Ezel / IRS Rulings / 201114024

CCA 201114024: The section 6707A penalty is based on the penalized person's return

Number
201114024
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
Penalty for Failure to Include Reportable Transaction Information with Return
Topics
Procedure, penalties, and administration
Code sections
§ 6707A, § 6901
Ruling dated
February 28, 2011
Publicly released
April 8, 2011
Source
View Official PDF

Apply this to your situation

This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2011, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2011
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It is advice from the IRS Office of Chief Counsel to IRS personnel on the facts they presented, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
View official IRS release (PDF)

Plain-English summary

Chief Counsel Advice addressed how to calculate the penalty under IRC § 6707A when the person being penalized is a transferee. The advice agreed with the field that the calculation is based on the transferee's return. Although the transferee may owe additional tax under IRC § 6901, that liability results from receiving the transferor's assets and is derivative. The advice is useful for identifying which return controls the penalty calculation in this situation.

Ruling snapshot

  • Question: Is the section 6707A penalty calculated from the return of the transferee who is subject to the penalty?
  • Outcome: Advice given.
  • Key authorities: IRC §§ 6707A and 6901.

Full text (IRS public release)

ID: CCA_2011022813313566 Number: 201114024
Release Date: 4/8/2011
Office: ----------

UILC: 6707A.00-00

From: ----------------------------
Sent: Monday, February 28, 2011 1:31:40 PM
To: ------------------
Cc: ---------------------------------------------------------------------------------------------------------------------------
-------------------------------------------
Subject: RE: 6707A calculation request ---------

I agree with the field. The section 6707A penalty is calculated based on the return of the person against whom the penalty is being imposed, which in this case is the transferee. Although the transferee may be liable for the additional tax under section 6901, that liability is a result of the person's receipt of assets of the transferor, i.e., a derivative liability. ------------------
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