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reduced by the amount of the penalty paid by such 
person by reason of subsection (a).’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to returns prepared after the date of the 
enactment of this Act. 
SEC. 551. PENALTY FOR FILING ERRONEOUS REFUND 
CLAIMS. 
(a) IN GENERAL.—Part I of subchapter B of chapter 
68 (relating to assessable penalties) is amended by inserting 
after section 6675 the following new section: 
‘‘SEC. 6676. ERRONEOUS CLAIM FOR REFUND OR CREDIT. 
‘‘(a) CIVIL PENALTY.—If a claim for refund or credit 
with respect to income tax (other than a claim for a refund 
or credit relating to the earned income credit under section 
32) is made for an excessive amount, unless it is shown 
that the claim for such excessive amount has a reasonable 
basis, the person making such claim shall be liable for a 
penalty in an amount equal to 20 percent of the excessive 
amount. 
‘‘(b) EXCESSIVE AMOUNT.—For purposes of this sec-
tion, the term ‘excessive amount’ means in the case of any 
person the amount by which the amount of the claim for 
refund or credit for any taxable year exceeds the amount 
of such claim allowable under this title for such taxable 
year. 
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‘‘(c) COORDINATION WITH OTHER PENALTIES.—This 
section shall not apply to any portion of the excessive 
amount of a claim for refund or credit on which a penalty 
is imposed under part II of subchapter A of chapter 68.’’. 
(b) CONFORMING AMENDMENT.—The table of sections 
for part I of subchapter B of chapter 68 is amended by 
inserting after the item relating to section 6675 the fol-
lowing new item: 
‘‘Sec. 6676. Erroneous claim for refund or credit.’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to any claim— 
(1) filed or submitted after the date of the enact-
ment of this Act, or 
(2) filed or submitted prior to such date but not 
withdrawn before the date which is 30 days after such 
date of enactment. 
SEC. 552. SUSPENSION OF CERTAIN PENALTIES AND INTER-
EST. 
(a) IN GENERAL.—Paragraphs (1)(A) and (3)(A) of 
section 6404(g) are each amended by striking ‘‘18-month 
period’’ and inserting ‘‘36-month period’’. 
(b) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section shall 
apply to notices provided by the Secretary of the 
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Treasury, or his delegate after the date which is 6 
months after the date of the enactment of this Act. 
(2) EXCEPTION FOR CERTAIN TAXPAYERS.—The 
amendments made by this section shall not apply to 
any taxpayer with respect to whom a suspension of 
any interest, penalty, addition to tax, or other 
amount is in effect on the date which is 6 months 
after the date of the enactment of this Act. 
SEC. 553. ADDITIONAL REASONS FOR SECRETARY TO TER-
MINATE INSTALLMENT AGREEMENTS. 
(a) IN GENERAL.—Section 6159(b)(4) (relating to fail-
ure to pay an installment or any other tax liability when 
due or to provide requested financial information) is 
amended by striking ‘‘or’’ at the end of subparagraph (B), 
by redesignating subparagraph (C) as subparagraph (E), 
and by inserting after subparagraph (B) the following new 
subparagraphs: 
‘‘(C) to make a Federal tax deposit under 
section 6302 at the time such deposit is required 
to be made, 
‘‘(D) to file a return of tax imposed under 
this title by its due date (including extensions), 
or’’. 
(b) CONFORMING
AMENDMENT.—The heading for 
paragraph (4) of section 6159(b) is amended by striking 
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