USC Subchapter A

in effect

26 U.S.C. § 6665 Applicable rules

(a) Additions treated as taxExcept as otherwise provided in this title—(1) the additions to the tax, additional amounts, and penalties provided by this chapter shall be paid upon notice and demand and shall be assessed, collected, and paid in the same manner as taxes; and (2) any reference in this title to “tax” imposed by this title shall be deemed also to refer to the additions to the tax, additional amounts, and penalties provided by this chapter. (b) Procedure for assessing certain additions to taxFor purposes of subchapter B of chapter 63 (relating to deficiency procedures for income, estate, gift, and certain excise taxes), subsection (a) shall not apply to any addition to tax under section 6651, 6654, or 6655; except that it shall apply—(1) in the case of an addition described in section 6651, to that portion of such addition which is attributable to a deficiency in tax described in section 6211; or (2) to an addition described in section 6654 or 6655, if no return is filed for the taxable year.

26 U.S.C. § 6662 Imposition of accuracy-related penalty on underpayments

(a) Imposition of penaltyIf this section applies to any portion of an underpayment of tax required to be shown on a return, there shall be added to the tax an amount equal to 20 percent of the portion of the underpayment to which this section applies. (b) Portion of underpayment to which section appliesThis section shall apply to the portion of any underpayment which is attributable to 1 or more of the following:(1) Negligence or disregard of rules or regulations. (2) Any substantial understatement of income tax. (3) Any substantial valuation misstatement under chapter 1. (4) Any substantial overstatement of pension liabilities. (5) Any substantial estate or gift tax valuation understatement. (6) Any disallowance of claimed tax benefits by reason of a transaction lacking economic substance (within the meaning of section 7701(o)) or failing to meet the requirements of any similar rule of law. (7) Any undisclosed foreign financial asset understatement. (8) Any inconsistent estate basis. (9) Any overstatement of the deduction provided in section 170(p). (10) Any disallowance of a deduction by reason of section 170(h)(7). This section shall not apply to any portion of an underpayment on which a penalty is imposed under section 6663. Except as provided in paragraph (1) or (2)(B) of section 6662A(e), this section shall not apply to the portion of any underpayment which is attributable to a reportable transaction understatement on which a penalty is imposed under section 6662A. (c) NegligenceFor purposes of this section, the term “negligence” includes any failure to make a reasonable attempt to comply with the provisions of this title, and the term “disregard” includes any careless, reckless, or intentional disregard. (d) Substantial understatement of income tax(1) Substantial understatement(A) In generalFor purposes of this section, there is a substantial understatement of income tax for any taxable year if the amount of the understatement for the taxable year exceeds the greater of—(i) 10 percent of the tax required to be shown on the return for the taxable year, or (ii) $5,000. (B) Special rule for corporationsIn the case of a corporation other than an S corporation or a personal holding company (as defined in section 542), there is a substantial understatement of income tax for any taxable year if the amount of the understatement for the taxable year exceeds the lesser of—(i) 10 percent of the tax required to be shown on the return for the taxable year (or, if greater, $10,000), or (ii) $10,000,000. (C) Special rule for taxpayers claiming section 199A deductionIn the case of any taxpayer who claims any deduction allowed under section 199A for the taxable year, subparagraph (A) shall be applied by substituting “5 percent” for “10 percent”. (2) Understatement(A) In generalFor purposes of paragraph (1), the term “understatement” means the excess of—(i) the amount of the tax required to be shown on the return for the taxable year, over (ii) the amount of the tax imposed which is shown on the return, reduced by any rebate (within the meaning of section 6211(b)(2)). The excess under the preceding sentence shall be determined without regard to items to which section 6662A applies. (B) Reduction for understatement due to position of taxpayer or disclosed itemThe amount of the understatement under subparagraph (A) shall be reduced by that portion of the understatement which is attributable to—(i) the tax treatment of any item by the taxpayer if there is or was substantial authority for such treatment, or (ii) any item if—(I) the relevant facts affecting the item’s tax treatment are adequately disclosed in the return or in a statement attached to the return, and (II) there is a reasonable basis for the tax treatment of such item by the taxpayer. For purposes of clause (ii)(II), in no event shall a corporation be treated as having a reasonable basis for its tax treatment of an item attributable to a multiple-party financing transaction if such treatment does not clearly reflect the income of the corporation. (C) Reduction not to apply to tax shelters(i) In generalSubparagraph (B) shall not apply to any item attributable to a tax shelter. (ii) Tax shelterFor purposes of clause (i), the term “tax shelter” means—(I) a partnership or other entity, (II) any investment plan or arrangement, or (III) any other plan or arrangement, if a significant purpose of such partnership, entity, plan, or arrangement is the avoidance or evasion of Federal income tax. (3) Secretarial listThe Secretary may prescribe a list of positions which the Secretary believes do not meet 1 or more of the standards specified in paragraph (2)(B)(i), section 6664(d)(3), and section 6694(a)(1). Such list (and any revisions thereof) shall be published in the Federal Register or the Internal Revenue Bulletin. (e) Substantial valuation misstatement under chapter 1(1) In generalFor purposes of this section, there is a substantial valuation misstatement under chapter 1 if—(A) the value of any property (or the adjusted basis of any property) claimed on any return of tax imposed by chapter 1 is 150 percent or more of the amount determined to be the correct amount of such valuation or adjusted basis (as the case may be), or (B)(i) the price for any property or services (or for the use of property) claimed on any such return in connection with any transaction between persons described in section 482 is 200 percent or more (or 50 percent or less) of the amount determined under section 482 to be the correct amount of such price, or (ii) the net section 482 transfer price adjustment for the taxable year exceeds the lesser of $5,000,000 or 10 percent of the taxpayer’s gross receipts. (2) LimitationNo penalty shall be imposed by reason of subsection (b)(3) unless the portion of the underpayment for the taxable year attributable to substantial valuation misstatements under chapter 1 exceeds $5,000 ($10,000 in the case of a corporation other than an S corporation or a personal holding company (as defined in section 542)). (3) Net section 482 transfer price adjustmentFor purposes of this subsection—(A) In generalThe term “net section 482 transfer price adjustment” means, with respect to any taxable year, the net increase in taxable income for the taxable year (determined without regard to any amount carried to such taxable year from another taxable year) resulting from adjustments under section 482 in the price for any property or services (or for the use of property). (B) Certain adjustments excluded in determining thresholdFor purposes of determining whether the threshold requirements of paragraph (1)(B)(ii) are met, the following shall be excluded:(i) Any portion of the net increase in taxable income referred to in subparagraph (A) which is attributable to any redetermination of a price if—(I) it is established that the taxpayer determined such price in accordance with a specific pricing method set forth in the regulations prescribed under section 482 and that the taxpayer’s use of such method was reasonable, (II) the taxpayer has documentation (which was in existence as of the time of filing the return) which sets forth the determination of such price in accordance with such a method and which establishes that the use of such method was reasonable, and (III) the taxpayer provides such documentation to the Secretary within 30 days of a request for such documentation. (ii) Any portion of the net increase in taxable income referred to in subparagraph (A) which is attributable to a redetermination of price where such price was not determined in accordance with such a specific pricing method if—(I) the taxpayer establishes that none of such pricing methods was likely to result in a price that would clearly reflect income, the taxpayer used another pricing method to determine such price, and such other pricing method was likely to result in a price that would clearly reflect income, (II) the taxpayer has documentation (which was in existence as of the time of filing the return) which sets forth the determination of such price in accordance with such other method and which establishes that the requirements of subclause (I) were satisfied, and (III) the taxpayer provides such documentation to the Secretary within 30 days of request for such documentation. (iii) Any portion of such net increase which is attributable to any transaction solely between foreign corporations unless, in the case of any such corporations, the treatment of such transaction affects the determination of income from sources within the United States or taxable income effectively connected with the conduct of a trade or business within the United States. (C) Special ruleIf the regular tax (as defined in section 55(c)) imposed by chapter 1 on the taxpayer is determined by reference to an amount other than taxable income, such amount shall be treated as the taxable income of such taxpayer for purposes of this paragraph. (D) Coordination with reasonable cause exceptionFor purposes of section 6664(c) the taxpayer shall not be treated as having reasonable cause for any portion of an underpayment attributable to a net section 482 transfer price adjustment unless such taxpayer meets the requirements of clause (i), (ii), or (iii) of subparagraph (B) with respect to such portion. (f) Substantial overstatement of pension liabilities(1) In generalFor purposes of this section, there is a substantial overstatement of pension liabilities if the actuarial determination of the liabilities taken into account for purposes of computing the deduction under paragraph (1) or (2) of section 404(a) is 200 percent or more of the amount determined to be the correct amount of such liabilities. (2) LimitationNo penalty shall be imposed by reason of subsection (b)(4) unless the portion of the underpayment for the taxable year attributable to substantial overstatements of pension liabilities exceeds $1,000. (g) Substantial estate or gift tax valuation understatement(1) In generalFor purposes of this section, there is a substantial estate or gift tax valuation understatement if the value of any property claimed on any return of tax imposed by subtitle B is 65 percent or less of the amount determined to be the correct amount of such valuation. (2) LimitationNo penalty shall be imposed by reason of subsection (b)(5) unless the portion of the underpayment attributable to substantial estate or gift tax valuation understatements for the taxable period (or, in the case of the tax imposed by chapter 11, with respect to the estate of the decedent) exceeds $5,000. (h) Increase in penalty in case of gross valuation misstatements(1) In generalTo the extent that a portion of the underpayment to which this section applies is attributable to one or more gross valuation misstatements, subsection (a) shall be applied with respect to such portion by substituting “40 percent” for “20 percent”. (2) Gross valuation misstatementsThe term “gross valuation misstatements” means—(A) any substantial valuation misstatement under chapter 1 as determined under subsection (e) by substituting—(i) in paragraph (1)(A), “200 percent” for “150 percent”, (ii) in paragraph (1)(B)(i)—(I) “400 percent” for “200 percent”, and (II) “25 percent” for “50 percent”, and (iii) in paragraph (1)(B)(ii)—(I) “$20,000,000” for “$5,000,000”, and (II) “20 percent” for “10 percent”. (B) any substantial overstatement of pension liabilities as determined under subsection (f) by substituting “400 percent” for “200 percent”, (C) any substantial estate or gift tax valuation understatement as determined under subsection (g) by substituting “40 percent” for “65 percent”, and (D) any disallowance of a deduction described in subsection (b)(10). (i) Increase in penalty in case of nondisclosed noneconomic substance transactions(1) In generalIn the case of any portion of an underpayment which is attributable to one or more nondisclosed noneconomic substance transactions, subsection (a) shall be applied with respect to such portion by substituting “40 percent” for “20 percent”. (2) Nondisclosed noneconomic substance transactionsFor purposes of this subsection, the term “nondisclosed noneconomic substance transaction” means any portion of a transaction described in subsection (b)(6) with respect to which the relevant facts affecting the tax treatment are not adequately disclosed in the return nor in a statement attached to the return. (3) Special rule for amended returnsIn no event shall any amendment or supplement to a return of tax be taken into account for purposes of this subsection if the amendment or supplement is filed after the earlier of the date the taxpayer is first contacted by the Secretary regarding the examination of the return or such other date as is specified by the Secretary. (j) Undisclosed foreign financial asset understatement(1) In generalFor purposes of this section, the term “undisclosed foreign financial asset understatement” means, for any taxable year, the portion of the understatement for such taxable year which is attributable to any transaction involving an undisclosed foreign financial asset. (2) Undisclosed foreign financial assetFor purposes of this subsection, the term “undisclosed foreign financial asset” means, with respect to any taxable year, any asset with respect to which information was required to be provided under section 6038, 6038B, 6038D, 6046A, or 6048 for such taxable year but was not provided by the taxpayer as required under the provisions of those sections. (3) Increase in penalty for undisclosed foreign financial asset understatementsIn the case of any portion of an underpayment which is attributable to any undisclosed foreign financial asset understatement, subsection (a) shall be applied with respect to such portion by substituting “40 percent” for “20 percent”. (k) Inconsistent estate basis reportingFor purposes of this section, the term “inconsistent estate basis” means any portion of an underpayment attributable to the failure to comply with section 1014(f). (l) Increase in penalty in case of overstatement of qualified charitable contributionsIn the case of any portion of an underpayment which is attributable to one or more overstatements of the deduction provided in section 170(p), subsection (a) shall be applied with respect to such portion by substituting “50 percent” for “20 percent”. (m) Substantial understatement of income tax due to disallowance of applicable energy credits(1) In generalIn the case of a taxpayer for which there is a disallowance of an applicable energy credit for any taxable year, for purposes of determining whether there is a substantial understatement of income tax for such taxable year, subsection (d)(1) shall be applied—(A) in subparagraphs (A) and (B), by substituting “1 percent” for “10 percent” each place it appears, and (B) without regard to subparagraph (C). (2) Disallowance of an applicable energy creditFor purposes of this subsection, the term “disallowance of an applicable energy credit” means the disallowance of a credit under section 45X, 45Y, or 48E by reason of overstating the material assistance cost ratio (as determined under section 7701(a)(52)) with respect to any qualified facility, energy storage technology, or facility which produces eligible components.

