Sec. 6695. Other Assessable Penalties With Respect To The Preparation Of Tax Returns For Other Persons
I.R.C. § 6695(a) Failure To Furnish Copy To Taxpayer — Any person who is a tax return preparer with respect to any return or claim for refund who fails to comply with section 6107(a) with respect to such return or claim shall pay a penalty of $50 for such failure, unless it is shown that such failure is due to reasonable cause and not due to willful neglect. The maximum penalty imposed under this subsection on any person with respect to documents filed during any calendar year shall not exceed $25,000.
I.R.C. § 6695(b) Failure To Sign Return — Any person who is a tax return preparer with respect to any return or claim for refund, who is required by regulations prescribed by the Secretary to sign such return or claim, and who fails to comply with such regulations with respect to such return or claim shall pay a penalty of $50 for such failure, unless it is shown that such failure is due to reasonable cause and not due to willful neglect. The maximum penalty imposed under this subsection on any person with respect to documents filed during any calendar year shall not exceed $25,000.
I.R.C. § 6695(c) Failure To Furnish Identifying Number — Any person who is a tax return preparer with respect to any return or claim for refund and who fails to comply with section 6109(a)(4) with respect to such return or claim shall pay a penalty of $50 for such failure, unless it is shown that such failure is due to reasonable cause and not due to willful neglect. The maximum penalty imposed under this subsection on any person with respect to documents filed during any calendar year shall not exceed $25,000.
I.R.C. § 6695(d) Failure To Retain Copy Or List — Any person who is a tax return preparer with respect to any return or claim for refund who fails to comply with section 6107(b) with respect to such return or claim shall pay a penalty of $50 for each such failure, unless it is shown that such failure is due to reasonable cause and not due to willful neglect. The maximum penalty imposed under this subsection on any person with respect to any return period shall not exceed $25,000.
I.R.C. § 6695(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—
I.R.C. § 6695(e)(1) — each failure to file a return as required under such section, and
I.R.C. § 6695(e)(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 due to willful neglect. The maximum penalty imposed under this subsection on any person with respect to any return period shall not exceed $25,000.
I.R.C. § 6695(f) Negotiation Of Check — Any person who is a tax return preparer who endorses or otherwise negotiates (directly or through an agent) any check made in respect of the taxes imposed by this title which is issued to a taxpayer (other than the tax return preparer) shall pay a penalty of $500 with respect to each such check. The preceding sentence shall not apply with respect to the deposit by a bank (within the meaning of section 581) of the full amount of the check in the taxpayer’s account in such bank for the benefit of the taxpayer.
I.R.C. § 6695(g) Failure To Be Diligent In Determining Eligibility For Certain Tax Benefits — Any person who is a tax return preparer with respect to any return or claim for refund who fails to comply with due diligence requirements imposed by the Secretary by regulations with respect to determining—
I.R.C. § 6695(g)(1) — eligibility to file as a head of household (as defined in section 2(b)) on the return, or
I.R.C. § 6695(g)(2) — eligibility for, or the amount of, the credit allowable by section 24, 25A(a)(1), or 32, shall pay a penalty of $500 for each such failure.
I.R.C. § 6695(h) Adjustment For Inflation
I.R.C. § 6695(h)(1) In General — In the case of any failure relating to a return or claim for refund filed in a calendar year beginning after 2014, each of the dollar amounts under subsections (a), (b), (c), (d), (e), (f), and (g) shall be increased by an amount equal to such dollar amount multiplied by the cost-of-living adjustment determined under section 1(f)(3) for the calendar year determined by substituting “calendar year 2013” for “calendar year 2016” in subparagraph (A)(ii) thereof.
I.R.C. § 6695(h)(2) Rounding — If any amount adjusted under paragraph (1)—
I.R.C. § 6695(h)(2)(A) — is not less than $5,000 and is not a multiple of $500, such amount shall be rounded to the next lowest multiple of $500, and
I.R.C. § 6695(h)(2)(B) — is not described in subparagraph (A) and is not a multiple of $5, such amount shall be rounded to the next lowest multiple of $5.
