Section 694 Temporary Regulations - Part II

Par. 53. Section 31.6694-4 is added to read as follows:



§31.6694-4 Extension of period of collection when tax return preparer pays 15 percent of a penalty for understatement of taxpayer's liability and certain other procedural matters.

(a) In general. For rules relating to the extension of period of collection when a tax return preparer who prepared a return or claim for refund for employment tax under chapters 21 through 25 of subtitle C of the Internal Revenue Code pays 15 percent of a penalty for understatement of taxpayer's liability, and procedural matters relating to the investigation, assessment and collection of the penalties under section 6694(a) and (b), the rules under §1.6694-4 of this chapter will apply.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 54. Section 31.6695-1 is added to read as follows:



§31.6695-1 Other assessable penalties with respect to the preparation of tax returns for other persons.

(a) In general. A person who is a tax return preparer of any return or claim for refund of employment tax under chapters 21 through 25 of subtitle C of the Internal Revenue Code (Code) shall be subject to penalties for failure to furnish a copy to the taxpayer under section 6695(a) of the Code, failure to sign the return under section 6695(b) of the Code, failure to furnish an identification number under section 6695(c) of the Code, failure to retain a copy or list under section 6695(d) of the Code, failure to file a correct information return under section 6695(e) of the Code, and negotiation of a check under section 6695(f) of the Code, in the manner stated in §1.6695-1 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 55. Section 31.6696-1 is added to read as follows:



§31.6696-1 Claims for credit or refund by tax return preparers.

(a) In general. For rules for claims for credit or refund by a tax return preparer who prepared a return or claim for refund for employment tax under chapters 21 through 25 of subtitle C of the Internal Revenue Code, the rules under §1.6696-1 of this chapter will apply.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 56. Section 31.7701-1 is added to read as follows:



§31.7701-1 Tax return preparer.

(a) In general. For the definition of a tax return preparer, see §301.7701-15 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.



PART 40 --EXCISE TAX PROCEDURAL REGULATIONS

Par. 57. The authority citation for part 40 is amended by adding entries in numerical order to read in part as follows:

Authority: 26 U.S.C. 7805 * * *

Section 40.6060-1 also issued under 26 U.S.C. 6060(a). * * *

Section 40.6109-2 also issued under 26 U.S.C. 6109(a). * * *

Section 40.6695-1 also issued under 26 U.S.C. 6695(b). * * *

Section 40.6695-2 also issued under 26 U.S.C. 6695(g). * * *

Par. 58. Section 40.6060-1 is added to read as follows:



§40.6060-1 Reporting requirements for tax return preparers.

(a) In general. A person that employs (or engages) one or more tax return preparers to prepare a return or claim for refund of excise tax under chapters 31, 32 (other than section 4181), 33, 34, 36 (other than section 4461), 38, and 39 of subtitle D of the Internal Revenue Code, other than for the person, at any time during a return period, shall satisfy the recordkeeping and inspection requirements in the manner stated in §1.6060-1 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 59. Section 40.6107-1 is added to read as follows:



§40.6107-1 Tax return preparer must furnish copy of return to taxpayer and must retain a copy or record.

(a) In general. A person who is a signing tax return preparer of any return or claim for refund of excise tax under chapters 31, 32(other than section 4181), 33, 34, 36 (other than section 4461), 38, and 39 of subtitle D of the Internal Revenue Code shall furnish a completed copy of the return or claim for refund to the taxpayer, and retain a completed copy or record in the manner stated in §1.6107-1 of this chapter.

(b) Effective/applicability date. This section is applicable for returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 60. Section 40.6109-1 is added to read as follows:



§40.6109-1 Tax return preparers furnishing identifying numbers for returns or claims for refund.

(a) In general. Each return or claim for refund of excise tax under chapters 31, 32 (other than section 4181), 33, 34, 36(other than section 4461), 38, and 39 of subtitle D of the Internal Revenue Code prepared by one or more signing tax return preparers must include the identifying number of the preparer required by §1.6695-1(b) of this chapter to sign the return or claim for refund in the manner stated in §1.6109-2 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 61. Section 40.6694-1 is added to read as follows:



§40.6694-1 Section 6694 penalties applicable to tax return preparer.

(a) In general. For general definitions regarding section 6694 penalties applicable to preparers of returns or claims for refund of excise tax under chapters 31, 32(other than section 4181), 33, 34, 36 (other than section 4461), 38, and 39 of subtitle D of the Internal Revenue Code, see §1.6694-1 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 62. Section 40.6694-2 is added to read as follows:



§40.6694-2 Penalties for understatement due to an unreasonable position.

(a) In general. A person who is a tax return preparer of any return or claim for refund of excise tax under chapters 31, 32 (other than section 4181), 33, 34, 36 (other than section 4461), 38, and 39 of subtitle D of the Internal Revenue Code (Code) shall be subject to penalties under section 6694(a) of the Code in the manner stated in §1.6694-2 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 63. Section 40.6694-3 is added to read as follows:



§40.6694-3 Penalty for understatement due to willful, reckless, or intentional conduct.

(a) In general. A person who is a tax return preparer of any return or claim for refund of excise tax under chapters 31, 32 (other than section 4181), 33, 34, 36 (other than section 4461), 38, and 39 of subtitle D of the Internal Revenue Code (Code) shall be subject to penalties under section 6694(b) of the Code in the manner stated in §1.6694-3 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 64. Section 40.6694-4 is added to read as follows:



§40.6694-4 Extension of period of collection when tax return preparer pays 15 percent of a penalty for understatement of taxpayer's liability and certain other procedural matters.

(a) In general. For rules relating to the extension of period of collection when a tax return preparer who prepared a return or claim for refund for excise tax under chapters 31, 32 (other than section 4181), 33, 34, 36 (other than section 4461), 38, and 39 of subtitle D of the Internal Revenue Code pays 15 percent of a penalty for understatement of taxpayer's liability, and procedural matters relating to the investigation, assessment and collection of the penalties under section 6694(a) and (b), the rules under §1.6694-4 of this chapter will apply.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 65. Section 40.6695-1 is added to read as follows:



§40.6695-1 Other assessable penalties with respect to the preparation of tax returns for other persons.

(a) In general. A person who is a tax return preparer of any return or claim for refund of excise tax under chapters 31, 32 (other than section 4181), 33, 34, 36 (other than section 4461), 38, and 39 of subtitle D of the Internal Revenue Code (Code) shall be subject to penalties for failure to furnish a copy to the taxpayer under section 6695(a) of the Code, failure to sign the return under section 6695(b) of the Code, failure to furnish an identification number under section 6695(c) of the Code, failure to retain a copy or list under section 6695(d) of the Code, failure to file a correct information return under section 6695(e) of the Code, and negotiation of a check under section 6695(f) of the Code, in the manner stated in §1.6695-1 of this chapter.

(b) Effective/applicability date. This section is applicable for returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 66. Section 40.6696-1 is added to read as follows:



§40.6696-1 Claims for credit or refund by tax return preparers.

