Title 26 — Internal Revenue CodeRelease 119-73not60
§6664 Definitions and Special Rules
Title 26 › Subtitle Subtitle F— Procedure and Administration › Chapter 68— ADDITIONS TO THE TAX, ADDITIONAL AMOUNTS, AND ASSESSABLE PENALTIES › Subchapter A— Additions to the Tax and Additional Amounts › Part II— ACCURACY-RELATED AND FRAUD PENALTIES › § 6664
Summary
You must pay penalties only when you file a tax return yourself. If the IRS prepares a return for you, those penalties don’t apply. An "underpayment" is the part of your tax that wasn’t paid after counting the tax you reported, any tax already assessed or collected before, and any rebates given. You can avoid some penalties if you can show a reasonable cause and that you acted in good faith. That relief does not cover underpayments from certain listed transactions or some disallowed deductions. For charity value overstatements, relief is also barred unless you had a qualified appraisal by a qualified appraiser and you made a real, good-faith check of the value. For underpayments tied to reportable transactions, you also must fully disclose the facts, have substantial legal authority, and reasonably believe your tax position was more likely right than wrong. A taxpayer’s belief must be based on the facts and law when the return was filed and must focus only on the legal chances of winning, not on whether the return will be audited. You generally cannot rely on an advisor’s opinion when the advisor is tied to the transaction in key ways or when the opinion is based on bad facts, bad law, or unreasonable assumptions.
Full Legal Text
Title 26, §6664
Internal Revenue Code — Source: USLM XML via OLRC
(a)For purposes of this part, the term “underpayment” means the amount by which any tax imposed by this title exceeds the excess of—
(1)the sum of—
(A)the amount shown as the tax by the taxpayer on his return, plus
(B)amounts not so shown previously assessed (or collected without assessment), over
(2)the amount of rebates made.
(b)The penalties provided in this part shall apply only in cases where a return of tax is filed (other than a return prepared by the Secretary under the authority of section 6020(b)).
(c)(1)No penalty shall be imposed under section 6662 or 6663 with respect to any portion of an underpayment if it is shown that there was a reasonable cause for such portion and that the taxpayer acted in good faith with respect to such portion.
(2)Paragraph (1) shall not apply to any portion of an underpayment which is attributable to one or more transactions described in section 6662(b)(6) or to any disallowance of a deduction described in section 6662(b)(10).
(3)In the case of any underpayment attributable to a substantial or gross valuation overstatement under chapter 1 with respect to charitable deduction property, paragraph (1) shall not apply. The preceding sentence shall not apply to a substantial valuation overstatement under chapter 1 if—
(A)the claimed value of the property was based on a qualified appraisal made by a qualified appraiser, and
(B)in addition to obtaining such appraisal, the taxpayer made a good faith investigation of the value of the contributed property.
(4)For purposes of this subsection—
(A)The term “charitable deduction property” means any property contributed by the taxpayer in a contribution for which a deduction was claimed under section 170. For purposes of paragraph (3), such term shall not include any securities for which (as of the date of the contribution) market quotations are readily available on an established securities market.
(B)The term “qualified appraisal” has the meaning given such term by section 170(f)(11)(E)(i).
(C)The term “qualified appraiser” has the meaning given such term by section 170(f)(11)(E)(ii).
(d)(1)No penalty shall be imposed under section 6662A with respect to any portion of a reportable transaction understatement if it is shown that there was a reasonable cause for such portion and that the taxpayer acted in good faith with respect to such portion.
(2)Paragraph (1) shall not apply to any portion of a reportable transaction understatement which is attributable to one or more transactions described in section 6662(b)(6).
(3)Paragraph (1) shall not apply to any reportable transaction understatement unless—
(A)the relevant facts affecting the tax treatment of the item are adequately disclosed in accordance with the regulations prescribed under section 6011,
(B)there is or was substantial authority for such treatment, and
(C)the taxpayer reasonably believed that such treatment was more likely than not the proper treatment.
(4)For purposes of paragraph (3)(C)—
(A)A taxpayer shall be treated as having a reasonable belief with respect to the tax treatment of an item only if such belief—
(i)is based on the facts and law that exist at the time the return of tax which includes such tax treatment is filed, and
(ii)relates solely to the taxpayer’s chances of success on the merits of such treatment and does not take into account the possibility that a return will not be audited, such treatment will not be raised on audit, or such treatment will be resolved through settlement if it is raised.
(B)(i)An opinion of a tax advisor may not be relied upon to establish the reasonable belief of a taxpayer if—
(I)the tax advisor is described in clause (ii), or
(II)the opinion is described in clause (iii).
(ii)A tax advisor is described in this clause if the tax advisor—
(I)is a material advisor (within the meaning of section 6111(b)(1)) and participates in the organization, management, promotion, or sale of the transaction or is related (within the meaning of section 267(b) or 707(b)(1)) to any person who so participates,
(II)is compensated directly or indirectly by a material advisor with respect to the transaction,
(III)has a fee arrangement with respect to the transaction which is contingent on all or part of the intended tax benefits from the transaction being sustained, or
(IV)as determined under regulations prescribed by the Secretary, has a disqualifying financial interest with respect to the transaction.