26 U.S.C. § 6662A Imposition of accuracy-related penalty on understatements with respect to reportable transactions

(a) Imposition of penaltyIf 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 understatementFor purposes of this section—(1) In generalThe term “reportable transaction understatement” 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 aggregate 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 appliesThis section shall apply to any item which is attributable to—(A) any listed transaction, and (B) any reportable transaction (other than a listed transaction) if a significant purpose of such transaction is the avoidance or evasion of Federal income tax. (c) Higher penalty for nondisclosed listed and other avoidance transactionsSubsection (a) shall be applied by substituting “30 percent” for “20 percent” with respect to the portion of any reportable transaction understatement with respect to which the requirement of section 6664(d)(3)(A) is not met. (d) Definitions of reportable and listed transactionsFor purposes of this section, the terms “reportable transaction” and “listed transaction” have the respective meanings given to such terms by section 6707A(c). (e) Special rules(1) Coordination with penalties, etc., on other understatementsIn the case of an understatement (as defined in section 6662(d)(2))—(A) the amount of such understatement (determined without regard to this paragraph) shall be increased by the aggregate amount of reportable transaction understatements for purposes of determining whether such understatement is a substantial understatement under section 6662(d)(1), and (B) the addition to tax under section 6662(a) shall apply only to the excess of the amount of the substantial understatement (if any) after the application of subparagraph (A) over the aggregate amount of reportable transaction understatements. (2) Coordination with other penalties(A) Coordination with fraud penaltyThis section shall not apply to any portion of an understatement on which a penalty is imposed under section 6663. (B) Coordination with certain increased underpayment penaltiesThis section shall not apply to any portion of an understatement on which a penalty is imposed under section 6662 if the rate of the penalty is determined under subsections (h) or (i) of section 6662. (3) Special rule for amended returnsExcept as provided in regulations, in no event shall any tax treatment included with an amendment or supplement to a return of tax be taken into account in determining the amount of any reportable transaction understatement if the amendment or supplement is filed after the earlier of the date the taxpayer is first contacted by the Secretary regarding the examination of the return or such other date as is specified by the Secretary.

26 U.S.C. § 6663 Imposition of fraud penalty

(a) Imposition of penaltyIf any part of any underpayment of tax required to be shown on a return is due to fraud, there shall be added to the tax an amount equal to 75 percent of the portion of the underpayment which is attributable to fraud. (b) Determination of portion attributable to fraudIf 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 (by a preponderance of the evidence) is not attributable to fraud. (c) Special rule for joint returnsIn the case of a joint return, this section shall not apply with respect to a spouse unless some part of the underpayment is due to the fraud of such spouse.

