Page:United States Statutes at Large Volume 111 Part 1.djvu/950

 Ill STAT. 926 PUBLIC LAW 105-34—AUG. 5, 1997 "(ii) elects to have this paragraph apply with respect to that item. "(3) EFFECT OF FAILURE TO NOTIFY. —In any case— " (A) described in subparagraph (A)(i)(I) of paragraph (2), and "(B) in which the beneficiary does not comply with subparagraph (A)(ii) of paragraph (2), any adjustment required to m^e the treatment of the items by such beneficiary consistent with the treatment of the items on the applicable entity's return shall be treated as arising out of mathematical or clerical errors and assessed according to section 6213(b)(1). Paragraph (2) of section 6213(b) shall not apply to any assessment referred to in the preceding sentence. "(4) DEFINITIONS.— For purposes of this subsection— "(A) REPORTED ITEM.—The term 'reported item' means any item for which information is required to be furnished under subsection (a). "(B) APPLICABLE ENTITY.— The term 'applicable entity* means the estate or trust of which the taxpayer is the beneficiary. "(5) ADDITION TO TAX FOR FAILURE TO COMPLY WITH SEC- TION.— For addition to tax in the case of a beneficiary's negligence in connection with, or disregard of, the requirements of this section, see part II of subchapter A of chapter 68.". (b) FOREIGN TRUSTS. — Subsection (d) of section 6048 (relating to information with respect to certain foreign trusts) is amended by adding at the end the following new paragraph: " (5) UNITED STATES PERSON'S RETURN MUST BE CONSISTENT WITH TRUST RETURN OR SECRETARY NOTIFIED OF INCONSIST- ENCY.—Rules similar to the rules of section 6034A(c) shall apply to items reported by a trust under subsection (b)(1)(B) and to United States persons referred to in such subsection.". 26 USC 6034A (c) EFFECTIVE DATE. —The amendments made by this section note. shall apply to returns of beneficiaries and owners filed after the date of the enactment of this Act. SEC. 1028. REGISTRATION AND OTHER PROVISIONS RELATING TO CON- FIDENTIAL CORPORATE TAX SHELTERS. (a) IN GENERAL. —Section 6111 (relating to registration of tax shelters) is amended by redesignating subsections (d) and (e) as subsections (e) and (f), respectively, and by inserting after subsection (c) the following new subsection: "(d) CERTAIN CONFIDENTIAL ARRANGEMENTS TREATED AS TAX SHELTERS.— "(1) IN GENERAL.—For purposes of this section, the term 'tax shelter' includes any entity, plan, arrangement, or transaction— "(A) a significant purpose of the structure of which is the avoidance or evasion of Federal income tax for a direct or indirect participant which is a corporation, "(B) which is offered to any potential participant under conditions of confidentiality, and "(C) for which the tax shelter promoters may receive fees in excess of $100,000 in the aggregate.

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