Page:United States Statutes at Large Volume 103 Part 3.djvu/327

 ^ PUBLIC LAW 101-239—DEC. 19, 1989 103 STAT. 2395 (b) REPORT.— Not later than July 1, 1990, the Comptroller General shall submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate a report on the stud^ conducted under subsection (a), together with such recommendations as he may deem advisable. PART II—REVISION OF ACCURACY-RELATED PENALTIES SEC. 7721. REVISION OF ACCURACY-RELATED PENALTIES. (a) GENERAL RULE. —Subchapter A of chaj^ter 68 (relating to addi- tions to the tax and additional amounts) is amended by striking section 6662 and inserting the following: "PART II—ACCURACY-RELATED AND FRAUD PENALTIES \ "Sec. 6662. Imposition of accuracy-related penalty. "Sec. 6663. Imposition of fraud penalty. "Sec. 6664. Definitions and special rules. " SEC. 6662. IMPOSITION OF ACCURACY-RELATED PENALTY. "(a) iMPOsmoN OF PENALTY.—If this section applies to any portion of an underpayment of tax required to be shown on a return, there shall be added to the t^c an amount equal to 20 percent of the portion of the undeipayment to which this section applies. "(b) PORTION OP UNDERPAYMENT TO WHICH SECTION APPLIES.— This section shall apply to the portion of any underpayment which is attributable to 1 or more of the following: "(1) Negligence or disr^ard of rules or r^ulations. "(2) Any substantial understatement of income tax. "(3) Any substantial valuation overstatement under chap- ter 1. "(4) Any substantial overstatement of pension liabilities. "(5) Any substantial estate or gift tax valuation understate- ment. This section shall not apply to any portion of an underpa3anent on which a penalty is imposed under section 6663. "(c) NEGUGENCE.— For purposes of this section, the term 'n^- ligence' includes any failure to make a reasonable attempt to comply with the provisions of this title, and tibe term 'disr^ard' includes any careless, reckless, or intentional disr^ard. "(d) SUBSTANTIAL UNDERSTATEMENT OF INCOME TAX.— "(1) SUBSTANTIAL UNDERSTATEMENT. — "(A) IN GENERAL. — For purposes of this section, there is a substantial understatement of income tax for any taxable year if the amount of the tmderstatement 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 CORPORATIONS. — In the case of a corporation other than an S corporation or a personal holding company (as defined in section 542), paragraph (1) shall be applied by substituting "$10,000'^ for^'$5,000". "(2) UNDERSTATEMENT.—

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