26 U.S.C. § 6664 Definitions and special rules

(a) UnderpaymentFor purposes of this part, the term “underpayment” means the amount by which any tax imposed by this title exceeds the excess of—(1) the sum of—(A) the amount shown as the tax by the taxpayer on his return, plus (B) amounts not so shown previously assessed (or collected without assessment), over (2) the amount of rebates made. For purposes of paragraph (2), the term “rebate” means so much of an abatement, credit, refund, or other repayment, as was made on the ground that the tax imposed was less than the excess of the amount specified in paragraph (1) over the rebates previously made. A rule similar to the rule of section 6211(b)(4) shall apply for purposes of this subsection. (b) Penalties applicable only where return filedThe penalties provided in this part shall apply only in cases where a return of tax is filed (other than a return prepared by the Secretary under the authority of section 6020(b)). (c) Reasonable cause exception for underpayments(1) In generalNo penalty shall be imposed under section 6662 or 6663 with respect to any portion of an underpayment if it is shown that there was a reasonable cause for such portion and that the taxpayer acted in good faith with respect to such portion. (2) ExceptionParagraph (1) shall not apply to any portion of an underpayment which is attributable to one or more transactions described in section 6662(b)(6) or to any disallowance of a deduction described in section 6662(b)(10). (3) Special rule for certain valuation overstatementsIn the case of any underpayment attributable to a substantial or gross valuation overstatement under chapter 1 with respect to charitable deduction property, paragraph (1) shall not apply. The preceding sentence shall not apply to a substantial valuation overstatement under chapter 1 if—(A) the claimed value of the property was based on a qualified appraisal made by a qualified appraiser, and (B) in addition to obtaining such appraisal, the taxpayer made a good faith investigation of the value of the contributed property. (4) DefinitionsFor purposes of this subsection—(A) Charitable deduction propertyThe term “charitable deduction property” means any property contributed by the taxpayer in a contribution for which a deduction was claimed under section 170. For purposes of paragraph (3), such term shall not include any securities for which (as of the date of the contribution) market quotations are readily available on an established securities market. (B) Qualified appraisalThe term “qualified appraisal” has the meaning given such term by section 170(f)(11)(E)(i). (C) Qualified appraiserThe term “qualified appraiser” has the meaning given such term by section 170(f)(11)(E)(ii). (d) Reasonable cause exception for reportable transaction understatements(1) In generalNo penalty shall be imposed under section 6662A with respect to any portion of a reportable transaction understatement if it is shown that there was a reasonable cause for such portion and that the taxpayer acted in good faith with respect to such portion. (2) ExceptionParagraph (1) shall not apply to any portion of a reportable transaction understatement which is attributable to one or more transactions described in section 6662(b)(6). (3) Special rulesParagraph (1) shall not apply to any reportable transaction understatement unless—(A) the relevant facts affecting the tax treatment of the item are adequately disclosed in accordance with the regulations prescribed under section 6011, (B) there is or was substantial authority for such treatment, and (C) the taxpayer reasonably believed that such treatment was more likely than not the proper treatment. A taxpayer failing to adequately disclose in accordance with section 6011 shall be treated as meeting the requirements of subparagraph (A) if the penalty for such failure was rescinded under section 6707A(d). (4) Rules relating to reasonable beliefFor purposes of paragraph (3)(C)—(A) In generalA taxpayer shall be treated as having a reasonable belief with respect to the tax treatment of an item only if such belief—(i) is based on the facts and law that exist at the time the return of tax which includes such tax treatment is filed, and (ii) relates solely to the taxpayer’s chances of success on the merits of such treatment and does not take into account the possibility that a return will not be audited, such treatment will not be raised on audit, or such treatment will be resolved through settlement if it is raised. (B) Certain opinions may not be relied upon(i) In generalAn opinion of a tax advisor may not be relied upon to establish the reasonable belief of a taxpayer if—(I) the tax advisor is described in clause (ii), or (II) the opinion is described in clause (iii). (ii) Disqualified tax advisorsA tax advisor is described in this clause if the tax advisor—(I) is a material advisor (within the meaning of section 6111(b)(1)) and participates in the organization, management, promotion, or sale of the transaction or is related (within the meaning of section 267(b) or 707(b)(1)) to any person who so participates, (II) is compensated directly or indirectly by a material advisor with respect to the transaction, (III) has a fee arrangement with respect to the transaction which is contingent on all or part of the intended tax benefits from the transaction being sustained, or (IV) as determined under regulations prescribed by the Secretary, has a disqualifying financial interest with respect to the transaction. (iii) Disqualified opinionsFor purposes of clause (i), an opinion is disqualified if the opinion—(I) is based on unreasonable factual or legal assumptions (including assumptions as to future events), (II) unreasonably relies on representations, statements, findings, or agreements of the taxpayer or any other person, (III) does not identify and consider all relevant facts, or (IV) fails to meet any other requirement as the Secretary may prescribe.

26 U.S.C. § 6651 Failure to file tax return or to pay tax

(a) Addition to the taxIn case of failure—(1) to file any return required under authority of subchapter A of chapter 61 (other than part III thereof), subchapter A of chapter 51 (relating to distilled spirits, wines, and beer), or of subchapter A of chapter 52 (relating to tobacco, cigars, cigarettes, and cigarette papers and tubes), or of subchapter A of chapter 53 (relating to machine guns and certain other firearms), on the date prescribed therefor (determined with regard to any extension of time for filing), unless it is shown that such failure is due to reasonable cause and not due to willful neglect, there shall be added to the amount required to be shown as tax on such return 5 percent of the amount of such tax if the failure is for not more than 1 month, with an additional 5 percent for each additional month or fraction thereof during which such failure continues, not exceeding 25 percent in the aggregate; (2) to pay the amount shown as tax on any return specified in paragraph (1) on or before the date prescribed for payment of such tax (determined with regard to any extension of time for payment), unless it is shown that such failure is due to reasonable cause and not due to willful neglect, there shall be added to the amount shown as tax on such return 0.5 percent of the amount of such tax if the failure is for not more than 1 month, with an additional 0.5 percent for each additional month or fraction thereof during which such failure continues, not exceeding 25 percent in the aggregate; or (3) to pay any amount in respect of any tax required to be shown on a return specified in paragraph (1) which is not so shown (including an assessment made pursuant to section 6213(b)) within 21 calendar days from the date of notice and demand therefor (10 business days if the amount for which such notice and demand is made equals or exceeds $100,000), unless it is shown that such failure is due to reasonable cause and not due to willful neglect, there shall be added to the amount of tax stated in such notice and demand 0.5 percent of the amount of such tax if the failure is for not more than 1 month, with an additional 0.5 percent for each additional month or fraction thereof during which such failure continues, not exceeding 25 percent in the aggregate. In the case of a failure to file a return of tax imposed by chapter 1 within 60 days of the date prescribed for filing of such return (determined with regard to any extensions of time for filing), unless it is shown that such failure is due to reasonable cause and not due to willful neglect, the addition to tax under paragraph (1) shall not be less than the lesser of $435 or 100 percent of the amount required to be shown as tax on such return. (b) Penalty imposed on net amount dueFor purposes of—(1) subsection (a)(1), the amount of tax required to be shown on the return shall be reduced by the amount of any part of the tax which is paid on or before the date prescribed for payment of the tax and by the amount of any credit against the tax which may be claimed on the return, (2) subsection (a)(2), the amount of tax shown on the return shall, for purposes of computing the addition for any month, be reduced by the amount of any part of the tax which is paid on or before the beginning of such month and by the amount of any credit against the tax which may be claimed on the return, and (3) subsection (a)(3), the amount of tax stated in the notice and demand shall, for the purpose of computing the addition for any month, be reduced by the amount of any part of the tax which is paid before the beginning of such month. (c) Limitations and special rule(1) Additions under more than one paragraphWith respect to any return, the amount of the addition under paragraph (1) of subsection (a) shall be reduced by the amount of the addition under paragraph (2) of subsection (a) for any month (or fraction thereof) to which an addition to tax applies under both paragraphs (1) and (2). In any case described in the last sentence of subsection (a), the amount of the addition under paragraph (1) of subsection (a) shall not be reduced under the preceding sentence below the amount provided in such last sentence. (2) Amount of tax shown more than amount required to be shownIf the amount required to be shown as tax on a return is less than the amount shown as tax on such return, subsections (a)(2) and (b)(2) shall be applied by substituting such lower amount. (d) Increase in penalty for failure to pay tax in certain cases(1) In generalIn the case of each month (or fraction thereof) beginning after the day described in paragraph (2) of this subsection, paragraphs (2) and (3) of subsection (a) shall be applied by substituting “1 percent” for “0.5 percent” each place it appears. (2) DescriptionFor purposes of paragraph (1), the day described in this paragraph is the earlier of—(A) the day 10 days after the date on which notice is given under section 6331(d), or (B) the day on which notice and demand for immediate payment is given under the last sentence of section 6331(a). (e) Exception for estimated taxThis section shall not apply to any failure to pay any estimated tax required to be paid by section 6654 or 6655. (f) Increase in penalty for fraudulent failure to fileIf any failure to file any return is fraudulent, paragraph (1) of subsection (a) shall be applied—(1) by substituting “15 percent” for “5 percent” each place it appears, and (2) by substituting “75 percent” for “25 percent”. (g) Treatment of returns prepared by Secretary under section 6020(b)In the case of any return made by the Secretary under section 6020(b)—(1) such return shall be disregarded for purposes of determining the amount of the addition under paragraph (1) of subsection (a), but (2) such return shall be treated as the return filed by the taxpayer for purposes of determining the amount of the addition under paragraphs (2) and (3) of subsection (a). (h) Limitation on penalty on individual’s failure to pay for months during period of installment agreementIn the case of an individual who files a return of tax on or before the due date for the return (including extensions), paragraphs (2) and (3) of subsection (a) shall each be applied by substituting “0.25” for “0.5” each place it appears for purposes of determining the addition to tax for any month during which an installment agreement under section 6159 is in effect for the payment of such tax. (i) Application to imputed underpaymentFor purposes of this section, any failure to comply with section 6226(b)(4)(A)(ii) shall be treated as a failure to pay the amount described in subclause (II) thereof and such amount shall be treated for purposes of this section as an amount shown as tax on a return specified in subsection (a)(1). (j) Adjustment for inflation(1) In generalIn the case of any return required to be filed in a calendar year beginning after 2020, the $435 dollar amount under subsection (a) 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 2019” for “calendar year 2016” in subparagraph (A)(ii) thereof. (2) RoundingIf any amount adjusted under paragraph (1) is not a multiple of $5, such amount shall be rounded to the next lowest multiple of $5.