(a) In general. For rules for claims for credit or refund by a tax return preparer who prepared a return or claim for refund for excise tax under chapters 31, 32 (other than section 4181), 33, 34, 36 (other than section 4461), 38, and 39 of subtitle D of the Internal Revenue Code, the rules under §1.6696-1 of this chapter will apply.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 67. Section 40.7701-1 is added to read as follows:



§40.7701-1 Tax return preparer.

(a) In general. For the definition of a tax return preparer, see §301.7701-15 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.



PART 41 --EXCISE TAX ON USE OF CERTAIN HIGHWAY MOTOR VEHICLES

Par. 68. The authority citation for part 41 is amended by adding entries in numerical order to read in part as follows:

Authority: 26 U.S.C. 7805 * * *

Section 41.6060-1 also issued under 26 U.S.C. 6060(a). * * *

Section 41.6109-2 also issued under 26 U.S.C. 6109(a). * * *

Section 41.6695-1 also issued under 26 U.S.C. 6695(b). * * *

Section 41.6695-2 also issued under 26 U.S.C. 6695(g). * * *

Par. 69. Section 41.6060-1 is added to read as follows:



§41.6060-1 Reporting requirements for tax return preparers.

(a) In general. A person that employs (or engages) one or more tax return preparers to prepare a return or claim for refund of excise tax under section 4481 of the Internal Revenue Code, other than for the person, at any time during a return period, shall satisfy the record keeping and inspection requirements in the manner stated in §1.6060-1 of this chapter.

(b) Effective/applicability date. This section is applicable for returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 70. Section 41.6107-1 is added to read as follows:



§41.6107-1 Tax return preparer must furnish copy of return to taxpayer and must retain a copy or record.

(a) In general. A person who is a signing tax return preparer of any return or claim for refund of excise tax section 4481 of the Internal Revenue Code shall furnish a completed copy of the return or claim for refund to the taxpayer, and retain a completed copy or record in the manner stated in §1.6107-1 of this chapter.

(b) Effective/applicability date. This section is applicable for returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 71. Section 41.6109-2 is added to read as follows:



§41.6109-2 Tax return preparers furnishing identifying numbers for returns or claims for refund filed after December 31, 2008.

(a) In general. Each excise tax return or claim for refund under section 4481 prepared by one or more signing tax return preparers must include the identifying number of the preparer required by §1.6695-1(b) of this chapter to sign the return or claim for refund in the manner stated in §1.6109-2 of this chapter.

(b) Effective/applicability date. This section is applicable for returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 72. Section 41.6694-1 is added to read as follows:



§41.6694-1 Section 6694 penalties applicable to tax return preparer.

(a) In general. For general definitions regarding section 6694 penalties applicable to preparers of tax returns or claims for refund, see §1.6694-1 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 73. Section 41.6694-2 is added to read as follows:



§41.6694-2 Penalties for understatement due to an unreasonable position.

(a) In general. A person who is a tax return preparer of any return or claim for refund of excise tax under section 4481 of the Internal Revenue Code (Code) shall be subject to penalties under section 6694(a) of the Code in the manner stated in §1.6694-2 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 74. Section 41.6694-3 is added to read as follows:



§41.6694-3 Penalty for understatement due to willful, reckless, or intentional conduct.

(a) In general. A person who is a tax return preparer of any return or claim for refund of excise tax under section 4481 of the Internal Revenue Code (Code) shall be subject to penalties under section 6694(b) of the Code in the manner stated in §1.6694-3 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 75. Section 41.6694-4 is added to read as follows:



§41.6694-4 Extension of period of collection when preparer pays 15 percent of a penalty for understatement of taxpayer's liability and certain other procedural matters.

(a) In general. For rules relating to the extension of period of collection when a tax return preparer who prepared a return or claim for refund for excise tax under section 4481 of the Internal Revenue Code pays 15 percent of a penalty for understatement of taxpayer's liability, and procedural matters relating to the investigation, assessment and collection of the penalties under section 6694(a) and (b), the rules under §1.6694-4 of this chapter will apply.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 76. Section 41.6695-1 is added to read as follows:



§41.6695-1 Other assessable penalties with respect to the preparation of tax returns for other persons.

(a) In general. A person who is a tax return preparer of any return or claim for refund of excise tax under section 4481 of the Internal Revenue Code (Code) shall be subject to penalties for failure to furnish a copy to the taxpayer under section 6695(a) of the Code, failure to sign a return under section 6695(b) of the Code, failure to furnish an identification number under section 6695(c) of the Code, failure to retain a copy or list under section 6695(d) of the Code, failure to file a correct information return under section 6695(e) of the Code, and negotiation of a check under section 6695(f) of the Code, in the manner stated in §1.6695-1 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 77. Section 41.6696-1 is added to read as follows:



§41.6696-1 Claims for credit or refund by tax return preparers.

(a) In general. For rules for claims for credit or refund by a tax return preparer who prepared a return or claim for refund for excise tax under section 4481 of the Internal Revenue Code, the rules under §1.6696-1 of this chapter will apply.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 78. Section 41.7701-1 is added to read as follows:



§41.7701-1 Tax return preparer.

(a) In general. For the definition of a tax return preparer, see §301.7701-15 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.



PART 44 --TAXES ON WAGERING; EFFECTIVE JANUARY 1, 1955

Par. 79. The authority citation for part 44 is amended by adding entries in numerical order to read in part as follows:

Authority: 26 U.S.C. 7805 * * *

Section 44.6060-1 also issued under 26 U.S.C. 6060(a). * * *

Section 44.6109-2 also issued under 26 U.S.C. 6109(a). * * *

Section 44.6695-1 also issued under 26 U.S.C. 6695(b). * * *

Section 44.6695-2 also issued under 26 U.S.C. 6695(g). * * *

Par. 80. Section 44.6060-1 is added to read as follows:



§44.6060-1 Reporting requirements for tax return preparers.

(a) In general. A person that employs (or engages) one or more tax return preparers to prepare a return or claim for refund of tax on wagers under sections 4401 or 4411 of the Internal Revenue Code, other than for the person, at any time during a return period, shall satisfy the record keeping and inspection requirements in the manner stated in §1.6060-1 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 81. Section 44.6107-1 is added to read as follows:



§44.6107-1 Tax return preparer must furnish copy of return to taxpayer and must retain a copy or record.

(a) In general. A person who is a signing tax return preparer of any return or claim for refund of tax on wagers under sections 4401 or 4411 of the Internal Revenue Code shall furnish a completed copy of the return or claim for refund to the taxpayer, and retain a completed copy or record in the manner stated in §1.6107-1 of this chapter.

(b) Effective/applicability date. This section is applicable for returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 82. Section 44.6109-1 is added to read as follows:



§44.6109-1 Tax return preparers furnishing identifying numbers for returns or claims for refund.

(a) In general. Each tax return or claim for refund of tax under sections 4401 or 4411 prepared by one or more signing tax return preparers must include the identifying number of the preparer required by §1.6695-1(b) of this chapter to sign the return or claim for refund in the manner stated in §1.6109-2 of this chapter.

(b) Effective/applicability date. This section is applicable for returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 83. Section 44.6694-1 is added to read as follows:



§44.6694-1 Section 6694 penalties applicable to tax return preparer.

