118 STAT. 1577 PUBLIC LAW 108–357—OCT. 22, 2004 (b) CONFORMING AMENDMENT.—The table of sections for part I of subchapter B of chapter 68 is amended by inserting after the item relating to section 6707 the following: ‘‘Sec. 6707A. Penalty for failure to include reportable transaction informa tion with return.’’. (c) EFFECTIVE DATE.—The amendments made by this section shall apply to returns and statements the due date for which is after the date of the enactment of this Act. (d) REPORT.—The Commissioner of Internal Revenue shall annually report to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate— (1) a summary of the total number and aggregate amount of penalties imposed, and rescinded, under section 6707A of the Internal Revenue Code of 1986, and (2) a description of each penalty rescinded under section 6707(c) of such Code and the reasons therefor. SEC. 812. ACCURACY RELATED PENALTY FOR LISTED TRANSACTIONS, OTHER REPORTABLE TRANSACTIONS HAVING A SIGNIFI CANT TAX AVOIDANCE PURPOSE, ETC. (a) IN GENERAL.—Subchapter A of chapter 68 is amended by inserting after section 6662 the following new section: ‘‘SEC. 6662A. IMPOSITION OF ACCURACY RELATED PENALTY ON UNDERSTATEMENTS WITH RESPECT TO REPORTABLE TRANSACTIONS. ‘‘(a) IMPOSITION OF PENALTY.—If a taxpayer has a reportable transaction understatement for any taxable year, there shall be added to the tax an amount equal to 20 percent of the amount of such understatement. ‘‘(b) REPORTABLE TRANSACTION UNDERSTATEMENT.—For pur poses of this section— ‘‘(1) IN GENERAL.—The term ‘reportable transaction under statement’ means the sum of— ‘‘(A) the product of— ‘‘(i) the amount of the increase (if any) in taxable income which results from a difference between the proper tax treatment of an item to which this section applies and the taxpayer’s treatment of such item (as shown on the taxpayer’s return of tax), and ‘‘(ii) the highest rate of tax imposed by section 1 (section 11 in the case of a taxpayer which is a corporation), and ‘‘(B) the amount of the decrease (if any) in the aggre gate amount of credits determined under subtitle A which results from a difference between the taxpayer’s treatment of an item to which this section applies (as shown on the taxpayer’s return of tax) and the proper tax treatment of such item. For purposes of subparagraph (A), any reduction of the excess of deductions allowed for the taxable year over gross income for such year, and any reduction in the amount of capital losses which would (without regard to section 1211) be allowed for such year, shall be treated as an increase in taxable income. ‘‘(2) ITEMS TO WHICH SECTION APPLIES.—This section shall apply to any item which is attributable to— 26 USC 6707A note. 26 USC 6707A note.
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