(iii)For purposes of clause (i), an opinion is disqualified if the opinion—
(I)is based on unreasonable factual or legal assumptions (including assumptions as to future events),
(II)unreasonably relies on representations, statements, findings, or agreements of the taxpayer or any other person,
(III)does not identify and consider all relevant facts, or
(IV)fails to meet any other requirement as the Secretary may prescribe.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
Codification section 1409(c) of Pub. L. 111–152, which directed the amendment of section 6664 without specifying the act to be amended, was executed to this section, which is section 6664 of the Internal Revenue Code of 1986, to reflect the probable intent of Congress. See 2010 Amendment notes below. section 1219(a)(3), (c)(2) of Pub. L. 109–280, which directed the amendment of section 6664 without specifying the act to be amended, was executed to this section, which is section 6664 of the Internal Revenue Code of 1986, to reflect the probable intent of Congress. See 2006 Amendment notes below.
Amendments
2022—Subsec. (c)(2). Pub. L. 117–328 inserted “or to any disallowance of a deduction described in section 6662(b)(10)” before period at end. 2015—Subsec. (a). Pub. L. 114–113 inserted at end “A rule similar to the rule of section 6211(b)(4) shall apply for purposes of this subsection.” 2010—Subsec. (c)(2) to (4). Pub. L. 111–152, § 1409(c)(1)(A), (C), added par. (2) and redesignated former pars. (2) and (3) as (3) and (4), respectively. See Codification note above. Subsec. (c)(4)(A). Pub. L. 111–152, § 1409(c)(1)(B), substituted “paragraph (3)” for “paragraph (2)”. See Codification note above. Subsec. (d)(2), (3). Pub. L. 111–152, § 1409(c)(2)(A), (C), added par. (2) and redesignated former par. (2) as (3). Former par. (3) redesignated (4). See Codification note above. Subsec. (d)(4). Pub. L. 111–152, § 1409(c)(2)(B), substituted “paragraph (3)(C)” for “paragraph (2)(C)” in introductory provisions. See Codification note above. Pub. L. 111–152, § 1409(c)(2)(A), redesignated par. (3) as (4). See Codification note above. 2006—Subsec. (c)(2). Pub. L. 109–280, § 1219(a)(3), substituted “paragraph (1) shall not apply. The preceding sentence shall not apply to a substantial valuation overstatement under chapter 1 if—” for “paragraph (1) shall not apply unless—” in introductory provisions. See Codification note above. Subsec. (c)(3)(B), (C). Pub. L. 109–280, § 1219(c)(2), amended subpars. (B) and (C) generally. Prior to amendment, subpars. (B) and (C) read as follows: “(B) Qualified appraiser.—The term ‘qualified appraiser’ means any appraiser meeting the requirements of the
Regulations
prescribed under section 170(a)(1). “(C) Qualified appraisal.—The term ‘qualified appraisal’ means any appraisal meeting the requirements of the
Regulations
prescribed under section 170(a)(1).” See Codification note above. 2004—Subsec. (c). Pub. L. 108–357, § 812(c)(2)(B), inserted “for underpayments” after “exception” in heading. Subsec. (c)(1). Pub. L. 108–357, § 812(c)(2)(A), substituted “section 6662 or 6663” for “this part”. Subsec. (d). Pub. L. 108–357, § 812(c)(1), added subsec. (d).
Statutory Notes and Related Subsidiaries
Effective Date
of 2022 AmendmentAmendment by Pub. L. 117–328 applicable to contributions made after Dec. 29, 2022, see section 605(c)(1) of Pub. L. 117–328, set out as a note under section 170 of this title.
Effective Date
of 2015 Amendment Pub. L. 114–113, div. Q, title II, § 209(d)(1), Dec. 18, 2015, 129 Stat. 3085, provided that: “The amendment made by subsection (a) [amending this section] shall apply to— “(A) returns filed after the date of the enactment of this Act [Dec. 18, 2015], and “(B) returns filed on or before such date if the period specified in section 6501 of the Internal Revenue Code of 1986 for assessment of the taxes with respect to which such return relates has not expired as of such date.”
Effective Date
of 2010 AmendmentAmendment by section 1409(c)(1) of Pub. L. 111–152 applicable to underpayments attributable to transactions entered into after Mar. 30, 2010, see section 1409(e)(2) of Pub. L. 111–152, set out as a note under section 6662 of this title. Amendment by section 1409(c)(2) of Pub. L. 111–152 applicable to understatements attributable to transactions entered into after Mar. 30, 2010, see section 1409(e)(3) of Pub. L. 111–152, set out as a note under section 6662 of this title.
Effective Date
of 2006 AmendmentAmendment by section 1219(a)(3) of Pub. L. 109–280 applicable to returns filed after Aug. 17, 2006, with special rule for certain easements, see section 1219(e)(1), (3), of Pub. L. 109–280, set out as a note under section 170 of this title. Amendment by section 1219(c)(2) of Pub. L. 109–280 applicable to appraisals prepared with respect to returns or submissions filed after Aug. 17, 2006, see section 1219(e)(2) of Pub. L. 109–280, set out as a note under section 170 of this title.
Effective Date
of 2004 AmendmentAmendment by Pub. L. 108–357 applicable to taxable years ending after Oct. 22, 2004, with special rule for application of subsec. (d)(3)(B) [now (d)(4)(B)] of this section, see section 812(f) of Pub. L. 108–357, as amended, set out as a note under section 6662 of this title.
Effective Date
Section applicable to returns the due date for which (determined without regard to extensions) is after Dec. 31, 1989, see section 7721(d) of Pub. L. 101–239, set out as an
Effective Date
of 1989 Amendment note under section 461 of this title.
Reference
Citations & Metadata
Citation
26 U.S.C. § 6664
Title 26 — Internal Revenue Code
Last Updated
Apr 5, 2026
Release point: 119-73not60