The Internal Revenue Service has proposed regulations changing the amount of the penalties for failing to include information required to be disclosed about reportable transactions.
The IRS said the
Section 6707A was amended again in 2010 by the Small Business Jobs Act of 2010, which changed the amount of the penalty from a stated dollar amount to a percentage, with both maximum and minimum dollar amounts. Before the Jobs Act was enacted, the penalty was $10,000 in the case of a “natural person” ($50,000 in any other case) and, in the case of a listed transaction, $100,000 in the case of a natural person ($200,000 in any other case). In some cases, the IRS noted, this structure resulted in penalties that were potentially disproportionate to the tax benefit derived from the transaction.
The Jobs Act amended section 6707A(b) to make the penalty 75 percent of the decrease in tax shown on the return as a result of a reportable transaction, with a minimum penalty amount of $10,000 ($5,000 in the case of a natural person). The maximum penalty amount is $200,000 ($100,000 in the case of a natural person) for failure to disclose a listed transaction, or $50,000 ($10,000 in the case of a natural person) for failure to disclose any other reportable transaction. The 2010 amendment specifying the amount of the penalty applies to penalties assessed after Dec. 31, 2006.
On Sept. 7, 2011, final regulations were published in the Federal Register, but the final regulations in