(a) In general. For general definitions regarding section 6694 penalties applicable to preparers of wagering tax returns or claims for refund under sections 4401 or 4411, see §1.6694-1 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 84. Section 44.6694-2 is added to read as follows:



§44.6694-2 Penalties for understatement due to an unreasonable position.

(a) In general. A person who is a tax return preparer of any return or claim for refund of tax on wagers under sections 4401 or 4411 of the Internal Revenue Code (Code) shall be subject to penalties under section 6694(a) of the Code in the manner stated in §1.6694-2 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 85. Section 44.6694-3 is added to read as follows:



§44.6694-3 Penalty for understatement due to willful, reckless, or intentional conduct.

(a) In general. A person who is a tax return preparer of any return or claim for refund of tax on wagers under sections 4401 or 4411 of the Internal Revenue Code (Code) shall be subject to penalties under section 6694(b) of the Code in the manner stated in §1.6694-3 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 86. Section 44.6694-4 is added to read as follows:



§44.6694-4 Extension of period of collection when preparer pays 15 percent of a penalty for understatement of taxpayer's liability and certain other procedural matters.

(a) In general. For rules relating to the extension of period of collection when a tax return preparer who prepared a return or claim for refund for tax on wagers under sections 4401 or 4411 of the Internal Revenue Code pays 15 percent of a penalty for understatement of taxpayer's liability, and procedural matters relating to the investigation, assessment and collection of the penalties under section 6694(a) and (b), the rules under §1.6694-4 of this chapter will apply.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 87. Section 44.6695-1 is added to read as follows:



§44.6695-1 Other assessable penalties with respect to the preparation of tax returns for other persons.

(a) In general. A person who is a tax return preparer of any return or claim for refund of tax on wagers under sections 4401 or 4411 of the Internal Revenue Code (Code) shall be subject to penalties for failure to furnish a copy to the taxpayer under section 6695(a) of the Code, failure to sign the return under section 6695(b) of the Code, failure to furnish an identification number under section 6695(c) of the Code, failure to retain a copy or list under section 6695(d) of the Code, failure to file a correct information return under section 6695(e) of the Code, and negotiation of a check under section 6695(f) of the Code, in the manner stated in §1.6695-1 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 88. Section 44.6696-1 is added to read as follows:



§44.6696-1 Claims for credit or refund by tax return preparers.

(a) In general. For rules for claims for credit or refund by a tax return preparer who prepared a return or claim for refund for tax on wagers under sections 4401 or 4411 of the Internal Revenue Code, the rules under §1.6696- 1 of this chapter will apply.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 89. Section 44.7701-1 is added to read as follows:



§44.7701-1 Tax return preparer.

(a) In general. For the definition of a tax return preparer, see §301.7701-15 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.



PART 53 --FOUNDATION AND SIMILAR EXCISE TAXES

Par. 90. The authority citation for part 53 is amended by adding entries in numerical order to read in part as follows:

Authority: 26 U.S.C. 7805 * * *

Section 53.6060-1 also issued under 26 U.S.C. 6060(a). * * *

Section 53.6109-2 also issued under 26 U.S.C. 6109(a). * * *

Section 53.6695-1 also issued under 26 U.S.C. 6695(b). * * *

Section 53.6695-2 also issued under 26 U.S.C. 6695(g). * * *

Par. 91. Section 53.6060-1 is added to read as follows:



§53.6060-1 Reporting requirements for tax return preparers.

(a) In general. A person that employs (or engages) one or more tax return preparers to prepare a return or claim for refund of tax under Chapter 42 of the Internal Revenue Code, other than for the person, at any time during a return period, shall satisfy the record keeping and inspection requirements in the manner stated in §1.6060-1 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 92. Section 53.6107-1 is added to read as follows:



§53.6107-1 Tax return preparer must furnish copy of return to taxpayer and must retain a copy or record.

(a) In general. A person who is a signing tax return preparer of any return or claim for refund of tax under Chapter 42 of the Internal Revenue Code shall furnish a completed copy of the return or claim for refund to the taxpayer, and retain a completed copy or record in the manner stated in §1.6107-1 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 93. Section 53.6109-1 is added to read as follows:



§53.6109-1 Tax return preparers furnishing identifying numbers for returns or claims for refund filed.

(a) In general. Each tax return or claim for refund under Chapter 42 of the Internal Revenue Code prepared by one or more signing tax return preparers must include the identifying number of the preparer required by §1.6695-1(b) of this chapter to sign the return or claim for refund in the manner stated in §1.6109-2 of this chapter.

(b) Effective/applicability date. Paragraph (a) of this section is applicable to returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 94. Section 53.6694-1 is added to read as follows:



§53.6694-1 Section 6694 penalties applicable to tax return preparer.

(a) In general. For general definitions regarding section 6694 penalties applicable to preparers of tax returns or claims for refund under Chapter 42 of the Internal Revenue Code, see §1.6694-1 of this chapter.

(b) Effective/applicability date. Paragraph (a) of this section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 95. Section 53.6694-2 is added to read as follows:



§53.6694-2 Penalties for understatement due to an unreasonable position.

(a) In general. A person who is a tax return preparer of any return or claim for refund of tax under Chapter 42 of the Internal Revenue Code (Code) shall be subject to penalties under section 6694(a) of the Code in the manner stated in §1.6694-2 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 96. Section 53.6694-3 is added to read as follows:



§53.6694-3 Penalty for understatement due to willful, reckless, or intentional conduct.

(a) In general. A person who is a tax return preparer of any return or claim for refund of tax under Chapter 42 of the Internal Revenue Code (Code) shall be subject to penalties under section 6694(b) of the Code in the manner stated in §1.6694-3 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 97. Section 53.6694-4 is added to read as follows:



§53.6694-4 Extension of period of collection when tax return preparer pays 15 percent of a penalty for understatement of taxpayer's liability and certain other procedural matters.

(a) In general. For rules relating to the extension of period of collection when a tax return preparer who prepared a return or claim for refund of tax under Chapter 42 of the Internal Revenue Code pays 15 percent of a penalty for understatement of taxpayer's liability, and procedural matters relating to the investigation, assessment and collection of the penalties under section 6694(a) and (b), the rules under §1.6694-4 of this chapter will apply.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 98. Section 53.6695-1 is added to read as follows:



§53.6695-1 Other assessable penalties with respect to the preparation of tax returns for other persons.

(a) In general. A person who is a tax return preparer of any return or claim for refund of tax under Chapter 42 of the Internal Revenue Code (Code) shall be subject to penalties for failure to furnish a copy to the taxpayer under section 6695(a) of the Code, failure to sign the return under section 6695(b) of the Code, failure to furnish an identification number under section 6695(c) of the Code, failure to retain a copy or list under section 6695(d) of the Code, failure to file a correct information return under section 6695(e) of the Code, and negotiation of a check under section 6695(f) of the Code, in the manner stated in §1.6695-1 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 99. Section 53.6696-1 is added to read as follows:



§53.6696-1 Claims for credit or refund by tax return preparers.