(Added by Pub. L. 94-455, title XII, 1203(f), Oct. 4, 1976, 90 Stat. 1692, and amended Pub. L. 95-600, title VII, 701(cc)(1), Nov. 6, 1978, 92 Stat. 2923; Pub. L. 98-369, div. A, title I, 179(b)(2), July 18, 1984, 98 Stat. 718; Pub. L. 99-44, 1(b), May 24, 1985, 99 Stat. 77; Pub. L. 105-34, title X, Sec. 1085(a)(2), Aug. 5, 1997, 111 Stat 788; Pub. L. 110-28, title VIII, Sec. 8246(a)(2)(G), May 25, 2007, 121 Stat. 112; Pub. L. 112-41, title V, 501, Oct. 21, 2011, 125 Stat. 428; Pub. L. 113-295, Div. B, title II, Sec. 208(c), Dec. 19 2014, 128 Stat. 4010; Pub. L. 114-113, Div. Q, title II, Sec. 207(a), Dec. 18, 2015; Pub. L. 115-97, title I, Sec. 11001(b), 11002(d)(1)(MM), Dec. 22, 2017, 131 Stat. 2054; Pub. L. 115-141, Div. U, title IV, Sec. 401(a)(299)(C), (309), (310), Mar. 23, 2018, 132 Stat. 348.)
BACKGROUND NOTES
AMENDMENTS
2018 — Subsec. (h)(1). Pub. L. 115-141, Div. U, Sec. 401(a)(299)(C), amended par. (1) by inserting “an amount equal to” after “increased by” and by inserting “for the calendar year” after “section 1(f)(3)”.
Subsec. (h)(2). Pub. L. 115-141, Div. U, Sec. 401(a)(309), amended par. (2) by substituting “paragraph (1) for “subparagraph (A)”.
Subsec. (h)(2)(B). Pub. L. 115-141, Div. U, Sec. 401(a)(310), amended subpar. (B) by substituting “subparagraph (A)” for “clause (i)”.
2017 — Subsec. (g). Pub. L. 115-97, Sec. 11001(b), amended subsec. (g). Before amendment, it read as follows:
“(g) Failure To Be Diligent In Determining Eligibility For Child Tax Credit; American Opportunity Tax Credit; And Earned Income Credit
“Any person who is an income tax return preparer with respect to any return or claim for refund who fails to comply with due diligence requirements imposed by the Secretary by regulations with respect to determining eligibility for, or the amount of, the credit allowable by section 24, 25A(a)(1), or 32 shall pay a penalty of $500 for each such failure”.
Subsec. (h)(1). Pub. L. 115-97, title I, Sec. 11002(d)(1)(MM), amended par. (1) by substituting “for ‘calendar year 2016’ in subparagraph (A)(ii)” for ‘‘for ‘calendar year 1992’ in subparagraph (B)’’.
2015—Subsec. (g). Pub. L. 114-113, Div. Q, Sec. 207(a)(2), amended the heading for subsec. (g) by inserting “CHILD TAX CREDIT; AMERICAN OPPORTUNITY TAX CREDIT; AND” before “EARNED INCOME CREDIT”.
Subsec. (g). Pub. L. 114-113, Div. Q, Sec. 207(a)(1), amended subsec. (g) by substituting “section 24, 25A(a)(1), or 32” for “section 32”.
2014—Subsec. (h). Pub. L. 113-295, Div. B, Sec. 208(c), added subsec. (h).
2011—Subsec. (g). Pub. L. 112-41, Sec. 501(a), amended subsec. (g) by substituting “$500” for “$100”.
2007—Sec. 6695. Pub. L. 110-28, Sec. 8246(a)(2)(G)(i)(I), amended the heading for Sec. 6695 by striking “Income”.
Sec. 6695. Pub. L. 110-28, Sec. 8246(a)(2)(G)(i)(II), amended Sec. 6695 by substituting “a tax return preparer” for “an income tax return preparer” each place it appeared.
Subsec. (f). Pub. L. 110-28, Sec. 8246(a)(2)(G)(ii), amended subsec. (f) by substituting “this title” for “Subtitle A” and by substituting “the tax return preparer” for “the income tax return preparer”.
1997–Subsec. (g). Pub. L. 105-34, Sec. 1085(a)(2), added subsec. (g).
1985–Subsec. (b). Pub. L. 99-44 repealed Pub. L. 98-369, 179(b)(2), which amended subsec. (b), and provided that the Internal Revenue Code of 1954 [now 1986] [this title] shall be applied and administered as if section 179(b)(2) (and the amendments made by such section) had not been enacted. See 1984 Amendment note and Effective Date of 1985 Amendment note below.
1984–Subsec. (b). Pub. L. 98-369 amended subsec. (b) generally, substituting provisions dealing with failure to inform taxpayer of certain recordkeeping requirements of section 274(d) of this title or to sign returns, for provisions dealing with failure to sign returns. See 1985 Amendment note above.
