U.S. Code » Title 26 » Subtitle Subtitle F— Procedure and Administration › Chapter CHAPTER 68— ADDITIONS TO THE TAX, ADDITIONAL AMOUNTS, AND ASSESSABLE PENALTIES › Subchapter Subchapter A— Additions to the Tax and Additional Amounts › Part PART I— GENERAL PROVISIONS

26 U.S.C. § 6658

Coordination with title 11

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(a) Certain failures to pay taxNo addition to the tax shall be made under section 6651, 6654, or 6655 for failure to make timely payment of tax with respect to a period during which a case is pending under title 11 of the United States Code—(1) if such tax was incurred by the estate and the failure occurred pursuant to an order of the court finding probable insufficiency of funds of the estate to pay administrative expenses, or(2) if—(A) such tax was incurred by the debtor before the earlier of the order for relief or (in the involuntary case) the appointment of a trustee, and(B)(i) the petition was filed before the due date prescribed by law (including extensions) for filing a return of such tax, or(ii) the date for making the addition to the tax occurs on or after the day on which the petition was filed.(b) Exception for collected taxes

Subsection (a) shall not apply to any liability for an addition to the tax which arises from the failure to pay or deposit a tax withheld or collected from others and required to be paid to the United States.

(Added Pub. L. 96–589, § 6(e)(1), Dec. 24, 1980, 94 Stat. 3408.)Editorial NotesPrior Provisions

A prior section 6658, act Aug. 16, 1954, ch. 736, 68A Stat. 826, authorized inclusion as part of the tax a 25 percent penalty in cases of violations or attempted violations of section 6851 of this title, prior to repeal by Pub. L. 96–167, § 6(a), Dec. 29, 1979, 93 Stat. 1276.

Statutory Notes and Related SubsidiariesEffective Date

Section effective Oct. 1, 1979, but not applicable to proceedings under Title 11, Bankruptcy, commenced before Oct. 1, 1979, see section 7(e) of Pub. L. 96–589, set out as an Effective Date of 1980 Amendment note under section 108 of this title.

Notes of Decisions
Cited in 15 cases, 1968–1997 · leading case: Woodward v. United States, Internal Revenue Serv. (In Re Woodward), 113 B.R. 680 (Bankr. D. Or. 1990).
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Woodward v. United States, Internal Revenue Serv. (In Re Woodward), 113 B.R. 680 (Bankr. D. Or. 1990). · cites it 5× “at 1021 The Irvin court relied, in part, on 26 U.S.C. § 6658 a section of the Bankruptcy Tax Act prohibiting the imposition of post-petition penalties on pre-petition taxes.”
In Re DuPage Boiler Works, Inc., 98 B.R. 907 (Bankr. N.D. Ill. 1989). · cites it 7× “FINDINGS OF FACT AND CONCLUSIONS OF LAW WITH RESPECT TO TRUSTEE’S MOTION UNDER 26 U.S.C. § 6658 (a)(1) TO BAR ADDITIONS TO TAXES JACK B.”
Mark D. Collins v. Comm'r of Internal Revenue, 3 F.3d 625 (2d Cir. 1993). “Pursuant to 26 U.S.C. §§ 6658 and 6661, the IRS also charged Collins with penalties of $2,344 for substantial understatement of income tax and $469 for intentionally disregarding IRS rules and regulations.”
In Re Quick, 152 B.R. 909 (Bankr. W.D. Va. 1993). · cites it 6× “A literal reading of 26 U.S.C. § 6658 supports the debtors’ contention.”
In Re Fox, 130 B.R. 571 (Bankr. W.D. Wash. 1991). · cites it 2× “This statement of policy is clear, and the debtors have given no persuasive reason why the Court should depart from it in Chapter 11 cases.”
In Re Stine, 81 B.R. 641 (Bankr. N.D. Fla. 1988). · cites it 2× “The particular provision relied on, 26 U.S.C. § 6658 entitled “Coordination with Title 11” provides as follows: (a) CERTAIN FAILURES TO PAY TAX —No addition to the tax shall be made under section 6651, 6654, or 6655 for failure to make timely payment of a tax with respect to a…”
Kiesner v. Internal Revenue Serv. (In Re Kiesner), 194 B.R. 452 (Bankr. E.D. Wis. 1996). · cites it 2× “26 U.S.C. § 6658 provides: § 6658. Coordination with title 11.”
In Re Sapphire S.S. Lines, Inc., Debtor. Internal Revenue Serv. v. Tr., Sapphire S.S. Lines, Inc., 762 F.2d 13 (2d Cir. 1985). “Code, 26 U.S.C. § 6658 . Its legislative history indicates that section 6654 has been understood to apply to the estates of bankrupt corporations in the past: *16 “2.”
United States v. Bailey, 789 F. Supp. 788 (N.D. Tex. 1992). “§ 6662 (c) (1989); see also former 26 U.S.C. § 6658 (a)(3) (1988). In addition, the federal courts have construed negligence to mean “lack of due care or failure to do what a reasonable and ordinarily prudent person would do under the circumstances.”
Bossert v. United States (In Re Bossert), 201 B.R. 553 (Bankr. E.D. Wash. 1996). “43 Section 26 U.S.C. § 6658 provides a safe harbor from certain types of additions to tax.”
United States v. Benson, 88 B.R. 210 (W.D. Mo. 1988). “The bankruptcy court’s reliance on 26 U.S.C. §§ 6658 and 6873(a) is misplaced.”
United States v. Bonaguro, 294 F. Supp. 750 (E.D.N.Y 1968). “§ 1 (a) (2), $1,130 plus 25% of excess over $6,000], and to that tax he added a 25% penalty under 26 U.S.C. § 6658 , that is, $404.38, so making up the total assessment of $2,021.”
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