(a) In general. For rules for claims for credit or refund by a tax return preparer who prepared a return or claim for refund for tax under Chapter 42 of the Internal Revenue Code, the rules under §1.6696-1 of this chapter will apply.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 100. Section 53.7701-1 is added to read as follows:



§53.7701-1 Tax return preparer.

(a) In general. For the definition of a tax return preparer, see §301.7701-15 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.



PART 54 --PENSION EXCISE TAXES

Par. 101. The authority citation for part 54 is amended by adding entries in numerical order to read in part as follows:

Authority: 26 U.S.C. 7805* * *

Section 54.6060-1 also issued under 26 U.S.C. 6060(a). * * *

Section 54.6109-2 also issued under 26 U.S.C. 6109(a). * * *

Section 54.6695-1 also issued under 26 U.S.C. 6695(b). * * *

Section 54.6695-2 also issued under 26 U.S.C. 6695(g). * * *

Par. 102. Section 54.6060-1 is added to read as follows:



§54.6060-1 Reporting requirements for tax return preparers.

(a) In general. A person that employs (or engages) one or more tax return preparers to prepare a return or claim for refund under Chapter 43 of subtitle D of the Internal Revenue Code, other than for the person, at any time during a return period, shall satisfy the record keeping and inspection requirements in the manner stated in §1.6060-1 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 103. Section 54.6107-1 is added to read as follows:



§54.6107-1 Tax return preparer must furnish copy of return to taxpayer and must retain a copy or record.

(a) In general. A person who is a signing tax return preparer of any return or claim for refund of tax under Chapter 43 of subtitle D of the Internal Revenue Code, shall furnish a completed copy of the return or claim for refund to the taxpayer, and retain a completed copy or record in the manner stated in §1.6107-1 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 104. Section 54.6109-1 is added to read as follows:



§54.6109-1 Tax return preparers furnishing identifying numbers for returns or claims for refund filed.

(a) In general. Each tax return or claim for refund of tax under Chapter 43 of subtitle D prepared by one or more signing tax return preparers must include the identifying number of the preparer required by §1.6695-1(b) of this chapter to sign the return or claim for refund in the manner stated in §1.6109-2 of this chapter.

(b) Effective/applicability date. Paragraph (a) of this section is applicable to returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 105. Section 54.6694-1 is added to read as follows:



§54.6694-1 Section 6694 penalties applicable to tax return preparer.

(a) In general. For general definitions regarding section 6694 penalties applicable to preparers of tax returns or claims for refund of tax under Chapter 43 of subtitle D, see §1.6694-1 of this chapter.

(b) Effective/applicability date. Paragraph (a) of this section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 106. Section 54.6694-2 is added to read as follows:



§54.6694-2 Penalties for understatement due to an unreasonable position.

(a) In general. A person who is a tax return preparer of any return or claim for refund of tax under chapter 43 of subtitle D of the Internal Revenue Code (Code) shall be subject to penalties under section 6694(a) of the Code in the manner stated in §1.6694-2 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 107. Section 56.6694-3 is added to read as follows:



§54.6694-3 Penalty for understatement due to willful, reckless, or intentional conduct.

(a) In general. A person who is a tax return preparer of any return or claim for refund of excise tax under chapter 43 of subtitle D of the Internal Revenue Code (Code) shall be subject to penalties under section 6694(b) of the Code in the manner stated in §1.6694-3 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 108. Section 54.6694-4 is added to read as follows:



§54.6694-4 Extension of period of collection when tax return preparer pays 15 percent of a penalty for understatement of taxpayer's liability and certain other procedural matters.

(a) In general. For rules relating to the extension of period of collection when a tax return preparer who prepared a return or claim for refund for tax under chapter 43 of subtitle D of the Internal Revenue Code pays 15 percent of a penalty for understatement of taxpayer's liability, and procedural matters relating to the investigation, assessment and collection of the penalties under section 6694(a) and (b), the rules under §1.6694-4 of this chapter will apply.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 109. Section 54.6695-1 is added to read as follows:



§54.6695-1 Other assessable penalties with respect to the preparation of tax returns for other persons.

(a) In general. A person who is a tax return preparer of any return or claim for refund of tax under chapter 43 of subtitle D of the Internal Revenue Code (Code) shall be subject to penalties for failure to furnish a copy to the taxpayer under section 6695(a) of the Code, failure to sign the return under section 6695(b) of the Code, failure to furnish an identification number under section 6695(c) of the Code, failure to retain a copy or list under section 6695(d) of the Code, failure to file a correct information return under section 6695(e) of the Code, and negotiation of a check under section 6695(f) of the Code, in the manner stated in §1.6695-1 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 110. Section 54.6696-1 is added to read as follows:



§54.6696-1 Claims for credit or refund by tax return preparers.

(a) In general. For rules for claims for credit or refund by a tax return preparer who prepared a return or claim for refund for excise tax under chapter 43 of subtitle D of the Internal Revenue Code, the rules under §1.6696-1 of this chapter will apply.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 111. Section 54.7701-1 is added to read as follows:



§54.7701-1 Tax return preparer.

(a) In general. For the definition of a tax return preparer, see §301.7701-15 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.



PART 55 --EXCISE TAX ON REAL ESTATE INVESTMENT TRUSTS AND REGULATED INVESTMENT COMPANIES

Par. 112. The authority citation for part 55 is amended by adding entries in numerical order to read in part as follows:

Authority: 26 U.S.C. 7805* * *

Section 55.6060-1 also issued under 26 U.S.C. 6060(a). * * *

Section 55.6109-2 also issued under 26 U.S.C. 6109(a). * * *

Section 55.6695-1 also issued under 26 U.S.C. 6695(b). * * *

Section 55.6695-2 also issued under 26 U.S.C. 6695(g). * * *

Par. 113. Section 55.6060-1 is added to read as follows:



§55.6060-1 Reporting requirements for tax return preparers.

(a) In general. A person that employs (or engages) one or more tax return preparers to prepare a return or claim for refund under chapter 44 of subtitle D of the Internal Revenue Code, other than for the person, at any time during a return period, shall satisfy the record keeping and inspection requirements in the manner stated in §1.6060-1 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 114. Section 55.6107-1 is added to read as follows:



§55.6107-1 Tax return preparer must furnish copy of return to taxpayer and must retain a copy or record.

(a) In general. A person who is a signing tax return preparer of any return or claim for refund of tax under Chapter 44 of subtitle D of the Internal Revenue Code shall furnish a completed copy of the return or claim for refund to the taxpayer, and retain a completed copy or record in the manner stated in §1.6107-1 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 115. Section 55.6109-1 is added to read as follows:



§55.6109-1 Tax return preparers furnishing identifying numbers for returns or claims for refund.

(a) In general. Each tax return or claim for refund of tax under chapter 44 of Subtitle D prepared by one or more signing tax return preparers must include the identifying number of the preparer required by §1.6695-1(b) of this chapter to sign the return or claim for refund in the manner stated in §1.6109-2 of this chapter.

(b) Effective/applicability date. Paragraph (a) of this section is applicable to returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 116. Section 55.6694-1 is added to read as follows:



§55.6694-1 Section 6694 penalties applicable to tax return preparer.