26 U.S.C. § 6652 Failure to file certain information returns, registration statements, etc.

(a) Returns with respect to certain payments aggregating less than $10In the case of each failure to file a statement of a payment to another person required under the authority of—(1) section 6042(a)(2) (relating to payments of dividends aggregating less than $10), or (2) section 6044(a)(2) (relating to payments of patronage dividends aggregating less than $10), on the date prescribed therefor (determined with regard to any extension of time for filing), unless it is shown that such failure is due to reasonable cause and not to willful neglect, there shall be paid (upon notice and demand by the Secretary and in the same manner as tax) by the person failing to so file the statement, $1 for each such statement not so filed, but the total amount imposed on the delinquent person for all such failures during the calendar year shall not exceed $1,000. (b) Failure to report tipsIn the case of failure by an employee to report to his employer on the date and in the manner prescribed therefor any amount of tips required to be so reported by section 6053(a) which are wages (as defined in section 3121(a)) or which are compensation (as defined in section 3231(e)), unless it is shown that such failure is due to reasonable cause and not due to willful neglect, there shall be paid by the employee, in addition to the tax imposed by section 3101 or section 3201 (as the case may be) with respect to the amount of tips which he so failed to report, an amount equal to 50 percent of such tax. (c) Returns by exempt organizations and by certain trusts(1) Annual returns under section 6033(a)(1) or 6012(a)(6)(A) Penalty on organizationIn the case of—(i) a failure to file a return required under section 6033(a)(1) (relating to returns by exempt organizations) or section 6012(a)(6) (relating to returns by political organizations) on the date and in the manner prescribed therefor (determined with regard to any extension of time for filing), or (ii) a failure to include any of the information required to be shown on a return filed under section 6033(a)(1) or section 6012(a)(6) or to show the correct information, there shall be paid by the exempt organization $20 for each day during which such failure continues. The maximum penalty under this subparagraph on failures with respect to any 1 return shall not exceed the lesser of $10,000 or 5 percent of the gross receipts of the organization for the year. In the case of an organization having gross receipts exceeding $1,000,000 for any year, with respect to the return required under section 6033(a)(1) or section 6012(a)(6) for such year, in applying the first sentence of this subparagraph, the amount of the penalty for each day during which a failure continues shall be $100 in lieu of the amount otherwise specified, and, in lieu of applying the second sentence of this subparagraph, the maximum penalty under this subparagraph shall not exceed $50,000. (B) Managers(i) In generalThe Secretary may make a written demand on any organization subject to penalty under subparagraph (A) specifying therein a reasonable future date by which the return shall be filed (or the information furnished) for purposes of this subparagraph. (ii) Failure to comply with demandIf any person fails to comply with any demand under clause (i) on or before the date specified in such demand, there shall be paid by the person failing to so comply $10 for each day after the expiration of the time specified in such demand during which such failure continues. The maximum penalty imposed under this subparagraph on all persons for failures with respect to any 1 return shall not exceed $5,000. (C) Public inspection of annual returns and reportsIn the case of a failure to comply with the requirements of section 6104(d) with respect to any annual return on the date and in the manner prescribed therefor (determined with regard to any extension of time for filing) or report required under section 527(j), there shall be paid by the person failing to meet such requirements $20 for each day during which such failure continues. The maximum penalty imposed under this subparagraph on all persons for failures with respect to any 1 return or report shall not exceed $10,000. (D) Public inspection of applications for exemption and notice of statusIn the case of a failure to comply with the requirements of section 6104(d) with respect to any exempt status application materials (as defined in such section) or notice materials (as defined in such section) on the date and in the manner prescribed therefor, there shall be paid by the person failing to meet such requirements $20 for each day during which such failure continues. (E) No penalty for certain annual noticesThis paragraph shall not apply with respect to any notice required under section 6033(i). (2) Returns under section 6034 or 6043(b)(A) Penalty on organization or trustIn the case of a failure to file a return required under section 6034 (relating to returns by certain trusts) or section 6043(b) (relating to terminations, etc., of exempt organizations), on the date and in the manner prescribed therefor (determined with regard to any extension of time for filing), there shall be paid by the exempt organization or trust failing so to file $10 for each day during which such failure continues, but the total amount imposed under this subparagraph on any organization or trust for failure to file any 1 return shall not exceed $5,000. (B) ManagersThe Secretary may make written demand on an organization or trust failing to file under subparagraph (A) specifying therein a reasonable future date by which such filing shall be made for purposes of this subparagraph. If such filing is not made on or before such date, there shall be paid by the person failing so to file $10 for each day after the expiration of the time specified in the written demand during which such failure continues, but the total amount imposed under this subparagraph on all persons for failure to file any 1 return shall not exceed $5,000. (C) Split-interest trustsIn the case of a trust which is required to file a return under section 6034(a), subparagraphs (A) and (B) of this paragraph shall not apply and paragraph (1) shall apply in the same manner as if such return were required under section 6033, except that—(i) the 5 percent limitation in the second sentence of paragraph (1)(A) shall not apply, (ii) in the case of any trust with gross income in excess of $250,000, in applying the first sentence of paragraph (1)(A), the amount of the penalty for each day during which a failure continues shall be $100 in lieu of the amount otherwise specified, and in lieu of applying the second sentence of paragraph (1)(A), the maximum penalty under paragraph (1)(A) shall not exceed $50,000, and (iii) the third sentence of paragraph (1)(A) shall be disregarded. In addition to any penalty imposed on the trust pursuant to this subparagraph, if the person required to file such return knowingly fails to file the return, such penalty shall also be imposed on such person who shall be personally liable for such penalty. (3) Disclosure under section 6033(a)(2)(A) Penalty on entitiesIn the case of a failure to file a disclosure required under section 6033(a)(2), there shall be paid by the tax-exempt entity (the entity manager in the case of a tax-exempt entity described in paragraph (4), (5), (6), or (7) of section 4965(c)) $100 for each day during which such failure continues. The maximum penalty under this subparagraph on failures with respect to any 1 disclosure shall not exceed $50,000. (B) Written demand(i) In generalThe Secretary may make a written demand on any entity or manager subject to penalty under subparagraph (A) specifying therein a reasonable future date by which the disclosure shall be filed for purposes of this subparagraph. (ii) Failure to comply with demandIf any entity or manager fails to comply with any demand under clause (i) on or before the date specified in such demand, there shall be paid by such entity or manager failing to so comply $100 for each day after the expiration of the time specified in such demand during which such failure continues. The maximum penalty imposed under this subparagraph on all entities and managers for failures with respect to any 1 disclosure shall not exceed $10,000. (C) DefinitionsAny term used in this section which is also used in section 4965 shall have the meaning given such term under section 4965. (4) Notices under section 506(A) Penalty on organizationIn the case of a failure to submit a notice required under section 506(a) (relating to organizations required to notify Secretary of intent to operate as 501(c)(4)) on the date and in the manner prescribed therefor, there shall be paid by the organization failing to so submit $20 for each day during which such failure continues, but the total amount imposed under this subparagraph on any organization for failure to submit any one notice shall not exceed $5,000. (B) ManagersThe Secretary may make written demand on an organization subject to penalty under subparagraph (A) specifying in such demand a reasonable future date by which the notice shall be submitted for purposes of this subparagraph. If such notice is not submitted on or before such date, there shall be paid by the person failing to so submit $20 for each day after the expiration of the time specified in the written demand during which such failure continues, but the total amount imposed under this subparagraph on all persons for failure to submit any one notice shall not exceed $5,000. (5) Reasonable cause exceptionNo penalty shall be imposed under this subsection with respect to any failure if it is shown that such failure is due to reasonable cause. (6) Other special rules(A) Treatment as taxAny penalty imposed under this subsection shall be paid on notice and demand of the Secretary and in the same manner as tax. (B) Joint and several liabilityIf more than 1 person is liable under this subsection for any penalty with respect to any failure, all such persons shall be jointly and severally