26 U.S.C. § 6707

Failure to furnish information regarding reportable transactions

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(a) In generalIf a person who is required to file a return under section 6111(a) with respect to any reportable transaction—(1) fails to file such return on or before the date prescribed therefor, or(2) files false or incomplete information with the Secretary with respect to such transaction,such person shall pay a penalty with respect to such return in the amount determined under subsection (b).(b) Amount of penalty(1) In general

Except as provided in paragraph (2), the penalty imposed under subsection (a) with respect to any failure shall be $50,000.

(2) Listed transactionsThe penalty imposed under subsection (a) with respect to any listed transaction shall be an amount equal to the greater of—(A) $200,000, or(B) 50 percent of the gross income derived by such person with respect to aid, assistance, or advice which is provided with respect to the listed transaction before the date the return is filed under section 6111.Subparagraph (B) shall be applied by substituting “75 percent” for “50 percent” in the case of an intentional failure or act described in subsection (a).(c) Rescission authority

The provisions of section 6707A(d) (relating to authority of Commissioner to rescind penalty) shall apply to any penalty imposed under this section.

(d) Reportable and listed transactions

For purposes of this section, the terms “reportable transaction” and “listed transaction” have the respective meanings given to such terms by section 6707A(c).

(Added Pub. L. 98–369, div. A, title I, § 141(b), July 18, 1984, 98 Stat. 680; amended Pub. L. 99–514, title XV, §§ 1532(a), 1533(a), Oct. 22, 1986, 100 Stat. 2750; Pub. L. 105–34, title X, § 1028(b), (d), Aug. 5, 1997, 111 Stat. 927, 928; Pub. L. 108–357, title VIII, § 816(a), Oct. 22, 2004, 118 Stat. 1583.)Editorial NotesAmendments

2004—Pub. L. 108–357 amended section catchline and text generally, substituting provisions relating to penalty for failure to furnish information regarding reportable transactions for provisions relating to penalty for failure to furnish information regarding tax shelters.

1997—Subsec. (a)(1). Pub. L. 105–34, § 1028(d)(2), which directed the substitution of “paragraph (2) or (3), as the case may be” for “paragraph (2)” in subpar. (A) of par. (1), was executed by making the substitution in the concluding provisions of par. (1) to reflect the probable intent of Congress.

Subsec. (a)(2). Pub. L. 105–34, § 1028(d)(1), substituted “Except as provided in paragraph (3), the penalty” for “The penalty”.

Subsec. (a)(3). Pub. L. 105–34, § 1028(b), added par. (3).

1986—Subsec. (a)(2). Pub. L. 99–514, § 1532(a), amended par. (2) generally. Prior to amendment, par. (2) read as follows: “The penalty imposed under paragraph (1) with respect to any tax shelter shall be an amount equal to the greater of—

“(A) $500, or

“(B) the lesser of (i) 1 percent of the aggregate amount invested in such tax shelter, or (ii) $10,000.

The $10,000 limitation in subparagraph (B) shall not apply where there is an intentional disregard of the requirements of section 6111(a).”

Subsec. (b)(2). Pub. L. 99–514, § 1533(a), substituted “$250” for “$50”.

Statutory Notes and Related SubsidiariesEffective Date of 2004 Amendment

Pub. L. 108–357, title VIII, § 816(c), Oct. 22, 2004, 118 Stat. 1584, provided that: “The amendments made by this section [amending this section] shall apply to returns the due date for which is after the date of the enactment of this Act [Oct. 22, 2004].”

Effective Date of 1997 Amendment

Amendment by Pub. L. 105–34 applicable to any tax shelter, as defined in section 6111(d) of this title, interests in which are offered to potential participants after Secretary of the Treasury prescribes guidance with respect to meeting requirements added by amendments made by Pub. L. 105–34, § 1028, see section 1028(e) of Pub. L. 105–34, set out as a note under section 6111 of this title.

Effective Date of 1986 Amendment

Pub. L. 99–514, title XV, § 1532(b), Oct. 22, 1986, 100 Stat. 2750, provided that: “The amendment made by this section [amending this section] shall apply to failures with respect to tax shelters interests in which are first offered for sale after the date of the enactment of this Act [Oct. 22, 1986].”

