S.Amdt. 2664

1. Adds SEC. 504. PENALTY FOR PROMOTING ABUSIVE TAX SHELTERS at the end of subtitle A of title V

   Adds a section

   In S. 2020 · Placed on Calendar Senate

   (f) Effective Date.--The amendments made by this section shall apply to submissions made and issues raised after the date on which the Secretary first prescribes a list under section 6702(c) of the Internal Revenue Code of 1986, as amended by subsection (a).

   Inserted: SEC. 504. PENALTY FOR PROMOTING ABUSIVE TAX SHELTERS.

   Inserted: (a) Penalty for Promoting Abusive Tax Shelters.--Section 6700 (relating to promoting abusive tax shelters, etc.) is amended--

   Inserted: (1) by redesignating subsections (b) and (c) as subsections (d) and (e), respectively,

   Inserted: (2) by striking "a penalty" and all that follows through the period in the first sentence of subsection (a) and inserting "a penalty determined under subsection (b)", and

   Inserted: (3) by inserting after subsection (a) the following new subsections:

   Inserted: "(b) Amount of Penalty; Calculation of Penalty; Liability for Penalty.--

   Inserted: "(1) Amount of penalty.--The amount of the penalty imposed by subsection (a) shall not exceed the greater of--

   Inserted: "(A) 100 percent of the gross income derived (or to be derived) from such activity by the person or persons subject to such penalty, and

   Inserted: "(B) if readily subject to calculation, the total amount of underpayment by the taxpayer (including penalties, interest, and taxes) in connection with such activity.

   Inserted: "(2) Calculation of penalty.--The penalty amount determined under paragraph (1) shall be calculated with respect to each instance of an activity described in subsection (a), each instance in which income was derived by the person or persons subject to such penalty, and each person who participated in such an activity.

   Inserted: "(3) Liability for penalty.--If more than 1 person is liable under subsection (a) with respect to such activity, all such persons shall be jointly and severally liable for the penalty under such subsection.

   Inserted: "(c) Penalty Not Deductible.--The payment of any penalty imposed under this section or the payment of any amount to settle or avoid the imposition of such penalty shall not be considered an ordinary and necessary expense in carrying on a trade or business for purposes of this title and shall not be deductible by the person who is subject to such penalty or who makes such payment.".

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   Inserted: (b) Conforming Amendment.--Section 6700(a) is amended by striking the last sentence.

   Inserted: (c) Effective Date.--The amendments made by this section shall apply to activities after the date of the enactment of this Act.

   Inserted: SEC. 505. PENALTY FOR AIDING AND ABETTING THE UNDERSTATEMENT OF TAX LIABILITY.

   Inserted: (a) In General.--Section 6701(a) (relating to imposition of penalty) is amended--

   Inserted: (1) by striking "preparation or presentation of" and inserting "tax liability reflected in" in paragraph (1),

   Inserted: (2) by inserting "aid, assistance, procurement, or advice with respect to such" before "portion" both places it appears in paragraphs (2) and (3), and

   Inserted: (3) by inserting "instance of aid, assistance, procurement, or advice or each such" before "document" in the matter following paragraph (3).

   Inserted: (b) Amount of Penalty.--Subsection (b) of section 6701 (relating to penalties for aiding and abetting understatement of tax liability) is amended to read as follows:

   Inserted: "(b) Amount of Penalty; Calculation of Penalty; Liability for Penalty.--

   Inserted: "(1) Amount of penalty.--The amount of the penalty imposed by subsection (a) shall not exceed the greater of--

   Inserted: "(A) 100 percent of the gross income derived (or to be derived) from such aid, assistance, procurement, or advice provided by the person or persons subject to such penalty, and

   Inserted: "(B) if readily subject to calculation, the total amount of underpayment by the taxpayer (including penalties, interest, and taxes) in connection with the understatement of the liability for tax.

   Inserted: "(2) Calculation of penalty.--The penalty amount determined under paragraph (1) shall be calculated with respect to each instance of aid, assistance, procurement, or advice described in subsection (a), each instance in which income was derived by the person or persons subject to such penalty, and each person who made such an understatement of the liability for tax.

   Inserted: "(3) Liability for penalty.--If more than 1 person is liable under subsection (a) with respect to providing such aid, assistance, procurement, or advice, all such persons shall be jointly and severally liable for the penalty under such subsection.".

   Inserted: (c) Penalty Not Deductible.--Section 6701 is amended by adding at the end the following new subsection:

   Inserted: "(g) Penalty Not Deductible.--The payment of any penalty imposed under this section or the payment of any amount to settle or avoid the imposition of such penalty shall not be considered an ordinary and necessary expense in carrying on a trade or business for purposes of this title and shall not be deductible by the person who is subject to such penalty or who makes such payment.".

   Inserted: (d) Effective Date.--The amendments made by this section shall apply to activities after the date of the enactment of this Act.

   Original wording

   At the end of subtitle A of title V, add the following:

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As printed