PUBLIC LAW 101-239—DEC. 19, 1989 103 STAT. 2403 (1) by striking "$25" and inserting "$50", and (2) by adding at the end thereof the following new sentence: "The maximum penalty imposed under this subsection on any person with respect to documents filed during any calendar: year shall not exceed $25,000." (d) FAILURE TO FILE CoRREcrr INFORMATION RETURNS.— Subsection (e) of section 6695 is Eunended to read as follows: "(e) FAILURE TO FILE CORRECT INFORMATION RETURNS.— Any person required to make a return under section 6060 who fails to comply with the requirements of such section shall pay a penalty of $50 for— "(1) each failure to file a return as required under such section, and "(2) each failure to set forth an item in the return as required under section, unless it is shown that such failure is due to reasonable cause and not duetowillful neglect. The maximum penalty imposed under this subsection on any person with respect to any return period shall not exceed $25,000. " (e) EFFECTIVE DATE.—The amendments made by this section shall 26 USC 6695 apply to documents prepared after December 31, 1989. "°*®- SEC. 7734. MODIFICATIONS TO PENALTY FOR PROMOTING ABUSIVE TAX SHELTERS, ETC. (a) GENERAL RULE. —Subsection (a) of section 6700 is amended— (1) by inserting "(directly or indirectly)" after "participates" in paragraph (1)^), (2) by inserting "or causes another person to make or furnish" after' makes or furnishes" in paragraph (2), and (3) by striking the matenal following paragraph (2) and inserting the following: "shall pay, with respect to each activity described in paragraph (1), a penalty equal to the $1,000 or, if the person establishes that it is lesser, 100 percent of the gross income derived (ortobe derived) by such person from such activity. For purposes of the preceding sentence, activities described in paragraph (I)(A) with respect to \ each entity or arrangement shall be treated as a separate activity and participation in each sale described in paragraph (1)(B) shall be so treated. (b) EFFECTIVE DATE.—The amendment made by subsection (a) 26 USC 6700 shall apply to activities after December 31, 1989. °^ SEC. 7735. MODIFICATIONS TO PENALTIES FOR AIDING AND ABETTING UNDERSTATEMENT OF TAX LIABILITY. (a) GENERAL RULE.— Subsection (a) of section 6701 (relating to penalties for aiding and abetting understatement of tax liability) is amended— (1) by striking "in connection with any matter arising under the internal revenue laws" in paragraph (1), (2) by striking "who knows in paragraph (2) and inserting "who knows (or has reasontobelieve)", and (3) by striking "will result" in paragraph (3) and inserting "would result". (b) COORDINATION WITH PENALTY UNDER SECTION 6700.— (1) IN GENERAL.— Subsection (f) of section 6701 is amended by adding at the end thereof the following new paragraph:
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