§6700 — Promoting abusive tax shelters, etc.
72 cases·18 followed·4 distinguished·6 overruled·44 cited—25% support
Statute Text — 26 U.S.C. §6700
Any person who—
organizes (or assists in the organization of)—
a partnership or other entity,
any investment plan or arrangement, or
any other plan or arrangement, or
participates (directly or indirectly) in the sale of any interest in an entity or plan or arrangement referred to in subparagraph (A), and
makes or furnishes or causes another person to make or furnish (in connection with such organization or sale)—
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
a gross valuation overstatement as to any material matter,
shall pay, with respect to each activity described in paragraph (1), a penalty equal to $1,000 or, if the person establishes that it is lesser, 100 percent of the gross income derived (or to be derived) by such person from such activity. For purposes of the preceding sentence, activities described in paragraph (1)(A) with respect to each entity or arrangement shall be treated as a separate activity and participation in each sale described in paragraph (1)(B) shall be so treated. Notwithstanding the first sentence, if an activity with respect to which a penalty imposed under this subsection involves a statement described in paragraph (2)(A), the amount of the penalty shall be equal to 50 percent of the gross income derived (or to be derived) from such activity by the person on which the penalty is imposed.
For purposes of this section, the term “gross valuation overstatement” means any statement as to the value of any property or services if—
the value so stated exceeds 200 percent of the amount determined to be the correct valuation, and
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.
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.
The penalty imposed by this section shall be in addition to any other penalty provided by law.
72 Citing Cases
485, 493 (2017), supplementing and overruling in part 147 T.C.
485, 493 (2017), supplementing and overruling in part 147 T.C.
The language ofsection 6700 on which the Court ofAppeals opined in Bond has been superseded by an amendment to section 6700.
The language ofsection 6700 on which the Court ofAppeals opined in Bond has been superseded by an amendment to section 6700.
(cid:16)042 A number ofFederal courts have considered whethe the period of limitations in section 6501(a) is applicable for the assessm nt ofpenalties under sections 6700 and 6701. See Mullikin, 952 F.2d at 929 (holding that no period of limitations governs the assessment ofsection 6701 penaltie ); Sage v. United States, 908 F.2d 18, 25 (5th Cir. 1990) (holding that the period oflimitations in section 6501(a) does not apply for the assessment ofsectioii 6700 penalties); Kraye v.
Civil Penalties and 1996 Tax Liability On October 5, 2009, respondent assessed civil penalties against petitioner for promoting an abusive tax shelter pursuant to section 6700, as follows: Penalty Year sec.
Section 6700 provides for the.imposition ofa penalty on any person who promotes an abusive tax shelter.
For these reasons, courts have uniformly rejected the argument that this provision restricts assessment of “assessable penalties” under the Code, including penalties assessed under sections 6700 and 6701.5 Moreover, 28 U.S.C. sec. 2462 by its terms applies “[e]xcept as otherwise provided by Act of Congress.” In the case of actions to collect tax penalties, Congress has “otherwise provided”--namely in section 6502(a), which provides that an assessed tax “may be collected by levy or by a proceedin
Jurisdiction The section 6.700 penalty is governed by the procedural rules of section 6703,2 which generally removes section 6700 penalty assessments from the deficiency jurisdiction of this Court . However, section 6330(d)(1)3 provides this Court with jurisdiction to review an appeal from the Commissioner's determination to proceed with collection activity regardless of the type of underlying tax involved . We have held that our jurisdiction includes the right to review the Commissioner's lien
Jurisdiction The section 6700 penalty is governed by the procedural rules of section 6703,2 which generally removes section 6700 penalty assessments from the deficiency jurisdiction of this Court . However, section 6330(d)(1)3 provides this Court with jurisdiction to review an appeal from the Commissioner's determination to proceed with collection activity regardless of the type of underlying tax involved . We have held that our jurisdiction includes the right to review the Commissioner's lien a
r’s hands). In 1995, the Commissioner determined that Henkell and EPS were engaged in promoting illegal tax shelters designed to claim excessive and/or improper deductions and assessed penalties of $1,254,000 each against Henkell and EPS pursuant to section 6700. In 1997, the Commissioner obtained from the U.S. District Court for the Eastern District of California an injunction preventing EPS and Henkell from rendering tax shelter advice. In United States v. Estate Pres. Servs., 202 F.3d 1093 (9
an indictment. However, in October 1989, the Commissioner assessed promoter penalties of $1,545,201 and $2,330,000 against Mr. Kersting, pursuant to sections 6700 and 6701, respectively, for the years 1982 through 1988.9 The District Court for the 9 Sec. 6700 provides for imposition of a penalty of a percentage of the gross income derived from promoting an abusive tax shelter, and sec. 6701 provides for imposition of a penalty (continued...) - 19 - District of Hawaii sustained the Commissioner's
an indictment. However, in October 1989, the Commissioner assessed promoter penalties of $1,545,201 and $2,330,000 against Mr. Kersting, pursuant to sections 6700 and 6701, respectively, for the years 1982 through 1988.9 The District Court for the 9 Sec. 6700 provides for imposition of a penalty of a percentage of the gross income derived from promoting an abusive tax shelter, and sec. 6701 provides for imposition of a penalty (continued...) - 19 - District of Hawaii sustained the Commissioner's
The United States filed a counterclaim in the amount of $2,329,700 to reduce the section 6701 penalties - 6 - to judgment, and it brought a separate action to reduce the section 6700 penalties to judgment (Kersting II, Civ.
