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(I) by striking ‘‘INCOME
TAX
RE-
TURN PREPARER’’ in the heading and in-
serting ‘‘TAX RETURN PREPARER’’,
(II) by striking ‘‘an income tax return
preparer’’ each place it appears and insert-
ing ‘‘a tax return preparer’’,
(III) in subsection (c)(2), by striking
‘‘the income tax return preparer’’ and in-
serting ‘‘the tax return preparer’’,
(IV) in subsection (e), by striking
‘‘subtitle A’’ and inserting ‘‘this title’’, and
(V) in subsection (f), by striking ‘‘in-
come tax return preparer’’ and inserting
‘‘tax return preparer’’.
(ii) The item relating to section 6694 in the
table of sections for part I of subchapter B of
chapter 68 is amended by striking ‘‘income tax
return preparer’’ and inserting ‘‘tax return pre-
parer’’.
(G)(i) Section 6695 is amended—
(I) by striking ‘‘INCOME’’ in the head-
ing, and
(II) by striking ‘‘an income tax return
preparer’’ each place it appears and insert-
ing ‘‘a tax return preparer’’.
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(ii) Section 6695(f) is amended—
(I) by striking ‘‘subtitle A’’ and insert-
ing ‘‘this title’’, and
(II) by striking ‘‘the income tax return
preparer’’ and inserting ‘‘the tax return
preparer’’.
(iii) The item relating to section 6695 in
the table of sections for part I of subchapter B
of chapter 68 is amended by striking ‘‘income’’.
(H) Section 6696(e) is amended by striking
‘‘subtitle A’’ each place it appears and inserting
‘‘this title’’.
(I)(i) Section 7407 is amended—
(I) by striking ‘‘INCOME
TAX
RE-
TURN PREPARERS’’ in the heading and
inserting ‘‘TAX RETURN PREPARERS’’,
(II) by striking ‘‘an income tax return
preparer’’ each place it appears and insert-
ing ‘‘a tax return preparer’’,
(III) by striking ‘‘income tax pre-
parer’’ both places it appears in subsection
(a) and inserting ‘‘tax return preparer’’,
and
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HR 1591 EAS
(IV) by striking ‘‘income tax return’’
in subsection (a) and inserting ‘‘tax re-
turn’’.
(ii) The item relating to section 7407 in the
table of sections for subchapter A of chapter 76
is amended by striking ‘‘income tax return pre-
parers’’ and inserting ‘‘tax return preparers’’.
(J)(i) Section 7427 is amended—
(I) by striking ‘‘INCOME
TAX
RE-
TURN PREPARERS’’ in the heading and
inserting ‘‘TAX
RETURN
PREPARERS’’,
and
(II) by striking ‘‘an income tax return
preparer’’ and inserting ‘‘a tax return pre-
parer’’.
(ii) The item relating to section 7427 in the
table of sections for subchapter B of chapter 76
is amended to read as follows:
‘‘Sec. 7427. Tax return preparers.’’.
(b) MODIFICATION OF PENALTY FOR UNDERSTATE-
MENT OF TAXPAYER’S LIABILITY BY TAX RETURN PRE-
PARER.—Subsections (a) and (b) of section 6694 are
amended to read as follows:
‘‘(a) UNDERSTATEMENT DUE TO UNREASONABLE PO-
SITIONS.—
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‘‘(1) IN
GENERAL.—Any tax return preparer
who prepares any return or claim for refund with re-
spect to which any part of an understatement of li-
ability is due to a position described in paragraph
(2) shall pay a penalty with respect to each such re-
turn or claim in an amount equal to the greater of—
‘‘(A) $1,000, or
‘‘(B) 50 percent of the income derived (or to
be derived) by the tax return preparer with re-
spect to the return or claim.
‘‘(2) UNREASONABLE POSITION.—A position is
described in this paragraph if—
‘‘(A) the tax return preparer knew (or rea-
sonably should have known) of the position,
‘‘(B) there was not a reasonable belief that
the position would more likely than not be sus-
tained on its merits, and
‘‘(C)(i) the position was not disclosed as
provided in section 6662(d)(2)(B)(ii), or
‘‘(ii) there was no reasonable basis for the
position.
‘‘(3) REASONABLE CAUSE EXCEPTION.—No pen-
alty shall be imposed under this subsection if it is
shown that there is reasonable cause for the under-