Small Business Jobs and Credit Act of 2010 presented to President

The bill containing relief for 6707A penalties has passed the Senate and the House and is awaiting the President’s signature. Following is the text of the relevant part of the bill:

PART IV–PROMOTING SMALL BUSINESS FAIRNESS

SEC. 2041. LIMITATION ON PENALTY FOR FAILURE TO DISCLOSE REPORTABLE TRANSACTIONS BASED ON RESULTING TAX BENEFITS.

(a) In General- Subsection (b) of section 6707A of the Internal Revenue Code of 1986 is amended to read as follows:

‘(b) Amount of Penalty-

‘(1) IN GENERAL- Except as otherwise provided in this subsection, the amount of the penalty under subsection (a) with respect to any reportable transaction shall be 75 percent of the decrease in tax shown on the return as a result of such transaction (or which would have resulted from such transaction if such transaction were respected for Federal tax purposes).

‘(2) MAXIMUM PENALTY- The amount of the penalty under subsection (a) with respect to any reportable transaction shall not exceed–

‘(A) in the case of a listed transaction, $200,000 ($100,000 in the case of a natural person), or

‘(B) in the case of any other reportable transaction, $50,000 ($10,000 in the case of a natural person).

‘(3) MINIMUM PENALTY- The amount of the penalty under subsection (a) with respect to any transaction shall not be less than $10,000 ($5,000 in the case of a natural person).’.

(b) Effective Date- The amendment made by this section shall apply to penalties assessed after December 31, 2006.

6707a