(a) In general. For general definitions regarding section 6694 penalties applicable to preparers of tax returns or claims for refund of tax under chapter 44 of Subtitle D see §1.6694-1 of this chapter.

(b) Effective/applicability date. Paragraph (a) of this section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 117. Section 55.6694-2 is added to read as follows:



§55.6694-2 Penalties for understatement due to an unreasonable position.

(a) In general. A person who is a tax return preparer of any return or claim for refund of excise tax under chapter 44 of subtitle D of the Internal Revenue Code (Code) shall be subject to penalties under section 6694(a) of the Code in the manner stated in §1.6694-2 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 118. Section 55.6694-3 is added to read as follows:



§55.6694-3 Penalty for understatement due to willful, reckless, or intentional conduct.

(a) In general. A person who is a tax return preparer of any return or claim for refund of tax under chapter 44 of subtitle D of the Internal Revenue Code (Code) shall be subject to penalties under section 6694(b) of the Code in the manner stated in §1.6694-3 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 119. Section 55.6694-4 is added to read as follows:



§55.6694-4 Extension of period of collection when tax return preparer pays 15 percent of a penalty for understatement of taxpayer's liability and certain other procedural matters.

(a) In general. For rules relating to the extension of period of collection when a tax return preparer who prepared a return or claim for refund for excise tax under chapter 44 of subtitle D of the Internal Revenue Code pays 15 percent of a penalty for understatement of taxpayer's liability, and procedural matters relating to the investigation, assessment and collection of the penalties under section 6694(a) and (b), the rules under §1.6694-4 of this chapter will apply.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 120. Section 55.6695-1 is added to read as follows:



§55.6695-1 Other assessable penalties with respect to the preparation of tax returns for other persons.

(a) In general. A person who is a tax return preparer of any return or claim for refund of tax under chapter 44 of subtitle D of the Internal Revenue Code (Code) shall be subject to penalties for failure to furnish a copy to the taxpayer under section 6695(a) of the Code, failure to sign the return under section 6695(b) of the Code, failure to furnish an identification number under section 6695(c) of the Code, failure to retain a copy or list under section 6695(d) of the Code, failure to file a correct information return under section 6695(e) of the Code, and negotiation of a check under section 6695(f) of the Code, in the manner stated in §1.6695-1 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 121. Section 55.6696-1 is added to read as follows:



§55.6696-1 Claims for credit or refund by tax return preparers.

(a) In general. For rules for claims for credit or refund by a tax return preparer who prepared a return or claim for refund for tax under chapter 44 of subtitle D of the Internal Revenue Code, the rules under §1.6696-1 of this chapter will apply.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 122. Section 55.7701-1 is added to read as follows:



§55.7701-1 Tax return preparer.

(a) In general. For the definition of a tax return preparer, see §301.7701-15 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.



PART 56 --PUBLIC CHARITY EXCISE TAXES

Par. 123. The authority citation for part 56 is amended by adding entries in numerical order to read in part as follows:

Authority: 26 U.S.C. 7805* * *

Section 56.6060-1 also issued under 26 U.S.C. 6060(a). * * *

Section 56.6109-2 also issued under 26 U.S.C. 6109(a). * * *

Section 56.6695-1 also issued under 26 U.S.C. 6695(b). * * *

Section 56.6695-2 also issued under 26 U.S.C. 6695(g). * * *

Par. 124. Section 56.6060-1 is added to read as follows:



§56.6060-1 Reporting requirements for tax return preparers.

(a) In general. A person that employs (or engages) one or more tax return preparers to prepare a return or claim for refund of tax under chapter 41 of subtitle D of the Internal Revenue Code, other than for the person, at any time during a return period, shall satisfy the record keeping and inspection requirements in the manner stated in §1.6060-1 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 125. Section 56.6107-1 is added to read as follows:



§56.6107-1 Tax return preparer must furnish copy of return to taxpayer and must retain a copy or record.

(a) In general. A person who is a signing tax return preparer of any return or claim for refund of tax under Chapter 41 of subtitle D of the Internal Revenue Code shall furnish a completed copy of the return or claim for refund to the estate, and retain a completed copy or record in the manner stated in §1.6107-1 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 126. Section 56.6109-1 is added to read as follows:



§56.6109-1 Tax return preparers furnishing identifying numbers for returns or claims for refund.

(a) In general. Each tax return or claim for refund for tax under chapter 41 of subtitle D prepared by one or more tax signing return preparers must include the identifying number of the preparer required by §1.6695-1(b) of this chapter to sign the return or claim for refund in the manner stated in §1.6109-2 of this chapter.

(b) Effective/applicability date. Paragraph (a) of this section is applicable to returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 127. Section 56.6694-1 is added to read as follows:



§56.6694-1 Section 6694 penalties applicable to tax return preparer.

(a) In general. For general definitions regarding section 6694 penalties applicable to preparers of tax returns or claims for refund of tax under chapter 41 of subtitle D see §1.6694-1 of this chapter.

(b) Effective/applicability date. Paragraph (a) of this section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 128. Section 56.6694-2 is added to read as follows:



§56.6694-2 Penalties for understatement due to an unreasonable position.

(a) In general. A person who is a tax return preparer of any return or claim for refund of excise tax under chapter 41 of subtitle D of the Internal Revenue Code (Code) shall be subject to penalties under section 6694(a) of the Code in the manner stated in §1.6694-2 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 129. Section 56.6694-3 is added to read as follows:



§56.6694-3 Penalty for understatement due to willful, reckless, or intentional conduct.

(a) In general. A person who is a tax return preparer of any return or claim for refund of tax under chapter 41 of subtitle D of the Internal Revenue Code (Code) shall be subject to penalties under section 6694(b) of the Code in the manner stated in §1.6694-3 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 130. Section 56.6694-4 is added to read as follows:



§56.6694-4 Extension of period of collection when tax return preparer pays 15 percent of a penalty for understatement of taxpayer's liability and certain other procedural matters.

(a) In general. For rules relating to the extension of period of collection when a tax return preparer who prepared a return or claim for refund for tax under chapter 41 of subtitle D of the Internal Revenue Code pays 15 percent of a penalty for understatement of taxpayer's liability, and procedural matters relating to the investigation, assessment and collection of the penalties under section 6694(a) and (b), the rules under §1.6694-4 of this chapter will apply.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 131. Section 56.6695-1 is added to read as follows:



§56.6695-1 Other assessable penalties with respect to the preparation of tax returns for other persons.

(a) In general. A person who is a tax return preparer of any return or claim for refund of tax under chapter 41 of subtitle D of the Internal Revenue Code (Code) shall be subject to penalties for failure to furnish a copy to the taxpayer under section 6695(a) of the Code, failure to sign the return under section 6695(b) of the Code, failure to furnish an identification number under section 6695(c) of the Code, failure to retain a copy or list under section 6695(d) of the Code, failure to file a correct information return under section 6695(e) of the Code, and negotiation of a check under section 6695(f) of the Code, in the manner stated in §1.6695-1 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 132. Section 56.6696-1 is added to read as follows:



§56.6696-1 Claims for credit or refund by tax return preparers.

