
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC6701]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                Subtitle F--Procedure and Administration
 
  CHAPTER 68--ADDITIONS TO THE TAX, ADDITIONAL AMOUNTS, AND ASSESSABLE 
                                PENALTIES
 
                   Subchapter B--Assessable Penalties
 
                       PART I--GENERAL PROVISIONS
 
Sec. 6701. Penalties for aiding and abetting understatement of 
        tax liability
        

(a) Imposition of penalty

    Any person--
        (1) who aids or assists in, procures, or advises with respect 
    to, the preparation or presentation of any portion of a return, 
    affidavit, claim, or other document,
        (2) who knows (or has reason to believe) that such portion will 
    be used in connection with any material matter arising under the 
    internal revenue laws, and
        (3) who knows that such portion (if so used) would result in an 
    understatement of the liability for tax of another person,

shall pay a penalty with respect to each such document in the amount 
determined under subsection (b).

(b) Amount of penalty

                           (1) In general

        Except as provided in paragraph (2), the amount of the penalty 
    imposed by subsection (a) shall be $1,000.

                          (2) Corporations

        If the return, affidavit, claim, or other document relates to 
    the tax liability of a corporation, the amount of the penalty 
    imposed by subsection (a) shall be $10,000.

              (3) Only 1 penalty per person per period

        If any person is subject to a penalty under subsection (a) with 
    respect to any document relating to any taxpayer for any taxable 
    period (or where there is no taxable period, any taxable event), 
    such person shall not be subject to a penalty under subsection (a) 
    with respect to any other document relating to such taxpayer for 
    such taxable period (or event).

(c) Activities of subordinates

                           (1) In general

        For purposes of subsection (a), the term ``procures'' includes--
            (A) ordering (or otherwise causing) a subordinate to do an 
        act, and
            (B) knowing of, and not attempting to prevent, participation 
        by a subordinate in an act.

                           (2) Subordinate

        For purposes of paragraph (1), the term ``subordinate'' means 
    any other person (whether or not a director, officer, employee, or 
    agent of the taxpayer involved) over whose activities the person has 
    direction, supervision, or control.

(d) Taxpayer not required to have knowledge

    Subsection (a) shall apply whether or not the understatement is with 
the knowledge or consent of the persons authorized or required to 
present the return, affidavit, claim, or other document.

(e) Certain actions not treated as aid or assistance

    For purposes of subsection (a)(1), a person furnishing typing, 
reproducing, or other mechanical assistance with respect to a document 
shall not be treated as having aided or assisted in the preparation of 
such document by reason of such assistance.

(f) Penalty in addition to other penalties

                           (1) In general

        Except as provided by paragraphs (2) and (3), the penalty 
    imposed by this section shall be in addition to any other penalty 
    provided by law.

           (2) Coordination with return preparer penalties

        No penalty shall be assessed under subsection (a) or (b) of 
    section 6694 on any person with respect to any document for which a 
    penalty is assessed on such person under subsection (a).

                 (3) Coordination with section 6700

        No penalty shall be assessed under section 6700 on any person 
    with respect to any document for which a penalty is assessed on such 
    person under subsection (a).

(Added Pub. L. 97-248, title III, Sec. 324(a), Sept. 3, 1982, 96 Stat. 
615; amended Pub. L. 101-239, title VII, Sec. 7735(a), (b), Dec. 19, 
1989, 103 Stat. 2403.)


                               Amendments

    1989--Subsec. (a)(1). Pub. L. 101-239, Sec. 7735(a)(1), struck out 
``in connection with any matter arising under the internal revenue 
laws'' after ``other document''.
    Subsec. (a)(2). Pub. L. 101-239, Sec. 7735(a)(2), inserted ``(or has 
reason to believe)'' after ``who knows''.
    Subsec. (a)(3). Pub. L. 101-239, Sec. 7735(a)(3), substituted 
``would result'' for ``will result''.
    Subsec. (f)(1). Pub. L. 101-239, Sec. 7735(b)(2), substituted 
``paragraphs (2) and (3)'' for ``paragraph (2)''.
    Subsec. (f)(3). Pub. L. 101-239, Sec. 7735(b)(1), added par. (3).


                    Effective Date of 1989 Amendment

    Section 7735(c) of Pub. L. 101-239 provided that: ``The amendments 
made by this section [amending this section] shall take effect on 
December 31, 1989.''


                             Effective Date

    Section 324(c) of Pub. L. 97-248 provided that: ``The amendments 
made by this section [enacting this section] shall take effect on the 
day after the date of the enactment of this Act [Sept. 3, 1982].''

                  Section Referred to in Other Sections

    This section is referred to in sections 6703, 7408, 7422 of this 
title; title 28 section 1509; title 31 section 330.
