[Code of Federal Regulations]
[Title 26, Volume 18]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR301.6689-1T]

[Page 424]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 301_PROCEDURE AND ADMINISTRATION--Table of Contents
 
   Additions to the Tax, Additional Amounts, and Assessable Penalties
 
Sec. 301.6689-1T  Failure to file notice of redetermination of foreign 
tax (temporary).

    (a) Application of civil penalty. If a foreign tax redetermination 
was made with respect to taxes for which the taxpayer previously claimed 
the foreign tax credit, and the taxpayer failed to notify the Service on 
or before the date prescribed in regulations under section 905(c) or in 
regulations under section 404A(g)(2) for giving notice of a foreign tax 
redetermination, then, unless paragraph (d) of this section applies, 
there shall be added to the deficiency attributable to such 
redetermination an amount determined under paragraph (b) of this 
section.
    (b) Amount of penalty. The amount of the penalty shall be equal to--
    (1) Five percent of the deficiency if the failure is for not more 
than one month, plus
    (2) An additional five percent of the deficiency for each month (or 
fraction thereof) during which the failure continues, but not to exceed 
in the aggregate twenty-five percent of the deficiency. If the penalty 
imposed under paragraph (a) of this section applies, then the penalty 
imposed under section 6653(a), relating to failure to pay by reason of 
negligent or intentional disregard of rules and regulations, shall not 
apply.
    (c) Foreign tax redetermination defined. For purposes of this 
section, a foreign tax redetermination is any redetermination for which 
a notice is required under section 905(c) and the regulations 
thereunder, or section 404A(g)(2) and the regulations thereunder.
    (d) Reasonable cause. The penalty set forth in this section shall 
not apply if it is established to the satisfaction of the Service that 
the failure to file the notification within the prescribed time was due 
to reasonable cause and not due to willful neglect. An affirmative 
showing of reasonable cause must be made in the form of a written 
statement that sets forth all the facts alleged as reasonable cause for 
the failure to file the notification on time and that contains a 
declaration by the taxpayer that the statement is made under the 
penalties of perjury. This statement must be filed with the service 
center in which the notification was required to be filed. The taxpayer 
must file this statement with the notice required under section 905(c) 
and the regulations thereunder or section 404A(g)(2) and the regulations 
thereunder. If the taxpayer exercised ordinary business care and 
prudence and was nevertheless unable to file the notification within the 
prescribed time, then the delay will be considered to be due to 
reasonable cause and not willful neglect.
    (e) Effective date. This section is effective with respect to 
foreign tax redeterminations occurring after December 31, 1979.

[T.D. 8210, 53 FR 23618, June 23, 1988]