100 STAT. 2742
PUBLIC LAW 99-514—OCT. 22, 1986
subsection (a)) shall be applied by taking into account the first notice (or renotice) after December 31, 1986. (2) SUBSECTION (b).—The amendment made by subsection (b) .ft shall apply to amounts assessed after December 31, 1986, with respect to failures to pay which begin before, on, or after such date. SEC. 1503. AMENDMENTS TO PENALTY FOR NEGLIGENCE AND FRAUD.
(a) GENERAL RULE.—Section 6653 (relating to failure to pay tax) is amended by striking out subsections (a) and (b) and inserting in lieu thereof the following: "(a) NEGLIGENCE.—
"(1) IN GENERAL.—If any part of any underpayment (as defined in subsection (c)) is due to negligence or disregard of rules V or regulations, there shall be added to the tax an amount equal to the sum of— "(A) 5 percent of the underpayment, and "(B) an amount equal to 50 percent of the interest payable under section 6601 with respect to the portion of such . underpayment which is attributable to negligence for the period beginning on the last date prescribed by law for payment of such underpayment (determined without . ^ regard to any extension) and ending on the date of the assessment of the tax (or, if earlier, the date of the payment ^-' of the tax). "(2) UNDERPAYMENT TAKEN INTO ACCOUNT REDUCED BY POR-
ai TiON ATTRIBUTABLE TO FRAUD.—There shall not be taken into account under this subsection any portion of an underpayment K attributable to fraud with respect to which a penalty is imposed fi under subsection 0)). "(3) NEGLIGENCE.—For purposes of this subsection, the term " 'negligence' includes any failure to make a reasonable attempt i to comply with the provisions of this title, and the term 'disregard' includes any careless, reckless, or intentional disregard. "(b) FRAUD.—
"(1) IN GENERAL.—If any part of any underpayment (as de^^ fined in subsection (c)) of tax required to be shown on a return is • due to fraud, there shall be added to the tax an amount equal to
- the sum of—
' "(A) 75 percent of the portion of the underpayment which
is attributable to fraud, and ,t' «'(g) g^j^ amount equal to 50 percent of the interest pay^, able under section 6601 with respect to such portion for the S; o; period beginning on the last day prescribed by law for payment of such underpayment (determined without ^ regard to any extension) and ending on the date of the assessment of the tax or, if earlier, the date of the payment of the tax. "(2) DETERMINATION OF PORTION ATTRIBUTABLE TO FRAUD.—If
• the Secretary establishes that any portion of an underpayment ' is attributable to fraud, the entire underpayment shall be treated as attributable to fraud, except with respect to any . portion of the underpayment which the taxpayer establishes is not attributable to fraud. "(3) SPECIAL RULE FOR JOINT RETURNS.—In the case of a joint J return, this subsection shall not apply with respect to a spouse
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