[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: 26CFR301.6712-1]

[Page 430-431]
 
                       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. 301.6712-1  Failure to disclose treaty-based return positions.

    (a) Penalty imposed. A taxpayer who fails in a material way to 
disclose one or more positions taken for a taxable year, as required by 
section 6114 and the regulations thereunder, is subject to a separate 
penalty for each failure to disclose a position taken with respect to 
each separate payment or separate income item in the amount of--
    (1) For a corporation taxable as such under the Code $10,000; or
    (2) For all other taxpayers, $1,000.

The penalty imposed by this section may be imposed more than once for a 
single taxable year if a taxpayer has failed to disclose one or more 
positions taken with respect to more than one separate payment or 
separate income item and may be imposed in addition to any other penalty 
imposed by law. For this purpose, separate payments or income items of 
the same type (e.g., interest payments) received from the same ultimate 
payor (e.g., the obligor on the note) will be treated as separate

[[Page 431]]

payments or income items (and not aggregated). However, for purposes of 
determining the number of separate penalties to be imposed under this 
section, the District Director shall have the discretion to aggregate 
separate payments or income items, in whole or in part, in accordance 
with the rules for aggregation of such items for purposes of reporting, 
as described in Sec. 301.6114-1(d).
    (b) Penalty waived. Pursuant to the authority contained in section 
6712(b) of the Code, the penalty imposed by paragraph (a) of this 
section may be waived, in whole or in part, if it is established to the 
satisfaction of the Assistant Commissioner (International), the District 
Director or the Director of the Internal Revenue Service Center that the 
taxpayer's failure to disclose the required information was not due to 
willful neglect. An affirmative showing of lack of willful neglect must 
be made in the form of a written statement that sets forth all the facts 
alleged to show lack of willful neglect and contains a declaration by 
such person that the statement is made under the penalties of perjury.
    (c) Manner of payment. The penalty set forth in paragraph (a) of 
this section shall be paid in the same manner as tax upon the issuance 
of a notice and demand thereof.
    (d) Effective date. This section is effective for taxable years of 
the taxpayer for which the due date for filing returns (without 
extension) occurs after December 31, 1988.

[T.D. 8292, 55 FR 9441, Mar. 14, 1990]