SECTION 1. NONIMPOSITION OF PENALTY FOR FAILURE TO 
DISCLOSE 
REPORTABLE 
TRANSACTIONS 
WHEN THERE IS REASONABLE CAUSE FOR 
SUCH FAILURE. 
(a) IN GENERAL.—Subsection (a) of section 6707A 
of the Internal Revenue Code of 1986 is amended by in-
serting ‘‘, unless it is shown that such failure is due to 
reasonable cause and not due to willful neglect’’ before the 
period. 
(b) CONFORMING AMENDMENTS.— 
(1) Subparagraph (C) of section 6664(d)(2) of 
the Internal Revenue Code of 1986 is amended by 
striking ‘‘was rescinded under section 6707A(d)’’ 
and inserting ‘‘was not imposed under section 
6707A(a)’’. 
(2) Section 6707A of such Code is amended by 
striking subsection (d) and redesignating subsections 
(e) and (f) as subsections (d) and (e), respectively. 
(3) Subsection (c) of section 6707 of such Code 
is amended to read as follows: 
‘‘(c) RESCISSION AUTHORITY.— 
‘‘(1) IN GENERAL.—The Commissioner of In-
ternal Revenue may rescind all or any portion of any 
penalty imposed by this section with respect to any 
violation if— 
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‘‘(A) the violation is with respect to a re-
portable transaction other than a listed trans-
action, and 
‘‘(B) rescinding the penalty would promote 
compliance with the requirements of this title 
and effective tax administration. 
‘‘(2) NO
JUDICIAL
APPEAL.—Notwithstanding 
any other provision of law, any determination under 
this subsection may not be reviewed in any judicial 
proceeding. 
‘‘(3) RECORDS.—If a penalty is rescinded under 
paragraph (1), the Commissioner shall place in the 
file in the Office of the Commissioner the opinion of 
the Commissioner with respect to the determination, 
including— 
‘‘(A) a statement of the facts and cir-
cumstances relating to the violation, 
‘‘(B) the reasons for the rescission, and 
‘‘(C) the amount of the penalty re-
scinded.’’. 
(c) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to penalties assessed after January 1, 
2008. 
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(2) CONFORMING
AMENDMENT.—The amend-
ment made by subsection (b)(3) shall take effect on 
the date of the enactment of this Act. 
SEC. 2. PROPORTIONALITY OF PENALTY. 
(a) IN GENERAL.—Subsection (b) of section 6707A 
of the Internal Revenue Code of 1986 is amended to read 
as follows: 
‘‘(b) AMOUNT OF PENALTY.— 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), the amount of the penalty under sub-
section (a) with respect to a reportable transaction 
shall be the amount that is equal to 100 percent of 
the penalty that would be imposed under section 
6662A (without regard to subsection (c) thereof) if 
the taxpayer had a reportable transaction under-
statement (as defined in section 6662A(b)) with re-
spect to such transaction. 
‘‘(2) LISTED
TRANSACTION.—The amount of 
the penalty under subsection (a) with respect to a 
listed transaction shall be the amount that is equal 
to 200 percent of the penalty that would be imposed 
under section 6662A (without regard to subsection 
(c) thereof) if the taxpayer had a reportable trans-
action 
understatement 
(as 
defined 
in 
section 
6662A(b)) with respect to such transaction.’’. 
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(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to penalties assessed after January 
1, 2008. 
SEC. 3. ONE-TIME ASSESSMENT OF PENALTY. 
(a) IN GENERAL.—Subsection (a) of section 6707A 
of the Internal Revenue Code of 1986, as amended by sec-
tion 1, is amended by striking ‘‘Any person’’ and inserting 
‘‘Any taxpayer’’. 
(b) CONFORMING AMENDMENTS.—Subsection (d) of 
section 6707A of the Internal Revenue Code of 1986, as 
redesignated by section 1, is amended by striking ‘‘per-
son’’ each place it appears and inserting ‘‘taxpayer’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to penalties assessed after January 
1, 2008. 
Æ 
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