[Code of Federal Regulations]
[Title 26, Volume 13]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR]

[Page 516]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
Procedure and Administration--Table of Contents
 
Sec.  1.6694-0  Table of contents.

    This section lists the captions that appear in Sec. Sec.  1.6694-1 
through 1.6694-4.

 Sec.  1.6694-1 Section 6694 penalties applicable to income tax return 
                                preparer.

    (a) Overview.
    (b) Income tax return preparer.
    (1) In general.
    (2) Signing and nonsigning preparers.
    (3) Example.
    (c) Understatement of liability.
    (d) Abatement of penalty where taxpayer's liability not understated.
    (e) Verification of information furnished by taxpayer.
    (1) In general.
    (2) Example.
    (f) Effective date.

    Sec.  1.6694-2 Penalty for understatement due to an unrealistic 
                                position.

    (a) In general.
    (1) Proscribed conduct.
    (2) Special rule for employers and partnerships.
    (b) Realistic possibility of being sustained on its merits.
    (1) In general.
    (2) Authorities.
    (3) Examples.
    (4) Written determinations.
    (5) When ``realistic possibility'' determined.
    (i) Signing preparers.
    (ii) Nonsigning preparers.
    (c) Exception for adequate disclosure of nonfrivolous positions.
    (1) In general.
    (2) Frivolous.
    (3) Adequate disclosure.
    (i) Signing preparers.
    (ii) Nonsigning preparers.
    (A) Advice to taxpayers.
    (B) Advice to another preparer.
    (d) Exception for reasonable cause and good faith.
    (1) Nature of the error causing the understatement.
    (2) Frequency of errors.
    (3) Materiality of errors.
    (4) Preparer's normal office practice.
    (5) Reliance on advice of another preparer.
    (e) Burden of proof.

 Sec.  1.6694-3 Penalty for understatement due to willful, reckless, or 
                          intentional conduct.

    (a) In general.
    (1) Proscribed conduct.
    (2) Special rule for employers and partnerships.
    (b) Willful attempt to understate liability.
    (c) Reckless or intentional disregard.
    (d) Examples.
    (e) Adequate disclosure.
    (1) Signing preparers.
    (2) Nonsigning preparers.
    (i) Advice to taxpayers.
    (ii) Advice to another preparer.
    (f) Rules or regulations.
    (g) Section 6694(b) penalty reduced by section 6694(a) penalty.
    (h) Burden of proof.

Sec.  1.6694-4 Extension of period of collection where preparer pays 15 
  percent of a penalty for understatement of taxpayer's liability and 
                    certain other procedural matters.

    (a) In general.
    (b) Preparer must bring suit in district court to determine 
liability for penalty.
    (c) Suspension of running of period of limitations on collection.
    (d) Effective date.

[T.D. 8382, 56 FR 67514, Dec. 31, 1991]

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