liable with respect to such failure. (C) PersonFor purposes of this subsection, the term “person” means any officer, director, trustee, employee, or other individual who is under a duty to perform the act in respect of which the violation occurs. (7) Adjustment for inflation(A) In generalIn the case of any failure relating to a return required to be filed in a calendar year beginning after 2014, each of the dollar amounts under paragraphs (1), (2), and (3) 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. (B) RoundingIf any amount adjusted under subparagraph (A)—(i) 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 (ii) is not described in clause (i) and is not a multiple of $5, such amount shall be rounded to the next lowest multiple of $5. (d) Annual registration and other notification by pension plan(1) RegistrationIn the case of any failure to file a registration statement required under section 6057(a) (relating to annual registration of certain plans) which includes all participants required to be included in such statement, on the date prescribed therefor (determined without regard to any extension of time for filing), unless it is shown that such failure is due to reasonable cause, there shall be paid (on notice and demand by the Secretary and in the same manner as tax) by the person failing so to file, an amount equal to $10 for each participant with respect to whom there is a failure to file, multiplied by the number of days during which such failure continues, but the total amount imposed under this paragraph on any person for any failure to file with respect to any plan year shall not exceed $50,000. (2) Notification of change of statusIn the case of failure to file a notification required under section 6057(b) (relating to notification of change of status) on the date prescribed therefor (determined without regard to any extension of time for filing), unless it is shown that such failure is due to reasonable cause, there shall be paid (on notice and demand by the Secretary and in the same manner as tax) by the person failing so to file, $10 for each day during which such failure continues, but the total amounts imposed under this paragraph on any person for failure to file any notification shall not exceed $10,000. (e) Information required in connection with certain plans of deferred compensation, etc.In the case of failure to file a return or statement required under section 6058 (relating to information required in connection with certain plans of deferred compensation), 6047 (relating to information relating to certain trusts and annuity and bond purchase plans), or 6039D (relating to returns and records with respect to certain fringe benefit plans) on the date and in the manner prescribed therefor (determined with regard to any extension of time for filing), unless it is shown that such failure is due to reasonable cause, there shall be paid (on notice and demand by the Secretary and in the same manner as tax) by the person failing so to file, $250 for each day during which such failure continues, but the total amount imposed under this subsection on any person for failure to file any return shall not exceed $150,000. This subsection shall not apply to any return or statement which is an information return described in section 6724(d)(1)(C)(ii) or a payee statement described in section 6724(d)(2)(AA). (f) Returns required under section 6039C(1) In generalIn the case of each failure to make a return required by section 6039C which contains the information required by such section on the date prescribed therefor (determined with regard to any extension of time for filing), unless it is shown that such failure is due to reasonable cause and not to willful neglect, the amount determined under paragraph (2) shall be paid (upon notice and demand by the Secretary and in the same manner as tax) by the person failing to make such return. (2) Amount of penaltyFor purposes of paragraph (1), the amount determined under this paragraph with respect to any failure shall be $25 for each day during which such failure continues. (3) LimitationThe amount determined under paragraph (2) with respect to any person for failing to meet the requirements of section 6039C for any calendar year shall not exceed the lesser of—(A) $25,000, or (B) 5 percent of the aggregate of the fair market value of the United States real property interests owned by such person at any time during such year. For purposes of the preceding sentence, fair market value shall be determined as of the end of the calendar year (or, in the case of any property disposed of during the calendar year, as of the date of such disposition). [(g) Repealed. Pub. L. 113–295, div. A, title II, § 221(a)(39)(B), Dec. 19, 2014, 128 Stat. 4043] (h) Failure to give notice to recipients of certain pension, etc., distributionsIn the case of each failure to provide notice as required by section 3405(e)(10)(B), at the time prescribed therefor, unless it is shown that such failure is due to reasonable cause and not to willful neglect, there shall be paid, on notice and demand of the Secretary and in the same manner as tax, by the person failing to provide such notice, an amount equal to $100 for each such failure, but the total amount imposed on such person for all such failures during any calendar year shall not exceed $50,000. (i) Failure to give written explanation to recipients of certain qualifying rollover distributionsIn the case of each failure to provide a written explanation as required by section 402(f), at the time prescribed therefor, unless it is shown that such failure is due to reasonable cause and not to willful neglect, there shall be paid, on notice and demand of the Secretary and in the same manner as tax, by the person failing to provide such written explanation, an amount equal to $100 for each such failure, but the total amount imposed on such person for all such failures during any calendar year shall not exceed $50,000. (j) Failure to file certification with respect to certain residential rental projectsIn the case of each failure to provide a certification as required by section 142(d)(7) at the time prescribed therefor, unless it is shown that such failure is due to reasonable cause and not to willful neglect, there shall be paid, on notice and demand of the Secretary and in the same manner as tax, by the person failing to provide such certification, an amount equal to $100 for each such failure. (k) 11 See 1993 Amendment note below. Failure to make reports required under section 1202In the case of a failure to make a report required under section 1202(d)(1)(C) which contains the information required by such section on the date prescribed therefor (determined with regard to any extension of time for filing), there shall be paid (on notice and demand by the Secretary and in the same manner as tax) by the person failing to make such report, an amount equal to $50 for each report with respect to which there was such a failure. In the case of any failure due to negligence or intentional disregard, the preceding sentence shall be applied by substituting “$100” for “$50”. In the case of a report covering periods in 2 or more years, the penalty determined under preceding provisions of this subsection shall be multiplied by the number of such years. No penalty shall be imposed under this subsection on any failure which is shown to be due to reasonable cause and not willful neglect. (l) Failure to file return with respect to certain corporate transactionsIn the case of any failure to make a return required under section 6043(c) containing the information required by such section on the date prescribed therefor (determined with regard to any extension of time for filing), unless it is shown that such failure is due to reasonable cause, there shall be paid (on notice and demand by the Secretary and in the same manner as tax) by the person failing to file such return, an amount equal to $500 for each day during which such failure continues, but the total amount imposed under this subsection with respect to any return shall not exceed $100,000. (m) Alcohol and tobacco taxesFor penalties for failure to file certain information returns with respect to alcohol and tobacco taxes, see, generally, subtitle E. (n) Failure to make reports required under sections 3511, 6053(c)(8), and 7705In the case of a failure to make a report required under section 3511, 6053(c)(8), or 7705 which contains the information required by such section on the date prescribed therefor (determined with regard to any extension of time for filing), there shall be paid (on notice and demand by the Secretary and in the same manner as tax) by the person failing to make such report, an amount equal to $50 for each report with respect to which there was such a failure. In the case of any failure due to negligence or intentional disregard the preceding sentence shall be applied by substituting “$100” for “$50”. (o) Failure to provide notices with respect to qualified small employer health reimbursement arrangementsIn the case of each failure to provide a written notice as required by section 9831(d)(4), unless it is shown that such failure is due to reasonable cause and not willful neglect, there shall be paid, on notice and demand of the Secretary and in the same manner as tax, by the person failing to provide such written notice, an amount equal to $50 per employee per incident of failure to provide such notice, but the total amount imposed on such person for all such failures during any calendar year shall not exceed $2,500. (p) Failure to provide notice under section 83(i)In the case of each failure to provide a notice as required by section 83(i)(6), at the time prescribed therefor, unless it is shown that such failure is due to reasonable cause and not to willful neglect, there shall be paid, on notice and demand of the Secretary and in the same manner as tax, by the person failing to provide such notice, an amount equal to $100 for each such failure, but the total amount imposed on such person for all such failures during any calendar year shall not exceed $50,000.