(a) In general. For rules relating to claims for credit or refund by a tax return preparer who prepared a return or claim for refund for tax under chapter 41 of subtitle D of the Internal Revenue Code, the rules under §1.6696-1 of this chapter will apply.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 133. Section 56.7701-1 is added to read as follows:



§56.7701-1 Tax return preparer.

(a) In general. For the definition of a tax return preparer, see §301.7701-15 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.



PART 156 --EXCISE TAX ON GREENMAIL

Par. 134. The authority citation for part 156 is amended by adding entries in numerical order to read in part as follows:

Authority: 26 U.S.C. 7805* * *

Section 156.6060-1 also issued under 26 U.S.C. 6060(a). * * *

Section 156.6109-2 also issued under 26 U.S.C. 6109(a). * * *

Section 156.6695-1 also issued under 26 U.S.C. 6695(b). * * *

Section 156.6695-2 also issued under 26 U.S.C. 6695(g). * * *

Par. 135. Section 156.6060-1 is added to read as follows:



§156.6060-1 Reporting requirements for tax return preparers.

(a) In general. A person that employs (or engages) one or more tax return preparers to prepare a return or claim for refund under section 5881 of the Internal Revenue Code, other than for the person, at any time during a return period, shall satisfy the record keeping and inspection requirements in the manner stated in §1.6060-1 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 136. Section 156.6107-1 is added to read as follows:



§156.6107-1 Tax return preparer must furnish copy of return to taxpayer and must retain a copy or record.

(a) In general. A person who is a signing tax return preparer of any return or claim for refund of tax under Section 5881 of the Internal Revenue Code shall furnish a completed copy of the return or claim for refund to the taxpayer, and retain a completed copy or record in the manner stated in §1.6107-1 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 137. Section 156.6109-1 is added to read as follows:



§156.6109-1 Tax return preparers furnishing identifying numbers for returns or claims for refund.

(a) In general. Each tax return or claim for refund for tax under section 5881 of the Internal Revenue Code prepared by one or more signing tax return preparers must include the identifying number of the preparer required by §1.6695-1(b) of this chapter to sign the return or claim for refund in the manner stated in §1.6109-2 of this chapter.

(b) Effective/applicability date. Paragraph (a) of this section is applicable to returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 138. Section 156.6694-1 is added to read as follows:



§156.6694-1 Section 6694 penalties applicable to tax return preparer.

(a) In general. For general definitions regarding section 6694 penalties applicable to preparers of tax returns or claims for refund for tax under section 5881 of the Internal Revenue Code, see §1.6694-1 of this chapter.

(b) Effective/applicability date. Paragraph (a) of this section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 139. Section 156.6694-2 is added to read as follows:



§156.6694-2 Penalties for understatement due to an unreasonable position.

(a) In general. A person who is a tax return preparer of any return or claim for refund of tax under section 5881 of the Internal Revenue Code (Code) shall be subject to penalties under section 6694(a) of the Code in the manner stated in §1.6694-2 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 140. Section 156.6694-3 is added to read as follows:



§156.6694-3 Penalty for understatement due to willful, reckless, or intentional conduct.

(a) In general. A person who is a tax return preparer of any return or claim for refund of tax under section 5881 of the Internal Revenue Code (Code) shall be subject to penalties under section 6694(b) of the Code in the manner stated in §1.6694-3 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 141. Section 156.6694-4 is added to read as follows:



§55.6694-4 Extension of period of collection when tax return preparer pays 15 percent of a penalty for understatement of taxpayer's liability and certain other procedural matters.

(a) In general. For rules relating to the extension of period of collection when a tax return preparer who prepared a return or claim for refund for tax under section 5881 of the Internal Revenue Code pays 15 percent of a penalty for understatement of taxpayer's liability, and procedural matters relating to the investigation, assessment and collection of the penalties under section 6694(a) and (b), the rules under §1.6694-4 of this chapter will apply.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 142. Section 156.6695-1 is added to read as follows:



§156.6695-1 Other assessable penalties with respect to the preparation of tax returns for other persons.

(a) In general. A person who is a tax return preparer of any return or claim for refund of tax under section 5881 of the Internal Revenue Code (Code) shall be subject to penalties for failure to furnish a copy to the taxpayer under section 6695(a) of the Code, failure to sign the return under section 6695(b) of the Code, failure to furnish an identification number under section 6695(c) of the Code, failure to retain a copy or list under section 6695(d) of the Code, failure to file a correct information return under section 6695(e) of the Code, and negotiation of a check under section 6695(f) of the Code, in the manner stated in §1.6695-1 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 143. Section 156.6696-1 is added to read as follows:



§156.6696-1 Claims for credit or refund by tax return preparers.

(a) In general. For rules for claims for credit or refund by a tax return preparer who prepared a return or claim for refund for tax under section 5881 of the Internal Revenue Code, the rules under §1.6696-1 of this chapter will apply.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 144. Section 156.7701-1 is added to read as follows:



§156.7701-1 Tax return preparer.

(a) In general. For the definition of a tax return preparer, see §301.7701-15 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.



PART 157 --EXCISE TAX ON STRUCTURED SETTLEMENT FACTORING TRANSACTIONS

Par. 145. The authority citation for part 157 is amended by adding entries in numerical order to read in part as follows:

Authority: 26 U.S.C. 7805* * *

Section 157.6060-1 also issued under 26 U.S.C. 6060(a). * * *

Section 157.6109-2 also issued under 26 U.S.C. 6109(a). * * *

Section 157.6695-1 also issued under 26 U.S.C. 6695(b). * * *

Section 157.6695-2 also issued under 26 U.S.C. 6695(g). * * *

Par. 146. Section 157.6060-1 is added to read as follows:



§157.6060-1 Reporting requirements for tax return preparers.

(a) In general. A person that employs (or engages) one or more tax return preparers to prepare a return or claim for refund for tax under section 5891 of the Internal Revenue Code, other than for the person, at any time during a return period, shall satisfy the record keeping and inspection requirements in the manner stated in §1.6060-1 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 147. Section 157.6107-1 is added to read as follows:



§157.6107-1 Tax return preparer must furnish copy of return to taxpayer and must retain a copy or record.

(a) In general. A person who is a signing tax return preparer of any return or claim for refund of tax under section 5891 of the Internal Revenue Code shall furnish a completed copy of the return or claim for refund to the taxpayer, and retain a completed copy or record in the manner stated in §1.6107-1 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 148. Section 157.6109-1 is added to read as follows:



§157.6109-1 Tax return preparers furnishing identifying numbers for returns or claims for refund.

(a) In general. Each tax return or claim for refund for tax under section 5891 of the Internal Revenue Code prepared by one or more signing tax return preparers must include the identifying number of the preparer required by §1.6695-1(b) of this chapter to sign the return or claim for refund in the manner stated in §1.6109-2 of this chapter.

(b) Effective/applicability date. Paragraph (a) of this section is applicable to returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 149. Section 157.6694-1 is added to read as follows:



§157.6694-1 Section 6694 penalties applicable to tax return preparer.

(a) In general. For general definitions regarding section 6694 penalties applicable to preparers of tax returns or claims for refund for tax under section 5891 of the Internal Revenue Code see §1.6694-1 of this chapter.

