PUBLIC LAW 94-455—OCT. 4, 1976
90 STAT. 1689
" ( i v) prepares a claim lor refund for a tax p a y e r in response to any notice of deficiency issued to such taxp a y e r or in response to any waiver of restriction after the commencement of an a u d i t of such tax p a y e r o r another tax p a y e r if a determination in such audit of such other tax p a y e r directly or indirectly affects the tax liability of such tax p a y e r. " (b) ASSESSABLE P E N A L T I E S W H E R E PREPARER UNDERSTATES PAYER'S L I A B I L I T Y. —
TAX-
(1) IN GENERAL.—Subchapter B of chapter 68 (relating to assessable penalties) is amended by a d d i n g a t the end thereof the following new section: "SEC. 6694. UNDERSTATEMENT OF TAXPAYER'S LIABILITY BY INCOME 26 USC 6694. TAX RETURN PREPARER. " (a) NEGLIGENT OR INTENTIONAL DISREGARD o r RULES AND REGULA-
Penalties.
TioNS.—If any part of any understatement of liability with respect to any return or claim for refund is due to the negligent or intentional disregard of rules and regulations by any person who is an income tax return preparer with respect to such return or claim, such person shall pay a penalty of $100 with respect to such return or claim. " (b) W I L L F U L UNDERSTATEMENT OF L I A B I L I T Y. — I f any part of any
understatement of liability with respect to any return o r claim for refund is due to a willful attempt in any m a n n e r to understate the liability for a tax by a person who is a n income tax return p r e p a r e r with respect to such return or claim, such person shall pay a penalty of $500 with respect to such return or claim. W i t h respect to any return o r claim, the amount of the penalty payable by any person by reason of this subsection shall be reduced by the amount of the penalty paid by such person by reason of subsection (a). " (c) E X T E N S I O N OF PERIOD OF COLLECTION W H E R E PREPARER P A Y S 15 P E R C E N T OF P E N A L T Y. —
" (1) IN GENERAL.—If, within 30 days after the d a y on which notice and demand of any penalty under subsection (a) o r (b) is made against any person w h o is an income tax return preparer, such person pays a n amount which is not less than 15 percent of the amount of such penalty and files a claim for rfefund of the amount so paid, no levy or proceeding in court for the collection of the remainder of such penalty shall be made, begun, o r prosecuted until the final resolution of a proceeding begun as provided in paragraph (2). Notwithstanding the provisions of section 7421 (a), the beginning of such proceeding o r levy during the time such prohibition is in force may be enjoined by a proceeding in the proper court. " (2) PREPARER MUST BRING SUIT I N DISTRICT COURT TO DETERMINE
H I S LIABILITY FOR PENALTY.—If, within 30 days after the d a y on which his claim for refund of any partial payment of any penalty under subsection (a) o r (b) is denied (or, if earlier, within 30 days after the expiration of 6 months after the d a y on which he filed the claim for r e f u n d), the income tax r e t u r n p r e p a r e r fails to begin a proceeding i n the a p p r o p r i a t e United States district court for the determination of his liability for such penalty, paragraph (1) shall cease to a p p l y with respect to such penalty, effective on the d a y following the close of the applicable 30-day period referred to i n this paragraph. " (3) SUSPENSION OF R U N N I N G OF PERIOD OF LIMITATIONS ON COL-
LECTION.—The r u n n i n g of the period of limitations provided i n
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