CCA 200909057: Temporary one-dollar increase applied to partnership-return penalty

Plain-English summary

Chief Counsel explained changes to the section 6698(b) penalty for failing to file a partnership return. The email says one public law raised the base penalty from $50 to $85, while a separate public law added $1 for a section 6031 return covering a tax year beginning in 2008. It also described how a pending bill would raise the base amount again if enacted. The one-dollar addition applied only to the 2008 tax year under the advice.

Ruling snapshot

• Question: How did separate legislative changes affect the section 6698(b) partnership-return penalty?
• Outcome: Advice given: apply the base penalty increase and add $1 for a return covering a tax year beginning in 2008.
• Key authorities: IRC §§ 6031 and 6698(b); P.L. 110-141; P.L. 110-142.

Full text (IRS public release)

ID: CCA_2008121910552053 Number: 200909057
Release Date: 2/27/2009
Office: --------------
UILC: 6698.00-00

From: --------------------
Sent: Friday, December 19, 2008 10:55:22 AM
To: ----------------------
Cc: ---------------------------------------------------------------------------------------------------------------------------
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Subject: FW: Your Question on IRC 6698

Hello,

We agree with -------------------- analysis of the section 6698(b) penalty.

P.L. 110-142 amended section 6698(b), increasing the penalty for failure to file a partnership return from
$50 to $85. If H.R. 7327 is signed into law, it will amend section 6698(b) again, increasing the penalty for failure to file from $85 to $89. H.R. 7327 will apply to returns required to be filed after December 31, 2008.

P.L. 110-141 did not amend section 6698(b) and imposes an independent increase to the section 6698(b) penalty. P.L. 110-141 increased the section 6698(b) penalty by $1 for any return that was required to be filed under section 6031 for a taxable year beginning in 2008. Thus, the section 6698(b) penalty, as amended by P.L. 110-142, would increase from $85 to $86. If H.R. 7327 becomes law, the section 6698(b) penalty would increase from $89 to $90. The $1 increases only applies to the 2008 tax year.

Here is a chronologic breakdown of the penalty rates assuming H.R. 7317 becomes law:

Returns required to be filed on or before December 20, 2007: $50 Returns required to be filed after December 20, 2007 but on or before December 31, 2008: $85 Returns required to be filed after December 3, 2008: $89 For a return required to be filed for a taxable year beginning in 2008: add $1 to the above rate

If you have any further questions please feel free to contact me at ----------. Have a wonderful holiday season.

Regards,
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