120 STAT. 1084
PUBLIC LAW 109–280—AUG. 17, 2006 (3) ELIMINATION
OF REASONABLE CAUSE EXCEPTION FOR
26 USC 6664.
GROSS MISSTATEMENTS.—Section
6664(c)(2) (relating to reasonable cause exception for underpayments) is amended by striking ‘‘paragraph (1) shall not apply unless’’ and inserting ‘‘paragraph (1) shall not apply. The preceding sentence shall not apply to a substantial valuation overstatement under chapter 1 if’’. (b) PENALTY ON APPRAISERS WHOSE APPRAISALS RESULT IN SUBSTANTIAL OR GROSS VALUATION MISSTATEMENTS.— (1) IN GENERAL.—Part I of subchapter B of chapter 68 (relating to assessable penalties) is amended by inserting after section 6695 the following new section:
26 USC 6695A.
‘‘SEC. 6695A. SUBSTANTIAL AND GROSS VALUATION MISSTATEMENTS ATTRIBUTABLE TO INCORRECT APPRAISALS.
‘‘(a) IMPOSITION OF PENALTY.—If— ‘‘(1) a person prepares an appraisal of the value of property and such person knows, or reasonably should have known, that the appraisal would be used in connection with a return or a claim for refund, and ‘‘(2) the claimed value of the property on a return or claim for refund which is based on such appraisal results in a substantial valuation misstatement under chapter 1 (within the meaning of section 6662(e)), or a gross valuation misstatement (within the meaning of section 6662(h)), with respect to such property, then such person shall pay a penalty in the amount determined under subsection (b). ‘‘(b) AMOUNT OF PENALTY.—The amount of the penalty imposed under subsection (a) on any person with respect to an appraisal shall be equal to the lesser of— ‘‘(1) the greater of— ‘‘(A) 10 percent of the amount of the underpayment (as defined in section 6664(a)) attributable to the misstatement described in subsection (a)(2), or ‘‘(B) $1,000, or ‘‘(2) 125 percent of the gross income received by the person described in subsection (a)(1) from the preparation of the appraisal. ‘‘(c) EXCEPTION.—No penalty shall be imposed under subsection (a) if the person establishes to the satisfaction of the Secretary that the value established in the appraisal was more likely than not the proper value.’’. (2) RULES APPLICABLE TO PENALTY.—Section 6696 (relating to rules applicable with respect to sections 6694 and 6695) is amended— (A) by striking ‘‘6694 and 6695’’ each place it appears in the text and heading thereof and inserting ‘‘6694, 6695, and 6695A’’, and (B) by striking ‘‘6694 or 6695’’ each place it appears in the text and inserting ‘‘6694, 6695, or 6695A’’. (3) CONFORMING AMENDMENT.—The table of sections for part I of subchapter B of chapter 68 is amended by striking the item relating to section 6696 and inserting the following new items: ‘‘Sec. 6695A. Substantial and gross valuation misstatements attributable to incorrect appraisals. ‘‘Sec. 6696. Rules applicable with respect to sections 6694, 6695, and 6695A.’’.
(c) QUALIFIED APPRAISERS AND APPRAISALS.—
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