(b) Effective/applicability date. Paragraph (a) of this section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 150. Section 157.6694-2 is added to read as follows:



§157.6694-2 Penalties for understatement due to an unreasonable position.

(a) In general. A person who is a tax return preparer of any return or claim for refund of tax under section 5891 of the Internal Revenue Code (Code) shall be subject to penalties under section 6694(a) of the Code in the manner stated in §1.6694-2 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 151. Section 157.6694-3 is added to read as follows:



§157.6694-3 Penalty for understatement due to willful, reckless, or intentional conduct.

(a) In general. A person who is a tax return preparer of any return or claim for refund of tax under section 5891 of the Internal Revenue Code (Code) shall be subject to penalties under section 6694(b) of the Code in the manner stated in §1.6694-3 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 152. Section 157.6694-4 is added to read as follows:



§157.6694-4 Extension of period of collection when preparer pays 15 percent of a penalty for understatement of taxpayer's liability and certain other procedural matters.

(a) In general. For rules relating to the extension of period of collection when a tax return preparer who prepared a return or claim for refund for tax under section 5891 of the Internal Revenue Code pays 15 percent of a penalty for understatement of taxpayer's liability, and procedural matters relating to the investigation, assessment and collection of the penalties under section 6694(a) and (b), the rules under §1.6694-4 of this chapter will apply.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 153. Section 157.6695-1 is added to read as follows:



§157.6695-1 Other assessable penalties with respect to the preparation of tax returns for other persons.

(a) In general. A person who is a tax return preparer of any return or claim for refund of tax under section 5891 of the Internal Revenue Code (Code) shall be subject to penalties for failure to furnish a copy to the taxpayer under section 6695(a) of the Code, failure to sign the return under section 6695(b) of the Code, failure to furnish an identification number under section 6695(c) of the Code, failure to retain a copy or list under section 6695(d) of the Code, failure to file a correct information return under section 6695(e) of the Code, and negotiation of a check under section 6695(f) of the Code, in the manner stated in §1.6695-1 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed after the date that final regulations are published in the Federal Register.

Par. 154. Section 157.6696-1 is added to read as follows:



§157.6696-1 Claims for credit or refund by tax return preparers.

(a) In general. For rules for claims for credit or refund by a tax return preparer who prepared a return or claim for refund for tax under section 5891 of the Internal Revenue Code, the rules under §1.6696-1 of this chapter will apply.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Par. 155. Section 157.7701-1 is added to read as follows:



§157.7701-1 Tax return preparer.

(a) In general. For the definition of a tax return preparer, see §301.7701-15 of this chapter.

(b) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.



PART 301 --PROCEDURE AND ADMINISTRATION

Par. 156. The authority citation for part 301 continues to read in part as follows:

Authority: 26 U.S.C. 7805 * * *

Par. 157. Section 301.7701-15 is amended to read as follows:



§301.7701-15 Tax return preparer.

(a) In general. A tax return preparer is any person who prepares for compensation, or who employs one or more persons to prepare for compensation, all or a substantial portion of any return of tax or any claim for refund of tax under the Internal Revenue Code (Code).

(b) Definitions --(1) Signing tax return preparer. A signing tax return preparer is any tax return preparer who signs or who is required to sign a return or claim for refund as a tax return preparer pursuant to §1.6695-1(b) of this chapter.

(2) Nonsigning tax return preparer --(i) In general. A nonsigning tax return preparer is any tax return preparer who is not a signing tax return preparer but who prepares all or a substantial portion of a return or claim for refund within the meaning of paragraph(b)(3) of this section with respect to events that have occurred at the time the advice is rendered. In determining whether an individual is a nonsigning tax return preparer, time spent on advice that is given after events have occurred that represents less than 5 percent of the aggregate time incurred by such individual with respect to the position(s) giving rise to the understatement shall not be taken into account. Examples of nonsigning tax return preparers are tax return preparers who provide advice (written or oral) to a taxpayer (or to another tax return preparer) when that advice constitutes a substantial portion of the return within the meaning of paragraph(b)(3) of this section.

(ii) Examples. The provisions of this paragraph (b)(2) are illustrated by the following examples:

Example 1. Attorney A, an attorney in a law firm, provides legal advice to a large corporate taxpayer regarding a completed corporate transaction. The advice provided by A is directly relevant to the determination of an entry on the taxpayer's return and this advice constitutes a substantial portion of the return. A, however, does not prepare any other portion of the taxpayer's return and is not the signing tax return preparer of this return. A is considered a tax return preparer.

Example 2. Attorney B, an attorney in a law firm, provides legal advice to a large corporate taxpayer regarding the tax consequences of a proposed corporate transaction. Based upon this advice, the corporate taxpayer enters into the transaction. Once the transaction is completed, the corporate taxpayer does not receive any additional advice from B with respect to the transaction. B did not provide advice with respect to events that have occurred and is not considered a tax return preparer.

Example 3. The facts are the same as Example 2, except that Attorney B provides supplemental advice to the corporate taxpayer on a phone call after the transaction is completed. The time incurred on this supplemental advice by B represented less than 5 percent of the aggregate amount of time spent by B providing tax advice on the position. B is not considered a tax return preparer.

(3) Substantial portion. (i) Only a person who prepares all or a substantial portion of a return or claim for refund shall be considered to be a tax return preparer of the return or claim for refund. A person who renders tax advice on a position that is directly relevant to the determination of the existence, characterization, or amount of an entry on a return or claim for refund will be regarded as having prepared that entry. Whether a schedule, entry, or other portion of a return or claim for refund is a substantial portion is determined based upon whether the person knows or reasonably should know that the tax attributable to the schedule, entry, or other portion of a return or claim for refund is a substantial portion of the tax required to be shown on the return or claim for refund. A single tax entry may constitute a substantial portion of the tax required to be shown on a return. Factors to consider in determining whether a schedule, entry, or other portion of a return or claim for refund is a substantial portion include but are not limited to --

(A) the size and complexity of the item relative to the taxpayer's gross income; and

(B) the size of the understatement attributable to the item compared to the taxpayer's reported tax liability.

(ii)(A) For purposes of applying the rules of paragraph (b)(3)(i) of this section to a nonsigning tax return preparer within the meaning of paragraph (b)(2) of this section only, if the schedule, entry, or other portion of the return or claim for refund involves amounts of gross income, amounts of deductions, or amounts on the basis of which credits are determined that are --

( 1) Less than $10,000; or

( 2) Less than $400,000 and also less than 20 percent of the gross income as shown on the return or claim for refund (or, for an individual, the individual's adjusted gross income), then the schedule or other portion is not considered to be a substantial portion.

(B) If more than one schedule, entry or other portion is involved, all schedules, entries or other portions shall be aggregated in applying this rule. This paragraph shall not apply to a signing tax return preparer within the meaning of paragraph (b)(1) of this section.

