PUBLIC LAW 105-34—AUG. 5, 1997 111 STAT. 927 "(2) CONDITIONS OF CONFIDENTIALITY. —For purposes of paragraph (1)(B), an offer is under conditions of confidentiality if— "(A) the potential participant to whom the offer is made (or any other person acting on behalf of such participant) has an understanding or agreement with or for the benefit of any promoter of the tax shelter that such participant (or such other person) will limit disclosure of the tax shelter or any significant tax features of the tax shelter, or "(B) any promoter of the tax shelter— "(i) claims, knows, or has reason to know, "(ii) knows or has reason to know that any other person (other than the potential participant) claims, or "(iii) causes another person to claim, that the tax shelter (or any aspect thereof) is proprietary to any person other than the potential participant or is otherwise protected from disclosure to or use by others. For purposes of this subsection, the term 'promoter' means any person or any related person (within the meaning of section 267 or 707) who participates in the organization, management, or sale of the tax shelter. "(3) PERSONS OTHER THAN PROMOTER REQUIRED TO REG- ISTER IN CERTAIN CASES. — "(A) IN GENERAL. — If— "(i) the requirements of subsection (a) are not met with respect to any tax shelter (as defined in paragraph (1)) by any tax shelter promoter, and "(ii) no tax shelter promoter is a United States person, then each United States person who discussed participation in such shelter shall register such shelter under subsection (a). "(B) EXCEPTION. — Subparagraph (A) shall not apply to a United States person who discussed participation in a tax shelter if—- "(i) such person notified the promoter in writing (not later than the close of the 90th day after the day on which such discussions began) that such person would not participate in such shelter, and "(ii) such person does not participate in such shelter. "(4) OFFER TO PARTICIPATE TREATED AS OFFER FOR SALE.— For purposes of subsections (a) and (b), an offer to participate in a tax shelter (as defined in paragraph (1)) shall be treated as an offer for sale.". (b) PENALTY. —Subsection (a) of section 6707 (relating to failure to furnish information regarding tax shelters) is amended by adding at the end the following new paragraph: "(3) CONFIDENTIAL ARRANGEMENTS. — "(A) IN GENERAL.—In the case of a tax shelter (as defined in section 6111(d)), the penalty imposed under paragraph (1) shall be an amount equal to the greater of— "(i) 50 percent of the fees paid to all promoters of the tax shelter with respect to offerings made before
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