Page:United States Statutes at Large Volume 96 Part 1.djvu/653

 PUBLIC LAW 97-248—SEPT. 3, 1982

96 STAT. 611

(among other relevant factors) the ability of the taxpayer to comply at a reasonable cost with such a filing requirement."

Subtitle C—Abusive Tax Shelters, Etc.; Substantial Underpayments; False Documents; Frivolous Returns PART I—ABUSIVE TAX SHELTERS, ETC. SEC. 320. PENALTY FOR PROMOTING ABUSIVE TAX SHELTERS, ETC. (a) GENERAL RULE.—Subchapter B of chapter 68 (relating to

assessable penalties) is amended by adding at the end thereof the following new section: "SEC. 6700. PROMOTING ABUSIVE TAX SHELTERS, ETC.

"(a) IMPOSITION OF PENALTY.—Any person who— "(I)(A) organizes (or assists in the organization of)— "(i) a partnership or other entity, "(ii) any investment plan or arrangement, or "(iii) any other plan or arrangement, or "(B) participates in the sale of any interest in an entity or plan or arrangement referred to in subparagraph (A), and "(2) makes or furnishes (in connection with such organization or sale)— "(A) a statement with respect to the allowability of any deduction or credit, the excludability of any income, or the securing of any other tax benefit by reason of holding an interest in the entity or participating in the plan or arrangement which the person knows or has reason to know is false or fraudulent as to any material matter, or "(B) a gross valuation overstatement as to any material matter, shall pay a penalty equal to the greater of $1,000 or 10 percent of the gross income derived or to be derived by such person from such activity. "(b) RULES RELATING TO PENALTY FOR GROSS VALUATION OVERSTATEMENTS.— "(1) GROSS VALUATION OVERSTATEMENT DEFINED.—For pur-

poses of this section, the term 'gross valuation overstatement' means any statement as to the value of any property or services if— "(A) the value so stated exceeds 200 percent of the amount determined to be the correct valuation, and "(B) the value of such property or services is directly related to the amount of any deduction or credit allowable under chapter 1 to any participant. "(2) AUTHORITY TO WAIVE.—The Secretary may waive all or any part of the penalty provided by subsection (a) with respect to any gross valuation overstatement on a showing that there was a reasonable basis for the valuation and that such valuation was made in good faith. "(c) PENALTY IN ADDITION TO OTHER PENALTIES.—The penalty imposed by this section shall be in addition to any other penalty provided by law."

26 USC 6700.

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