHER ENFORCEMENT ACTIONS. 

9 (a) IN GENERAL.—The Commissioner of Internal 

10 Revenue, in consultation with the Secretary of the Treas11 ury, shall submit to the Committee on Ways and Means 

12 of the House of Representatives and the Committee on 

13 Finance of the Senate an annual report on the penalties 

14 assessed by the Internal Revenue Service during the pre15 ceding year under each of the following provisions of the 

16 Internal Revenue Code of 1986: 

17 (1) Section 6662A (relating to accuracy-related 

18 penalty on understatements with respect to report19 able transactions). 

20 (2) Section 6700(a) (relating to promoting abu21 sive tax shelters). 

22 (3) Section 6707 (relating to failure to furnish 

23 information regarding reportable transactions). 

24 (4) Section 6707A (relating to failure to include 

25 reportable transaction information with return). 


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1 (5) Section 6708 (relating to failure to main2 tain lists of advisees with respect to reportable 

3 transactions). 

4 (b) ADDITIONAL INFORMATION.—The report re5 quired under subsection (a) shall also include information 

6 on the following with respect to each year: 

7 (1) Any action taken under section 330(b) of 

8 title 31, United States Code, with respect to any re9 portable transaction (as defined in section 6707A(c) 

10 of the Internal Revenue Code of 1986). 

11 (2) Any extension of the time for assessment of 

12 tax enforced, or assessment of any amount under 

13 such an extension, under paragraph (10) of section 

14 6501(c) of the Internal Revenue Code of 1986. 

15 (c) DATE OF REPORT.—The first report required 

16 under subsection (a) shall be submitted not later than 

17 June 1, 2010. 

Æ 


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