26 U.S.C. § 6653 Failure to pay stamp tax

Any person (as defined in section 6671(b)) who— (1) willfully fails to pay any tax imposed by this title which is payable by stamp, coupons, tickets, books, or other devices or methods prescribed by this title or by regulations under the authority of this title, or (2) willfully attempts in any manner to evade or defeat any such tax or the payment thereof, shall, in addition to other penalties provided by law, be liable for a penalty of 50 percent of the total amount of the underpayment of the tax.

26 U.S.C. § 6654 Failure by individual to pay estimated income tax

(a) Addition to the taxExcept as otherwise provided in this section, in the case of any underpayment of estimated tax by an individual, there shall be added to the tax under chapter 1, the tax under chapter 2, and the tax under chapter 2A for the taxable year an amount determined by applying—(1) the underpayment rate established under section 6621, (2) to the amount of the underpayment, (3) for the period of the underpayment. (b) Amount of underpayment; period of underpaymentFor purposes of subsection (a)—(1) AmountThe amount of the underpayment shall be the excess of—(A) the required installment, over (B) the amount (if any) of the installment paid on or before the due date for the installment. (2) Period of underpaymentThe period of the underpayment shall run from the due date for the installment to whichever of the following dates is the earlier—(A) the 15th day of the 4th month following the close of the taxable year, or (B) with respect to any portion of the underpayment, the date on which such portion is paid. (3) Order of crediting paymentsFor purposes of paragraph (2)(B), a payment of estimated tax shall be credited against unpaid required installments in the order in which such installments are required to be paid. (c) Number of required installments; due datesFor purposes of this section—(1) Payable in 4 installmentsThere shall be 4 required installments for each taxable year. (2) Time for payment of installments In the case of the following required installments:The due date is: 1stApril 15 2ndJune 15 3rdSeptember 15 4thJanuary 15 of the following taxable year. (d) Amount of required installmentsFor purposes of this section—(1) Amount(A) In generalExcept as provided in paragraph (2), the amount of any required installment shall be 25 percent of the required annual payment. (B) Required annual paymentFor purposes of subparagraph (A), the term “required annual payment” means the lesser of—(i) 90 percent of the tax shown on the return for the taxable year (or, if no return is filed, 90 percent of the tax for such year), or (ii) 100 percent of the tax shown on the return of the individual for the preceding taxable year. Clause (ii) shall not apply if the preceding taxable year was not a taxable year of 12 months or if the individual did not file a return for such preceding taxable year. (C) Limitation on use of preceding year’s tax(i) In generalIf the adjusted gross income shown on the return of the individual for the preceding taxable year beginning in any calendar year exceeds $150,000, clause (ii) of subparagraph (B) shall be applied by substituting “110 percent” for “100 percent”. (ii) Separate returnsIn the case of a married individual (within the meaning of section 7703) who files a separate return for the taxable year for which the amount of the installment is being determined, clause (i) shall be applied by substituting “$75,000” for “$150,000”. (iii) Special ruleIn the case of an estate or trust, adjusted gross income shall be determined as provided in section 67(e). (2) Lower required installment where annualized income installment is less than amount determined under paragraph (1)(A) In generalIn the case of any required installment, if the individual establishes that the annualized income installment is less than the amount determined under paragraph (1)—(i) the amount of such required installment shall be the annualized income installment, and (ii) any reduction in a required installment resulting from the application of this subparagraph shall be recaptured by increasing the amount of the next required installment determined under paragraph (1) by the amount of such reduction (and by increasing subsequent required installments to the extent that the reduction has not previously been recaptured under this clause). (B) Determination of annualized income installmentIn the case of any required installment, the annualized income installment is the excess (if any) of—(i) an amount equal to the applicable percentage of the tax for the taxable year computed by placing on an annualized basis the taxable income, alternative minimum taxable income, and adjusted self-employment income for months in the taxable year ending before the due date for the installment, over (ii) the aggregate amount of any prior required installments for the taxable year. (C) Special rulesFor purposes of this paragraph—(i) AnnualizationThe taxable income, alternative minimum taxable income, and adjusted self-employment income shall be placed on an annualized basis under regulations prescribed by the Secretary. (ii) Applicable percentage In the case of the following required installments:The applicable percentage is: 1st22.5 2nd45 3rd67.5 4th90. (iii) Adjusted self-employment incomeThe term “adjusted self-employment income” means self-employment income (as defined in section 1402(b)); except that section 1402(b) shall be applied by placing wages (within the meaning of section 1402(b)) for months in the taxable year ending before the due date for the installment on an annualized basis consistent with clause (i). (D) Treatment of subpart F income(i) In generalAny amounts required to be included in gross income under section 951(a) (and credits properly allocable thereto) shall be taken into account in computing any annualized income installment under subparagraph (B) in a manner similar to the manner under which partnership income inclusions (and credits properly allocable thereto) are taken into account. (ii) Prior year safe harborIf a taxpayer elects to have this clause apply to any taxable year—(I) clause (i) shall not apply, and (II) for purposes of computing any annualized income installment for such taxable year, the taxpayer shall be treated as having received ratably during such taxable year items of income and credit described in clause (i) in an amount equal to the amount of such items shown on the return of the taxpayer for the preceding taxable year (the second preceding taxable year in the case of the first and second required installments for such taxable year). (e) Exceptions(1) Where tax is small amountNo addition to tax shall be imposed under subsection (a) for any taxable year if the tax shown on the return for such taxable year (or, if no return is filed, the tax), reduced by the credit allowable under section 31, is less than $1,000. (2) Where no tax liability for preceding taxable yearNo addition to tax shall be imposed under subsection (a) for any taxable year if—(A) the preceding taxable year was a taxable year of 12 months, (B) the individual did not have any liability for tax for the preceding taxable year, and (C) the individual was a citizen or resident of the United States throughout the preceding taxable year. (3) Waiver in certain cases(A) In generalNo addition to tax shall be imposed under subsection (a) with respect to any underpayment to the extent the Secretary determines that by reason of casualty, disaster, or other unusual circumstances the imposition of such addition to tax would be against equity and good conscience. (B) Newly retired or disabled individualsNo addition to tax shall be imposed under subsection (a) with respect to any underpayment if the Secretary determines that—(i) the taxpayer—(I) retired after having attained age 62, or (II) became disabled, in the taxable year for which estimated payments were required to be made or in the taxable year preceding such taxable year, and (ii) such underpayment was due to reasonable cause and not to willful neglect. (f) Tax computed after application of credits against taxFor purposes of this section, the term “tax” means—(1) the tax imposed by chapter 1 (other than any increase in such tax by reason of section 143(m)), plus (2) the tax imposed by chapter 2, plus (3) the tax imposed by chapter 2A, minus (4) the credits against tax provided by part IV of subchapter A of chapter 1, other than the credit against tax provided by section 31 (relating to tax withheld on wages). (g) Application of section in case of tax withheld on wages(1) In generalFor purposes of applying this section, the amount of the credit allowed under section 31 for the taxable year shall be deemed a payment of estimated tax, and an equal part of such amount shall be deemed paid on each due date for such taxable year, unless the taxpayer establishes the dates on which all amounts were actually withheld, in which case the amounts so withheld shall be deemed payments of estimated tax on the dates on which such amounts were actually withheld. (2) Separate applicationThe taxpayer may apply paragraph (1) separately with respect to—(A) wage withholding, and (B) all other amounts withheld for which credit is allowed under section 31. (h) Special rule where return filed on or before January 31If, on or before January 31 of the following taxable year, the taxpayer files a return for the taxable year and pays in full the amount computed on the return as payable, then no addition to tax shall be imposed under subsection (a) with respect to any underpayment of the 4th required installment for the taxable year. (i) Special rules for farmers and fishermenFor purposes of this section—(1) In generalIf an individual is a farmer or fisherman for any taxable year—(A) there shall be only 1 required installment for the taxable year, (B) the due date for such installment shall be January 15 of the following taxable year, (C) the amount of such installment shall be equal to the required annual payment determined under subsection (d)(1)(B) by substituting “66⅔ percent” for “90 percent” and without regard to subparagraph (C) of subsection (d)(1), and (D) subsection (h) shall be applied—(i) by substituting “March 1” for “January 31”, and (ii) by treating the required installment described in subparagraph (A) of this paragraph as the 4th required installment. (2) Farmer or fisherman definedAn individual is a farmer or fisherman for any taxable year if—(A) the individual’s gross income from farming or fishing (including oyster farming) for the taxable year is at least 66⅔ percent of the total gross income from all sources for the taxable year, or (B) such individual’s gross income from farming or fishing (including oyster farming) shown on the return of the individual for the preceding taxable year is at least 66⅔ percent of the total gross income from all sources shown on such return. (j) Special rules for nonresident aliensIn the case of a nonresident alien described in section 6072(c):(1) Payable in 3 installmentsThere shall be 3 required installments for the taxable year. (2) Time for payment of installmentsThe due dates for required installments under this subsection shall be determined under the following table: In the case of the following required installments:The due date is: 1stJune 15 2ndSeptember 15 3rdJanuary 15 of the following taxable year. (3) Amount of required installments(A) First required installmentIn the case of the first required installment, subsection (d) shall be applied by substituting “50 percent” for “25 percent” in subsection (d)(1)(A). (B) Determination of applicable percentageThe applicable percentage for purposes of subsection (d)(2) shall be determined under the following table: In the case of the following required installments:The applicable percentage is: 1st22.5 2nd45 3rd67.5 4th90. (k) Fiscal years and short years(1) Fiscal yearsIn applying this section to a taxable year beginning on any date other than January 1, there shall be substituted, for the months specified in this section, the months which correspond thereto. (2) Short taxable yearThis section shall be applied to taxable years of less than 12 months in accordance with regulations prescribed by the Secretary. (l) Estates and trusts(1) In generalExcept as otherwise provided in this subsection, this section shall apply to any estate or trust. (2) Exception for estates and certain trustsWith respect to any taxable year ending before the date 2 years after the date of the decedent’s death, this section shall not apply to—(A) the estate of such decedent, or (B) any trust—(i) all of which was treated (under subpart E of part I of subchapter J of chapter 1) as owned by the decedent, and (ii) to which the residue of the decedent’s estate will pass under his will (or, if no will is admitted to probate, which is the trust primarily responsible for paying debts, taxes, and expenses of administration). (3) Exception for charitable trusts and private foundationsThis section shall not apply to any trust which is subject to the tax imposed by section 511 or which is a private foundation. (4) Special rule for annualizationsIn the case of any estate or trust to which this section applies, subsection (d)(2)(B)(i) shall be applied by substituting “ending before the date 1 month before the due date for the installment” for “ending before the due date for the installment”. (m) Special rule for Medicare taxFor purposes of this section, the tax imposed under section 3101(b)(2) (to the extent not withheld) shall be treated as a tax imposed under chapter 2. (n) RegulationsThe Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this section.