(iii) A tax return preparer with respect to one return is not considered to be a tax return preparer of another return merely because an entry or entries reported on the first return may affect an entry reported on the other return, unless the entry or entries reported on the first return are directly reflected on the other return and constitute a substantial portion of the other return. For example, the sole preparer of a partnership return of income or small business corporation income tax return is considered a tax return preparer of a partner's or a shareholder's return if the entry or entries on the partnership or small business corporation return reportable on the partner's or shareholder's return constitute a substantial portion of the partner's or shareholder's return.

(iv) Examples. The provisions of this paragraph (b)(3) are illustrated by the following examples:
Example 1. Accountant C prepares a Form 8886, "Reportable Transaction Disclosure Statement", that is used to disclose reportable transactions. C does not prepare the tax return or advise the taxpayer regarding the tax return reporting position of the transaction to which the Form 8886 relates. The preparation of the Form 8886 is not directly relevant to the determination of the existence, characterization, or amount of an entry on a tax return or claim for refund. Rather, the Form 8886 is prepared by C to disclose a reportable transaction. C has not prepared a substantial portion of the tax return and is not considered a tax return preparer under section 6694.

Example 2. Accountant D prepares a schedule for an individual taxpayer's Form 1040, "U.S. Individual Income Tax Return", reporting $4,000 in dividend income and gives oral or written advice about Schedule A, which results in a claim of a medical expense deduction totaling $5,000, but does not sign the tax return. D is not a tax return preparer because the total aggregate amount of the deductions is less than $10,000.

(4) Return and claim for refund --(i) Return. For purposes of this section, a return of tax is a return (including an amended or adjusted return) filed by or on behalf of a taxpayer reporting the liability of the taxpayer for tax under the Code, if the type of return is identified in published guidance in the Internal Revenue Bulletin. A return of tax also includes any information return or other document identified in published guidance in the Internal Revenue Bulletin, and that reports information that is or may be reported on another taxpayer's return under the Code if the information reported on the information return or other document constitutes a substantial portion of the taxpayer's return within the meaning of paragraph (b)(3) of this section.

(ii) Claim for refund. For purposes of this section, a claim for refund of tax includes a claim for credit against any tax that is included in published guidance in the Internal Revenue Bulletin. A claim for refund also includes a claim for payment under section 6420, 6421, or 6427.

(c) Mechanical or clerical assistance. A person who furnishes to a taxpayer or other tax return preparer sufficient information and advice so that completion of the return or claim for refund is largely a mechanical or clerical matter is considered a tax return preparer, even though that person does not actually place or review placement of information on the return or claim for refund. See also paragraph (b)(3) of this section.

(d) Qualifications. A person may be a tax return preparer without regard to educational qualifications and professional status requirements.

(e) Outside the United States. A person who prepares a return or claim for refund outside the United States is a tax return preparer, regardless of the person's nationality, residence, or the location of the person's place of business, if the person otherwise satisfies the definition of tax return preparer. Notwithstanding the provisions of §301.6109-1(g), the person shall secure an employer identification number if the person is an employer of another tax return preparer, is a partnership in which one or more of the general partners is a tax return preparer, is a firm entity in which one or more of the equity holders is a tax return preparer, or is an individual not employed by another tax return preparer.

(f) Persons who are not tax return preparers. (1) The following persons are not tax return preparers:

(i) An official or employee of the Internal Revenue Service (IRS) performing their official duties.

(ii) Any individual who provides tax assistance under a Volunteer Income Tax Assistance (VITA) program established by the IRS, but only with respect to those returns prepared as part of the VITA program.

(iii) Any organization sponsoring or administering a VITA program established by the IRS, but only with respect to that sponsorship or administration.

(iv) Any individual who provides tax counseling for the elderly under a program established pursuant to section 163 of the Revenue Act of 1978, but only with respect to those returns prepared as part of that program.

(v) Any organization sponsoring or administering a program to provide tax counseling for the elderly established pursuant to section 163 of the Revenue Act of 1978, but only with respect to that sponsorship or administration.

(vi) Any individual who provides tax assistance as part of a qualified Low-Income Taxpayer Clinic (LITC), as defined by section 7526, subject to the requirements of paragraphs (f)(2) and (3) of this section, but only with respect to those returns prepared as part of the LITC program.

(vii) Any organization that is a qualified LITC, as defined by section 7526, subject to the requirements of paragraphs (h)(2) and (3) of this section.

(viii) An individual providing only typing, reproduction, or other mechanical assistance in the preparation of a return or claim for refund.

(ix) An individual preparing a return or claim for refund of a person, or an officer, a general partner, member, shareholder, or employee of a person, by whom the individual is regularly and continuously employed or compensated or in which the individual is a general partner.

(x) An individual preparing a return or claim for refund for a trust, estate, or other entity of which the person either is a fiduciary or is an officer, general partner, or employee of the fiduciary.

(xi) An individual preparing a claim for refund for a taxpayer in response to --

(A) A notice of deficiency issued to the taxpayer; or

(B) A waiver of restriction on assessment after initiation of an audit of the taxpayer or another taxpayer if a determination in the audit of the other taxpayer affects, directly or indirectly, the liability of the taxpayer for tax under subtitle A.

(xii) A person who prepares a return or claim for refund for a taxpayer with no explicit or implicit agreement for compensation, even if the person receives an insubstantial gift, return service, or favor.

(2) Paragraphs (f)(1)(vi) and (vii) of this section apply only if any assistance with a return of tax or claim for refund is directly related to a controversy with the IRS for which the qualified LITC is providing assistance, or is an ancillary part of an LITC program to inform individuals for whom English is a second language about their rights and responsibilities under the Code.

(3) Notwithstanding paragraph (f)(2) of this section, paragraphs (f)(1)(vi) and (f)(1)(vii) of this section do not apply if an LITC charges a separate fee or varies a fee based on whether the LITC provides assistance with a return of tax or claim for refund under the Code, or if the LITC charges more than a nominal fee for its services.

(4) For purposes of paragraph (f)(1)(ix) of this section, the employee of a corporation owning more than 50 percent of the voting power of another corporation, or the employee of a corporation more than 50 percent of the voting power of which is owned by another corporation, is considered the employee of the other corporation as well.

(5) For purposes of paragraph (f)(1)(x) of this section, an estate, guardianship, conservatorship, committee, or any similar arrangement for a taxpayer under a legal disability (such as a minor, an incompetent, or an infirm individual) is considered a trust or estate.

(6) Examples. The mechanical assistance exception described in paragraph (f)(1)(viii) of this section is illustrated by the following examples:

Example 1. A reporting agent received employment tax information from a client from the client's business records. The reporting agent did not render any tax advice to the client or exercise any discretion or independent judgment on the client's underlying tax positions. The reporting agent processed the client's information, signed the return as authorized by the client pursuant to Form 8655, Reporting Agent Authorization, and filed the client's return using the information supplied by the client. The reporting agent is not a tax return preparer.

Example 2. A reporting agent rendered tax advice to a client on determining whether its workers are employees or independent contractors for Federal tax purposes. For compensation, the reporting agent received employment tax information from the client, processed the client's information and filed the client's return using the information supplied by the client. The reporting agent is a tax return preparer.

(g) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after the date that final regulations are published in the Federal Register.

Linda E. Stiff

Deputy Commissioner for Services and Enforcement.