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 B— Assessable Penalties › Part PART I— GENERAL PROVISIONS

26 U.S.C. § 6698

Failure to file partnership return

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(a) General ruleIn addition to the penalty imposed by section 7203 (relating to willful failure to file return, supply information, or pay tax), if any partnership required to file a return under section 6031, or a partnership adjustment tracking report under section 6226(b)(4)(A), for any taxable year—(1) fails to file such return, or such report, at the time prescribed therefor (determined with regard to any extension of time for filing), or(2) files a return or a report which fails to show the information required under section 6031 or 6226(b)(4)(A), respectively,such partnership shall be liable for a penalty determined under subsection (b) for each month (or fraction thereof) during which such failure continues (but not to exceed 12 months), unless it is shown that such failure is due to reasonable cause.(b) Amount per monthFor purposes of subsection (a), the amount determined under this subsection for any month is the product of—(1) $195, multiplied by(2) the number of persons who were partners in the partnership during any part of the taxable year.(c) Assessment of penalty

The penalty imposed by subsection (a) shall be assessed against the partnership.

(d) Deficiency procedures not to apply

Subchapter B of chapter 63 (relating to deficiency procedures for income, estate, gift, and certain excise taxes) shall not apply in respect of the assessment or collection of any penalty imposed by subsection (a).

(e) Adjustment for inflation(1) In general

In the case of any return required to be filed in a calendar year beginning after 2014, the $195 dollar amount under subsection (b)(1) shall be increased by an amount equal to such dollar amount multiplied by the cost-of-living adjustment determined under section 1(f)(3) for the calendar year determined by substituting “calendar year 2013” for “calendar year 2016” in subparagraph (A)(ii) thereof.

(2) Rounding

If any amount adjusted under paragraph (1) is not a multiple of $5, such amount shall be rounded to the next lowest multiple of $5.

(Added Pub. L. 95–600, title II, § 211(a), Nov. 6, 1978, 92 Stat. 2817; amended Pub. L. 110–142, § 8(a), (b), Dec. 20, 2007, 121 Stat. 1806; Pub. L. 110–458, title I, § 127(a), Dec. 23, 2008, 122 Stat. 5116; Pub. L. 111–92, § 16(a), Nov. 6, 2009, 123 Stat. 2996; Pub. L. 113–295, div. B, title II, § 208(d), Dec. 19, 2014, 128 Stat. 4073; Pub. L. 115–97, title I, § 11002(d)(1)(NN), Dec. 22, 2017, 131 Stat. 2061; Pub. L. 115–141, div. U, title II, § 206(n)(2), title IV, § 401(a)(299)(D), (313), Mar. 23, 2018, 132 Stat. 1182, 1198, 1199.)Inflation Adjusted Items for Certain Years

For inflation adjustment of certain items in this section, see Revenue Procedures listed in a table under section 1 of this title.

Editorial NotesCodification

Another section 6698, formerly section 6694, relating to failure to file information with respect to carryover basis property, which was added by Pub. L. 94–455, § 2005(d)(2), was renumbered section 6698 by Pub. L. 95–600, renumbered section 6698A by Pub. L. 96–222, and repealed by Pub. L. 96–223.

Amendments

2018—Subsec. (a). Pub. L. 115–141, § 206(n)(2)(A), inserted “, or a partnership adjustment tracking report under section 6226(b)(4)(A),” after “under section 6031” in introductory provisions.

Subsec. (a)(1). Pub. L. 115–141, § 206(n)(2)(B), inserted “, or such report,” after “such return”.

Subsec. (a)(2). Pub. L. 115–141, § 206(n)(2)(C), inserted “or a report” after “a return” and “or 6226(b)(4)(A), respectively” after “section 6031”.

Subsec. (b)(2). Pub. L. 115–141, § 401(a)(313), inserted period at end.

Subsec. (e)(1). Pub. L. 115–141, § 401(a)(299)(D), inserted “an amount equal to” after “increased by” and “for the calendar year” after “section 1(f)(3)”.

2017—Subsec. (e)(1). Pub. L. 115–97 substituted “for ‘calendar year 2016’ in subparagraph (A)(ii)” for “for ‘calendar year 1992’ in subparagraph (B)”.

2014—Subsec. (e). Pub. L. 113–295 added subsec. (e).