26 U.S.C. § 6655 Failure by corporation to pay estimated income tax

(a) Addition to taxExcept as otherwise provided in this section, in the case of any underpayment of estimated tax by a corporation, there shall be added to the tax under chapter 1 for the taxable year an amount determined by applying—(1) the underpayment rate established under section 6621, (2) to the amount of the underpayment, (3) for the period of the underpayment. (b) Amount of underpayment; period of underpaymentFor purposes of subsection (a)—(1) AmountThe amount of the underpayment shall be the excess of—(A) the required installment, over (B) the amount (if any) of the installment paid on or before the due date for the installment. (2) Period of underpaymentThe period of the underpayment shall run from the due date for the installment to whichever of the following dates is the earlier—(A) the 15th day of the 4th month following the close of the taxable year, or (B) with respect to any portion of the underpayment, the date on which such portion is paid. (3) Order of crediting paymentsFor purposes of paragraph (2)(B), a payment of estimated tax shall be credited against unpaid required installments in the order in which such installments are required to be paid. (c) Number of required installments; due datesFor purposes of this section—(1) Payable in 4 installmentsThere shall be 4 required installments for each taxable year. (2) Time for payment of installments In the case of the following required installments:The due date is: 1stApril 15 2ndJune 15 3rdSeptember 15 4thDecember 15. (d) Amount of required installmentsFor purposes of this section—(1) Amount(A) In generalExcept as otherwise provided in this section, the amount of any required installment shall be 25 percent of the required annual payment. (B) Required annual paymentExcept as otherwise provided in this subsection, the term “required annual payment” means the lesser of—(i) 100 percent of the tax shown on the return for the taxable year (or, if no return is filed, 100 percent of the tax for such year), or (ii) 100 percent of the tax shown on the return of the corporation for the preceding taxable year. Clause (ii) shall not apply if the preceding taxable year was not a taxable year of 12 months, or the corporation did not file a return for such preceding taxable year showing a liability for tax. (2) Large corporations required to pay 100 percent of current year tax(A) In generalExcept as provided in subparagraph (B), clause (ii) of paragraph (1)(B) shall not apply in the case of a large corporation. (B) May use last year’s tax for 1st installmentSubparagraph (A) shall not apply for purposes of determining the amount of the 1st required installment for any taxable year. Any reduction in such 1st installment by reason of the preceding sentence shall be recaptured by increasing the amount of the next required installment determined under paragraph (1) by the amount of such reduction. (e) Lower required installment where annualized income installment or adjusted seasonal installment is less than amount determined under subsection (d)(1) In generalIn the case of any required installment, if the corporation establishes that the annualized income installment or the adjusted seasonal installment is less than the amount determined under subsection (d)(1) (as modified by paragraphs (2) and (3) of subsection (d))—(A) the amount of such required installment shall be the annualized income installment (or, if lesser, the adjusted seasonal installment), and (B) any reduction in a required installment resulting from the application of this paragraph shall be recaptured by increasing the amount of the next required installment determined under subsection (d)(1) (as so modified) by the amount of such reduction (and by increasing subsequent required installments to the extent that the reduction has not previously been recaptured under this subparagraph). (2) Determination of annualized income installment(A) In generalIn the case of any required installment, the annualized income installment is the excess (if any) of—(i) an amount equal to the applicable percentage of the tax for the taxable year computed by placing on an annualized basis the taxable income, adjusted financial statement income (as defined in section 56A), and modified taxable income—(I) for the first 3 months of the taxable year, in the case of the 1st required installment, (II) for the first 3 months of the taxable year, in the case of the 2nd required installment, (III) for the first 6 months of the taxable year in the case of the 3rd required installment, and (IV) for the first 9 months of the taxable year, in the case of the 4th required installment, over (ii) the aggregate amount of any prior required installments for the taxable year. (B) Special rulesFor purposes of this paragraph—(i) AnnualizationThe taxable income, adjusted financial statement income (as defined in section 56A), and modified taxable income shall be placed on an annualized basis under regulations prescribed by the Secretary. (ii) Applicable percentage In the case of the following required installments:The applicable percentage is: 1st25 2nd50 3rd75 4th100. (iii) Modified taxable incomeThe term “modified taxable income” has the meaning given such term by section 59A(c)(1). (C) Election for different annualization periods(i) If the taxpayer makes an election under this clause—(I) subclause (I) of subparagraph (A)(i) shall be applied by substituting “2 months” for “3 months”, (II) subclause (II) of subparagraph (A)(i) shall be applied by substituting “4 months” for “3 months”, (III) subclause (III) of subparagraph (A)(i) shall be applied by substituting “7 months” for “6 months”, and (IV) subclause (IV) of subparagraph (A)(i) shall be applied by substituting “10 months” for “9 months”. (ii) If the taxpayer makes an election under this clause—(I) subclause (II) of subparagraph (A)(i) shall be applied by substituting “5 months” for “3 months”, (II) subclause (III) of subparagraph (A)(i) shall be applied by substituting “8 months” for “6 months”, and (III) subclause (IV) of subparagraph (A)(i) shall be applied by substituting “11 months” for “9 months”. (iii) An election under clause (i) or (ii) shall apply to the taxable year for which made and such an election shall be effective only if made on or before the date required for the payment of the first required installment for such taxable year. (3) Determination of adjusted seasonal installment(A) In generalIn the case of any required installment, the amount of the adjusted seasonal installment is the excess (if any) of—(i) 100 percent of the amount determined under subparagraph (C), over (ii) the aggregate amount of all prior required installments for the taxable year. (B) Limitation on application of paragraphThis paragraph shall apply only if the base period percentage for any 6 consecutive months of the taxable year equals or exceeds 70 percent. (C) Determination of amountThe amount determined under this subparagraph for any installment shall be determined in the following manner—(i) take the taxable income for all months during the taxable year preceding the filing month, (ii) divide such amount by the base period percentage for all months during the taxable year preceding the filing month, (iii) determine the tax on the amount determined under clause (ii), and (iv) multiply the tax computed under clause (iii) by the base period percentage for the filing month and all months during the taxable year preceding the filing month. (D) Definitions and special rulesFor purposes of this paragraph—(i) Base period percentageThe base period percentage for any period of months shall be the average percent which the taxable income for the corresponding months in each of the 3 preceding taxable years bears to the taxable income for the 3 preceding taxable years. (ii) Filing monthThe term “filing month” means the month in which the installment is required to be paid. (iii) Reorganization, etc.The Secretary may by regulations provide for the determination of the base period percentage in the case of reorganizations, new corporations, and other similar circumstances. (4) Treatment of subpart F income(A) In generalAny amounts required to be included in gross income under section 951(a) (and credits properly allocable thereto) shall be taken into account in computing any annualized income installment under paragraph (2) in a manner similar to the manner under which partnership income inclusions (and credits properly allocable thereto) are taken into account. (B) Prior year safe harbor(i) In generalIf a taxpayer elects to have this subparagraph apply for any taxable year—(I) subparagraph (A) shall not apply, and (II) for purposes of computing any annualized income installment for such taxable year, the taxpayer shall be treated as having received ratably during such taxable year items of income and credit described in subparagraph (A) in an amount equal to 115 percent of the amount of such items shown on the return of the taxpayer for the preceding taxable year (the second preceding taxable year in the case of the first and second required installments for such taxable year). (ii) Special rule for noncontrolling shareholder(I) In generalIf a taxpayer making the election under clause (i) is a noncontrolling shareholder of a corporation, clause (i)(II) shall be applied with respect to items of such corporation by substituting “100 percent” for “115 percent”. (II) Noncontrolling shareholderFor purposes of subclause (I), the term “noncontrolling shareholder” means, with respect to any corporation, a shareholder which (as of the beginning of the taxable year for which the installment is being made) does not own (within the meaning of section 958(a)), and is not treated as owning (within the meaning of section 958(b)), more than 50 percent (by vote or value) of the stock in the corporation. (5) Treatment of certain REIT dividends(A) In generalAny dividend received from a closely held real estate investment trust by any person which owns (after application of subsection (d)(5) of section 856) 10 percent or more (by vote or value) of the stock or beneficial interests in the trust shall be taken into account in computing annualized income installments under paragraph (2) in a manner similar to the manner under which partnership income inclusions are taken into account. (B) Closely held REITFor purposes of subparagraph (A), the term “closely held real estate investment trust” means a real estate investment trust with respect to which 5 or fewer persons own (after application of subsection (d)(5) of section 856) 50 percent or more (by vote or value) of the stock or beneficial interests in the trust. (f) Exception where tax is small amountNo addition to tax shall be imposed under subsection (a) for any taxable year if the tax shown on the return for such taxable year (or, if no return is filed, the tax) is less than $500. (g) Definitions and special rules(1) TaxFor purposes of this section, the term “tax” means the excess of—(A) the sum of—(i) the tax imposed by section 11 or subchapter L of chapter 1, whichever applies, (ii) the tax imposed by section 55, (iii) the tax imposed by section 59A, plus (iv) the tax imposed by section 887, over (B) the credits against tax provided by part IV of subchapter A of chapter 1. For purposes of the preceding sentence, in the case of a foreign corporation subject to taxation under section 11 or 1201(a), or under subchapter L of chapter 1, the tax imposed by section 881 shall be treated as a tax imposed by section 11. (2) Large corporation(A) In generalFor purposes of this section, the term “large corporation” means any corporation if such corporation (or any predecessor corporation) had taxable income of $1,000,000 or more for any taxable year during the testing period. (B) Rules for applying subparagraph (A)(i) Testing periodFor purposes of subparagraph (A), the term “testing period” means the 3 taxable years immediately preceding the taxable year involved. (ii) Members of controlled groupFor purposes of applying subparagraph (A) to any taxable year in the testing period with respect to corporations which are component members of a controlled group of corporations for such taxable year, the $1,000,000 amount specified in subparagraph (A) shall be divided among such members under rules similar to the rules of section 1561. (iii) Certain carrybacks and carryovers not taken into accountFor purposes of subparagraph (A), taxable income shall be determined without regard to any amount carried to the taxable year under section 172 or 1212(a). (3) Certain tax-exempt organizationsFor purposes of this section—(A) Any organization subject to the tax imposed by section 511, and any private foundation, shall be treated as a corporation subject to tax under section 11. (B) Any tax imposed by section 511, and any tax imposed by section 1 or 4940 on a private foundation, shall be treated as a tax imposed by section 11. (C) Any reference to taxable income shall be treated as including a reference to unrelated business taxable income or net investment income (as the case may be). In the case of any organization described in subparagraph (A), subsection (b)(2)(A) shall be applied by substituting “5th month” for “4th month”, subsection (e)(2)(A) shall be applied by substituting “2 months” for “3 months” in clause (i)(I), the election under clause (i) of subsection (e)(2)(C) may be made separately for each installment, and clause (ii) of subsection (e)(2)(C) shall not apply. In the case of a private foundation, subsection (c)(2) shall be applied by substituting “May 15” for “April 15”. (4) Application of section to certain taxes imposed on S corporationsIn the case of an S corporation, for purposes of this section—(A) The following taxes shall be treated as imposed by section 11:(i) The tax imposed by section 1374(a). (ii) The tax imposed by section 1375(a). (iii) Any tax for which the S corporation is liable by reason of section 1371(d)(2). (B) Paragraph (2) of subsection (d) shall not apply. (C) Clause (ii) of subsection (d)(1)(B) shall be applied as if it read as follows:“(ii) the sum of—“(I) the amount determined under clause (i) by only taking into account the taxes referred to in clauses (i) and (iii) of subsection (g)(4)(A), and “(II) 100 percent of the tax imposed by section 1375(a) which was shown on the return of the corporation for the preceding taxable year.” (D) The requirement in the last sentence of subsection (d)(1)(B) that the return for the preceding taxable year show a liability for tax shall not apply. (E) Subsection (b)(2)(A) shall be applied by substituting “3rd month” for “4th month”. (F) Any reference in subsection (e) to taxable income shall be treated as including a reference to the net recognized built-in gain or the excess passive income (as the case may be). (h) Excessive adjustment under section 6425(1) Addition to taxIf the amount of an adjustment under section 6425 made before the 15th day of the 4th month following the close of the taxable year is excessive, there shall be added to the tax under chapter 1 for the taxable year an amount determined at the underpayment rate established under section 6621 upon the excessive amount from the date on which the credit is allowed or the refund is paid to such 15th day. (2) Excessive amountFor purposes of paragraph (1), the excessive amount is equal to the amount of the adjustment or (if smaller) the amount by which—(A) the income tax liability (as defined in section 6425(c)) for the taxable year as shown on the return for the taxable year, exceeds (B) the estimated income tax paid during the taxable year, reduced by the amount of the adjustment. (i) Fiscal years and short years(1) Fiscal yearsIn applying this section to a taxable year beginning on any date other than January 1, there shall be substituted, for the months specified in this section, the months which correspond thereto. (2) Short taxable yearThis section shall be applied to taxable years of less than 12 months in accordance with regulations prescribed by the Secretary. (j) RegulationsThe Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this section.