an indictment. However, in October 1989, the Commissioner assessed promoter penalties of $1,545,201 and $2,330,000 against Mr. Kersting, pursuant to sections 6700 and 6701, respectively, for the years 1982 through 1988.9 The District Court for the 9 Sec. 6700 provides for imposition of a penalty of a percentage of the gross income derived from promoting an abusive tax shelter, and sec. 6701 provides for imposition of a penalty (continued...) - 19 - District of Hawaii sustained the Commissioner's
an indictment. However, in October 1989, the Commissioner assessed promoter penalties of $1,545,201 and $2,330,000 against Mr. Kersting, pursuant to sections 6700 and 6701, respectively, for the years 1982 through 1988.9 The District Court for the 9 Sec. 6700 provides for imposition of a penalty of a percentage of the gross income derived from promoting an abusive tax shelter, and sec. 6701 provides for imposition of a penalty (continued...) - 19 - District of Hawaii sustained the Commissioner's
an indictment. However, in October 1989, the Commissioner assessed promoter penalties of $1,545,201 and $2,330,000 against Mr. Kersting, pursuant to sections 6700 and 6701, respectively, for the years 1982 through 1988.9 The District Court for the 9 Sec. 6700 provides for imposition of a penalty of a percentage of the gross income derived from promoting an abusive tax shelter, and sec. 6701 provides for imposition of a penalty (continued...) - 19 - District of Hawaii sustained the Commissioner's
were identified by respondent as persons who had violated section 6700 by promoting or selling partnerships or other arrangements that included gross valuation overstatements.
The civil lawsuits were later consolidated and sought a refund of penalties asserted by the IRS under section 6700 for tax years 2010 through 2016 in relation to the plaintiffs’ promotion and management of captive insurance arrangements.
Regarding the section 6700 penalty for promoters of abusive tax shelters, the report states: “The penalty for promoting an abusive tax shelter is an assessable penalty .
Meyer, holding that he had engaged in conduct penalizable under section 6700 by promoting the Ultimate Tax Plan to customers.
2021-117, at *16, *18, Congress provided a postassessment limitations period for section 6700 assessable penalties: Section 6700 penalties for promoting abusive tax shelters bear no relationship to the filing of a tax return (by the promoter or anyone else).
se excise taxes on improper ex- penditures by public charities. Section 4941 imposes an excise tax on self-dealing by private foundations. Sections 6671 through 6720 impose assessable penalties for such activities as promoting abusive tax shelters (sec. 6700), aiding and abet- ting understatements oftax (sec. 6701), failing to furnish information about report- able transactions (sec. 6707), and furnishing fraudulent statements to various par- ties (secs. 6690, 6720). And section 6663(a) imposes
eal in this case would normally lie, was asked to decide whether to sustain an injunction under section 7408 that the U.S. District Court for the District ofUtah had imposed against an individual for promoting an abusive tax shelter in viola- tion ofsection 6700. In order to decide that issue, the Court ofAppeals con- sidered whether a minister ofa church is required to include in income and pay tax - 25 - [*25] on income that he/she earns in his/her normal employment as a minister and assigns t
161 (2015) (upholding Tax Courtjurisdiction to review section 6700 penalties in the CDP context).
s the trustee ofthe Millennium plan since the plan's inception. The Millennium plan's assets are held by the trustee with the assistance ofan independent financial 7At the time oftrial Ms. Barrow, Mr. Bev in, and Mr. Ridge were the subjects ofan IRS sec. 6700 investigation. Mr. Lloyd represented Ms. Barrow with regard to the sec. 6700 investigation. - 34 - adviser. The trustee is responsible for functions such as recordkeeping, including maintaining complete and accurate account records for all
Respondent's Investigation of KPMG _for Section 6700 Liability Respondent sent a letter to KPMG in October 2001, notifying KPMG that he was considering imposing penalties on KPMG for promoting abusive tax shelters.
Respondent’s Investigation of KPMG for Section 6700 Liability Respondent sent a letter to KPMG in October 2001, notifying KPMG that he was considering imposing penalties on KPMG for promoting abusive tax shelters.
- 13 - tax shelter in violation of section 6700 .8 The theory was that Derivium "falsely advise[d] customers that they can receive 90% of the value of their securities without paying income tax on capital gains." The government asserted that Derivium made false i statements about the tax benefits of its product, including saying that it was marketing loans with potentially indefinit
2009) (in an ,action involving `section 6700 promoter penalties, Chief Judge Norton for the-U .S..
2009) (in an action involving section 6700 promoter penalties, Chief Judge Norton for the U.S.
helters to its private clients and partners during the tax year at issue . Respondent served summonses on KPMG in 2002 requesting documents and testimony relevant to determining KPMG's liability for penalties for promoting abusive tax shelters under section 6700 . The summonses issued to KPMG covered Son of BOSS transactions, but respondent did not then contact petitioners about their claimed losses . Petitioners subsequently filed an amended Federal tax return for 2001 in March 2004 (amended re
Richardson under section 6700, which imposes a civil penalty for the promotion of abusive tax shelters.
Richardson under section 6700, which imposes a civil penalty for the promotion of abusive tax shelters.
In 1983, the IRS determined that Roberts had violated section 6700 by promoting and selling limited partnership interests in plastics recycling partnerships (the partnerships).
Chisum’s conduct in this and other cases has created an appropriate occasion for imposition of tax shelter promoter/operator penalties under section 6700 or section 6701, cf., e.g., Kersting v.
District Court for the District of Minnesota entered a Final Judgment of Permanent Injunction as to James and Joan Noske, finding that they had engaged in conduct subject to penalty under section 6700 and enjoining them from organizing, assisting, selling, or otherwise promoting business trusts as abusive tax shelters.
District Court for the District of Minnesota entered a Final Judgment of Permanent Injunction as to James and Joan Noske, finding that they had engaged in conduct subject to penalty under section 6700 and enjoining them from organizing, assisting, selling, or otherwise promoting business trusts as abusive tax shelters.