II 110th CONGRESS 2d Session S. 3121 IN THE SENATE OF THE UNITED STATES June 12, 2008 Mr. Nelson of Nebraska (for himself, Mr. Roberts, Mr. Crapo, Mr. Bayh, and Mr. Lugar) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to allow the Secretary of the Treasury to waive the penalties for failure to disclose reportable transactions, and for other purposes.

1.

Waiver and modification of penalties for failure to disclose reportable transactions

(a)

In general

Subsection (d) of section 6707A of the Internal Revenue Code of 1986 (relating to authority to rescind penalty) is amended to read as follows: (d)

Authority To rescind or waive penalty

(1)

In general

The Secretary may rescind or waive all or any portion of any penalty imposed by this section with respect to any violation if— (A)there was reasonable cause for the violation and the taxpayer acted in good faith, or (B)rescinding or waiving the penalty would promote compliance with the requirements of this title and effective tax administration. (2)

No judicial appeal

Notwithstanding any other provision of law, any determination under this subsection may not be reviewed in any judicial proceeding. (3)

Records

If a penalty is rescinded or waived under paragraph (1), the Secretary shall set forth in writing the opinion of the Secretary with respect to the determination, including— (A)a statement of the facts and circumstances relating to the violation, (B)the reasons for the rescission or waiver, and (C)the amount of the penalty rescinded or waived. . (b)

Conforming amendment

Subsection (c) of section 6707 of the Internal Revenue Code of 1986 (relating to rescission authority) is amended to read as follows: (c)

Rescission authority

(1)

In general

The Commissioner of Internal Revenue may rescind all or any portion of any penalty imposed by this section with respect to any violation if— (A)the violation is with respect to a reportable transaction other than a listed transaction, and (B)rescinding the penalty would promote compliance with the requirements of this title and effective tax administration. (2)

No judicial appeal

Notwithstanding any other provision of law, any determination under this subsection may not be reviewed in any judicial proceeding. (3)

Records

If a penalty is rescinded under paragraph (1), the Commissioner shall place in the file in the Office of the Commissioner the opinion of the Commissioner with respect to the determination, including— (A)a statement of the facts and circumstances relating to the violation, (B)the reasons for the rescission, and (C)the amount of the penalty rescinded. . (c)

Effective date

The amendments made by this section shall apply to penalties assessed after January 1, 2008.