Pub. L. 99–514, title XV, § 1533(b), Oct. 22, 1986, 100 Stat. 2750, provided that: “The amendment made by this section [amending this section] shall apply to returns filed after the date of the enactment of this Act [Oct 22, 1986].”

Effective Date

Section applicable to tax shelters (within the meaning of section 6111 of this title), any interest in which is first sold to any investor after Aug. 31, 1984, see section 141(d) of Pub. L. 98–369, set out as a note under section 6111 of this title.

Notes of Decisions

Cited in 26 cases (5 in the last 5 years), 1988–2025 · leading case: Larson v. United States, 888 F.3d 578 (2d Cir. 2018).

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Larson v. United States, 888 F.3d 578 (2d Cir. 2018). · cites it 6× “" 26 U.S.C. § 6707 (a)(2) (1997) (current version at 26 U.”

William Canada, Jr. v. USA (IRS), 950 F.3d 299 (5th Cir. 2020). · cites it 5× “In 2007, during Heritage’s bankruptcy case, Canada received notice letters informing him of an IRS investigation regarding possible penalties under 26 U.S.C. §§ 6707 and 6108 for failing to report tax shelter transactions as required by 26 U.”

Haber v. United States, 823 F.3d 746 (2d Cir. 2016). · cites it 4× “BACKGROUND The IRS issued an approximately $25 million penalty against Haber and his company, The Diversified Group Incorporated (“DGI”), pursuant to 26 U.S.C. § 6707 , 1 in connection with their alleged failure to register tax shelters in violation of 26 U.”

Diversified Grp. Inc. v. United States, 841 F.3d 975 (Fed. Cir. 2016). · cites it 3× “Diversified Group Incorporated (“Diversified”) and its president, Janies Haber, (collectively, “Appellants”) brought this action against the United States, seeking a refund of payments made toward a federal tax penalty which the Internal Revenue Service (“IRS”) assessed under 26…”

United States v. Canada (In re Canada), 574 B.R. 620 (N.D. Tex. 2017). · cites it 9× “A second letter, dated April 3, 2007, notified him that he was being investigated for tax shelter promoter penalties under 26 U.S.C. § 6707 . R. 924. Though it is unclear from the record what progress was made on the investigation or whether the IRS communicated with Canada at…”

Diversified Grp. Inc. v. United States, 123 Fed. Cl. 442 (Fed. Cl. 2015). · cites it 7× “§ 6111 ; 26 U.S.C. § 6707 ; Aggregate; Divisibility; Abatement; Son-of-BOSS; Option Partnership Strategy; Financial Derivatives Investment Strategy OPINION AND ORDER SWEENEY, Judge Before the court is defendant’s motion to dismiss plaintiffs’ complaint for lack of subject matter…”

Cic Servs., LLC v. Internal Revenue Serv., 925 F.3d 247 (6th Cir. 2019). · cites it 2× “See 26 U.S.C. §§ 6707 , 6707A, 6708. And the Tax Code deems those penalties “taxes.”

Bemont Investments, L.L.C. Ex Rel. Tax Matters Partner v. United States, 679 F.3d 339 (5th Cir. 2012). · cites it 2× “§ 6501 (c)(10) "with respect to a listed transaction as defined in 26 U.S.C. § 6707 (c)(2)" when the taxpayer fails to make the required disclosure under 26 U.”

United States v. BDO Seidman, LLP, 492 F.3d 806 (7th Cir. 2007). “See 26 U.S.C. §§ 6707 & 6708 (2000 & Supp. IV 2004).”

Noffke v. United States, 129 Fed. Cl. 341 (Fed. Cl. 2016). · cites it 2× “3d at 982 , in that case, the Federal Circuit addressed the issue of the divisibility exception in the context of the IRS conducting a penalty audit, pursuant to 26 U.S.C. § 6707 , for the failure to register a tax shelter under 26 U.”

Bill Gates v. United States, 874 F.2d 584 (8th Cir. 1989). “§ 6687 ), or a tax shelter identification number ( 26 U.S.C. § 6707 (b) (Supp. IV 1986)) applies to “each such failure.”

United States v. BDO Seidman, 337 F.3d 802 (7th Cir. 2003). “See 26 U.S.C. §§ 6707 , 6708. Because the IRS suspected that BDO had violated these statutory provisions by organizing and selling interests in potentially abusive tax shelters without complying with the registration and list-keeping requirements, it issued a series of summonses…”

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