1978–Subsec. (f). Pub. L. 95-600 inserted provision relating to deposits by a bank.
EFFECTIVE DATE OF 2018 AMENDMENTS
Amendments by Pub. L. 115-141, Div. U, Sec. 401(a), effective March 23, 2018.
EFFECTIVE DATE OF 2017 AMENDMENTS
Amendment by Pub. L. 115-97, Sec. 11001(b), effective for taxable years beginning after December 31, 2017.
Amendment by Pub. L. 115-97, Sec. 11002(d)(1)(MM), effective for taxable years beginning after December 31, 2017.
EFFECTIVE DATE OF 2015 AMENDMENTS
Amendments by Pub. L. 114-113, Div. Q, Sec. 207(a), as amended by Pub. L. , Div. U, Sec. 101(l)(19), effective for taxable years beginning after December 31, 2015. Sec. 207(b), provided that:
“(b) Return Preparer Due Diligence Study.—
“(1) IN GENERAL.—The Secretary of the Treasury, or his delegate, shall conduct a study of the effectiveness of tax return preparer due diligence requirements for claiming the earned income tax credit under section 32 of the Internal Revenue Code of 1986, the child tax credit under section 24 of such Code, and the American Opportunity Tax Credit under section 25A of such Code.
“(2) REQUIREMENTS.—Such study shall include an evaluation of the following:
“(A) The effectiveness of the questions currently asked as part of the due-diligence requirement with respect to minimizing error and fraud.
“(B) Whether all such questions are necessary and support improved compliance.
“(C) The comparative effectiveness of such questions relative to other means of determining (i) eligibility for these tax credits and (ii) the correct amount of tax credit.
“(D) Whether due diligence of this type should apply to other methods of tax filing and whether such requirements should vary based on the methods to increase effectiveness.
“(E) The effectiveness of the preparer penalty under section 6695(g) in enforcing the due diligence requirements.
“(3) REPORT.—The Secretary, or his delegate, shall submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate a report detailing the study and its findings—
“(A) in the case of the portion of the study that relates to the earned income tax credit, not later than 1 year after the date of enactment of this Act, and
“(B) in the case of the portions of the study that relate to the child tax credit and the American opportunity tax credit, not later than 2 years after the date of the enactment of this Act [Enacted: Dec. 18, 2015].”
EFFECTIVE DATE OF 2014 AMENDMENT
Amendment by Pub. L. 113-295, Div. B, Sec. 208(c), as amended by Pub. L. 115-141, Div. U, Sec. 105(a), effective for returns required to be filed, and statements required to be furnished, after December 31, 2014.
EFFECTIVE DATE OF 2011 AMENDMENT
Amendment by Sec. 501(a) of Pub. L. 112-41, as amended by Pub. L. 115-141, Div. U, Sec. 107, effective for documents prepared after December 31, 2011.
EFFECTIVE DATE OF 2007 AMENDMENTS
Amendments by Sec. 8246(a)(2)(G) of Pub. L. 110-28 effective for returns prepared after the date of the enactment of this Act [Enacted: May 25, 2007].
EFFECTIVE DATE OF 1997 AMENDMENTS
Amendment by Sec. 1085(a)(2) of Pub. L. 105-34 applicable to taxable years beginning after December 31, 1996.
EFFECTIVE DATE OF 1985 AMENDMENT
Amendment by Pub. L. 99-44 effective as if included in the amendments made by section 179(b) of Pub. L. 98-369, see section 6(a) of Pub. L. 99-44, set out as a note under section 274 of this title.
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by Pub. L. 98-369 applicable to taxable years beginning after Dec. 31, 1984, see section 179(d)(2) of Pub. L. 98-369, set out as an Effective Date note under section 280F of this title.
EFFECTIVE DATE OF 1978 AMENDMENT
Section 701(cc)(3) of Pub. L. 95-600 provided that: “The amendments made by this subsection [amending sections 6695 and 7701 of this title] shall apply to documents prepared after December 31, 1976.”
REPEAL OF REGULATIONS COVERING SUBSTANTIATION BY ADEQUATE CONTEMPORANEOUS RECORDS
Regulations issued before May 24, 1985, to carry out the amendment of subsec. (b) of this section by section 179(b)(2) of Pub. L. 98-369 to have no force and effect, see section 1(c) of Pub. L. 99-44, set out as a note under section 274 of this title.