Code Section

Revenue and Taxation Code - RTC

DIVISION 2. OTHER TAXES [6001 - 61050]

  ( Heading of Division 2 amended by Stats. 1968, Ch. 279. )
  

PART 10.2. ADMINISTRATION OF FRANCHISE AND INCOME TAX LAWS [18401 - 19802]

  ( Part 10.2 added by Stats. 1993, Ch. 31, Sec. 26. )
  

CHAPTER 9.5. Tax Shelters [19751 - 19778]

  ( Chapter 9.5 added by Stats. 2003, Ch. 656, Sec. 13. )
  

ARTICLE 4. Penalties and Interest [19772 - 19778]
  ( Article 4 heading added by Stats. 2011, Ch. 14, Sec. 22. )

  
19772.  

(a) Section 6707A of the Internal Revenue Code, relating to penalty for failure to include reportable transaction information with a return, shall apply, except as otherwise provided.

(b) (1) Section 6707A(b)(1) of the Internal Revenue Code, relating to amount of penalty, is modified by substituting the phrase “or which would have resulted from such transaction if such transaction were respected for state tax purposes” for the phrase “or which would have resulted from such transaction if such transaction were respected for Federal tax purposes.”

(2) The penalty amounts in Section 6707A(b)(2)(A) of the Internal Revenue Code are modified by substituting “$30,000 ($15,000” for “$200,000 ($100,000.”

(3) The penalty amounts in Section 6707A(b)(2)(B) of the Internal Revenue Code are modified by substituting “$15,000 ($5,000” for “$50,000 ($10,000.”

(4) The penalty amounts in Section 6707A(b)(3) of the Internal Revenue Code, relating to minimum penalty, are modified by substituting “$2,500 ($1,250” for “$10,000 ($5,000.”

(c) (1) Section 6707A(c)(1) of the Internal Revenue Code, relating to reportable transaction, is modified to include reportable transactions within the meaning of paragraph (3) of subdivision (a) of Section 18407.

(2) Section 6707A(c)(2) of the Internal Revenue Code, relating to listed transaction, is modified to include listed transactions within the meaning of paragraph (4) of subdivision (a) of Section 18407.

(d) The penalty under this section only applies to taxpayers with taxable income greater than two hundred thousand dollars ($200,000).

(e) Section 6707A(e) of the Internal Revenue Code, relating to a penalty reported to the Securities and Exchange Commission, does not apply.

(f) Section 6707A(d) of the Internal Revenue Code, relating to authority to rescind penalty, does not apply, and in lieu thereof, the following apply:

(1) The Chief Counsel of the Franchise Tax Board may rescind all or any portion of any penalty imposed by this section with respect to any violation if all of the following apply:

(A) The violation is with respect to a reportable transaction other than a listed transaction.

(B) The person on whom the penalty is imposed has a history of complying with the requirements of this part and Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001).

(C) It is shown that the violation is due to an unintentional mistake of fact.

(D) Imposing the penalty would be against equity and good conscience.

(E) Rescinding the penalty would promote compliance with the requirements of this part and Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001) and effective tax administration.

(2) The exercise of authority under paragraph (1) shall be at the sole discretion of the Chief Counsel of the Franchise Tax Board and may not be delegated.

(3) Notwithstanding any other law or rule of law, any determination under this subdivision may not be reviewed in any administrative or judicial proceeding.

(g) Article 3 (commencing with Section 19031) of Chapter 4, relating to deficiency assessments, does not apply with respect to the assessment or collection of any penalty imposed under this section.

(h) The penalty imposed by this section is in addition to any penalty imposed under Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part.

(i) The amendments made to this section by Section 25 of Chapter 359 of the Statutes of 2015 apply to penalties assessed on or after January 1, 2016.

(Amended by Stats. 2016, Ch. 86, Sec. 288. (SB 1171) Effective January 1, 2017.)