2009—Subsec. (b)(1). Pub. L. 111–92 substituted “$195” for “$89”.

2008—Subsec. (b)(1). Pub. L. 110–458 substituted “$89” for “$85”.

2007—Subsec. (a). Pub. L. 110–142, § 8(a), substituted “12 months” for “5 months” in concluding provisions.

Subsec. (b)(1). Pub. L. 110–142, § 8(b), substituted “$85” for “$50”.

Statutory Notes and Related SubsidiariesEffective Date of 2018 Amendment

Amendment by section 206(n)(2) of Pub. L. 115–141 effective as if included in section 1101 of Pub. L. 114–74, see section 207 of Pub. L. 115–141, set out as a note under section 6031 of this title.

Effective Date of 2017 Amendment

Amendment by Pub. L. 115–97 applicable to taxable years beginning after Dec. 31, 2017, see section 11002(e) of Pub. L. 115–97, set out as a note under section 1 of this title.

Effective Date of 2014 Amendment

Amendment by Pub. L. 113–295 applicable to returns required to be filed, and statements required to be furnished, after Dec. 31, 2014, see section 208(h) of Pub. L. 113–295, set out as a note under section 6651 of this title.

Effective Date of 2009 Amendment

Pub. L. 111–92, § 16(b), Nov. 6, 2009, 123 Stat. 2996, provided that: “The amendments made by this section [amending this section and section 6699 of this title] shall apply to returns for taxable years beginning after December 31, 2009.”

Effective Date of 2008 Amendment

Pub. L. 110–458, title I, § 127(b), Dec. 23, 2008, 122 Stat. 5116, provided that: “The amendment made by subsection (a) [amending this section] shall apply to returns required to be filed after December 31, 2008.”

Effective Date of 2007 Amendment

Pub. L. 110–142, § 8(d), Dec. 20, 2007, 121 Stat. 1807, provided that: “The amendments made by subsections (a) and (b) [amending this section] shall apply to returns required to be filed after the date of the enactment of this Act [Dec. 20, 2007].”

Effective Date

Pub. L. 95–600, title II, § 211(c), Nov. 6, 1978, 92 Stat. 2818, provided that: “The amendments made by this section [enacting this section] shall apply with respect to returns for taxable years beginning after December 31, 1978.”

Modification of Penalty for Failure To File Partnership Returns

Pub. L. 110–141, § 2, Dec. 19, 2007, 121 Stat. 1802, provided that: “For any return of a partnership required to be filed under section 6031 of the Internal Revenue Code of 1986 for a taxable year beginning in 2008, the dollar amount in effect under section 6698(b)(1) of such Code shall be increased by $1.”

Notes of Decisions
Cited in 5 cases (1 in the last 5 years), 1990–2022 · leading case: Sullivan v. Lawlis, 105 N.E.3d 274 (Mass. App. Ct. 2018).
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Sullivan v. Lawlis, 105 N.E.3d 274 (Mass. App. Ct. 2018). “We note that 26 U.S.C. § 6698 (a) (2012) allows partnerships to avoid the penalty for failure to file a return upon a showing of "reasonable cause," but it does not create an exemption from the filing requirement and it is the taxpayer's burden to establish reasonable cause.”
Amici v. United States (In Re Amici), 177 B.R. 386 (Bankr. M.D. Fla. 1994). “That penalty is assessed pursuant to 26 U.S.C. § 6698 for failure to file a partnership tax return.”
Seaview Trading, LLC, Agk Inve v. Cir, 34 F.4th 666 (9th Cir. 2022). · cites it 4× “See 26 U.S.C. §§ 6698 (a)(1), 7203. So the IRS regulations expressly govern the time and place to file timely partnership returns.”
Roberts v. United States, 906 F.2d 1440 (10th Cir. 1990). “§ 6686 ($1,000 per failure); failure to file a partnership return, 26 U.S.C. § 6698 ($50 per partner per month); and filing a frivolous return, 26 U.”
In re Colony Beach & Tennis Club, Ltd., 578 B.R. 909 (Bankr. M.D. Fla. 2017). “Rodney May, United States Bankruptcy Judge The Internal Revenue Service assessed penalties of $847,490 against the Debtor pursuant to 26 U.S.C. § 6698 (a), 1 because the Chapter 7 Trustee filed the partnership’s tax return for the year ending April 30,2011 (the “2011 Return”) by…”
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