26 U.S.C. § 6656 Failure to make deposit of taxes

(a) Underpayment of depositsIn the case of any failure by any person to deposit (as required by this title or by regulations of the Secretary under this title) on the date prescribed therefor any amount of tax imposed by this title in such government depository as is authorized under section 6302(c) to receive such deposit, unless it is shown that such failure is due to reasonable cause and not due to willful neglect, there shall be imposed upon such person a penalty equal to the applicable percentage of the amount of the underpayment. (b) DefinitionsFor purposes of subsection (a)—(1) Applicable percentage(A) In generalExcept as provided in subparagraph (B), the term “applicable percentage” means—(i) 2 percent if the failure is for not more than 5 days, (ii) 5 percent if the failure is for more than 5 days but not more than 15 days, and (iii) 10 percent if the failure is for more than 15 days. (B) Special ruleIn any case where the tax is not deposited on or before the earlier of—(i) the day 10 days after the date of the first delinquency notice to the taxpayer under section 6303, or (ii) the day on which notice and demand for immediate payment is given under section 6861 or 6862 or the last sentence of section 6331(a), the applicable percentage shall be 15 percent. (2) UnderpaymentThe term “underpayment” means the excess of the amount of the tax required to be deposited over the amount, if any, thereof deposited on or before the date prescribed therefor. (c) Exception for first-time depositors of employment taxesThe Secretary may waive the penalty imposed by subsection (a) on a person’s inadvertent failure to deposit any employment tax if—(1) such person meets the requirements referred to in section 7430(c)(4)(A)(ii), (2) such failure—(A) occurs during the first quarter that such person was required to deposit any employment tax; or (B) if such person is required to change the frequency of deposits of any employment tax, relates to the first deposit to which such change applies, and (3) the return of such tax was filed on or before the due date. For purposes of this subsection, the term “employment taxes” means the taxes imposed by subtitle C. (d) Authority to abate penalty where deposit sent to SecretaryThe Secretary may abate the penalty imposed by subsection (a) with respect to the first time a depositor is required to make a deposit if the amount required to be deposited is inadvertently sent to the Secretary instead of to the appropriate government depository. (e) Designation of periods to which deposits apply(1) In generalA deposit made under this section shall be applied to the most recent period or periods within the specified tax period to which the deposit relates, unless the person making such deposit designates a different period or periods to which such deposit is to be applied. (2) Time for making designationA person may make a designation under paragraph (1) only during the 90-day period beginning on the date of a notice that a penalty under subsection (a) has been imposed for the specified tax period to which the deposit relates.

26 U.S.C. § 6657 Bad checks

If any instrument in payment, by any commercially acceptable means, of any amount receivable under this title is not duly paid, in addition to any other penalties provided by law, there shall be paid as a penalty by the person who tendered such instrument, upon notice and demand by the Secretary, in the same manner as tax, an amount equal to 2 percent of the amount of such instrument, except that if the amount of such instrument is less than $1,250, the penalty under this section shall be $25 or the amount of such instrument, whichever is the lesser. This section shall not apply if the person tendered such instrument in good faith and with reasonable cause to believe that it would be duly paid.

26 U.S.C. § 6658 Coordination with title 11

(a) Certain failures to pay taxNo addition to the tax shall be made under section 6651, 6654, or 6655 for failure to make timely payment of tax with respect to a period during which a case is pending under title 11 of the United States Code—(1) if such tax was incurred by the estate and the failure occurred pursuant to an order of the court finding probable insufficiency of funds of the estate to pay administrative expenses, or (2) if—(A) such tax was incurred by the debtor before the earlier of the order for relief or (in the involuntary case) the appointment of a trustee, and (B)(i) the petition was filed before the due date prescribed by law (including extensions) for filing a return of such tax, or (ii) the date for making the addition to the tax occurs on or after the day on which the petition was filed. (b) Exception for collected taxesSubsection (a) shall not apply to any liability for an addition to the tax which arises from the failure to pay or deposit a tax withheld or collected from others and required to be paid to the United States.

26 U.S.C. § 6659 Improper claim for Trump account contribution pilot program credit

(a) In generalIn the case of any individual who makes an election under section 6434 with respect to an individual who is not an eligible child of the taxpayer—(1) if such election was made due to negligence or disregard of the rules or regulations, there shall be imposed a penalty of $500, or (2) if such election was made due to fraud, there shall be imposed a penalty of $1,000. (b) Definitions(1) Eligible childThe term “eligible child” has the meaning given such term under section 6434. (2) Negligence; disregardThe terms “negligence” and “disregard” have the same meaning as when such terms are used in section 6662.