§6695B — Title 26 Internal Revenue Code | U.S. Code

Summary

Suppliers of clean-energy products can be penalized for false paperwork about where their products come from. The penalty applies when a supplier certifies whether a product, component, or material was made by a prohibited foreign entity, knew or should have known the certification was false, and the falsehood caused an energy credit to be disallowed and an understatement of tax bigger than the lesser of 5 percent of the tax owed or $100,000. The penalty is the greater of 10 percent of the underpayment caused by the false certification or $5,000. There is no penalty if the supplier shows the error was due to reasonable cause and not willful neglect.

Title 26, §6695B

Internal Revenue Code — Source: USLM XML via OLRC

(a)If—

(1)a person—

(A)provides a certification described in clause (iii)(II)(bb) of section 7701(a)(52)(D) with respect to any manufactured product, eligible component, or constituent element, material, or subcomponent of an eligible component, and

(B)knows, or reasonably should have known, that the certification would be used in connection with a determination under such section,

(2)such person knows, or reasonably should have known, that such certification is inaccurate or false with respect to—

(A)whether such property was produced or manufactured by a prohibited foreign entity, or

(B)the total direct costs or total direct material costs of such property that was not produced or manufactured by a prohibited foreign entity that were provided on such certification, and

(3)the inaccuracy or falsity described in paragraph (2) resulted in the disallowance of an applicable energy credit (as defined in section 6662(m)(2)) and an understatement of income tax (within the meaning of section 6662(d)(2)) for the taxable year in an amount which exceeds the lesser of—

(A)5 percent of the tax required to be shown on the return for the taxable year, or

(B)$100,000,

(b)The amount of the penalty imposed under subsection (a) on any person with respect to a certification shall be equal to the greater of—

(1)10 percent of the amount of the underpayment (as defined in section 6664(a)) solely attributable to the inaccuracy or falsity described in subsection (a)(2), or

(2)$5,000.

(c)No penalty shall be imposed under subsection (a) if the person establishes to the satisfaction of the Secretary that any inaccuracy or falsity described in subsection (a)(2) is due to a reasonable cause and not willful neglect.

(d)Any term used in this section which is also used in section 7701(a)(52) shall have the meaning given such term in such section.

Statutory Notes and Related Subsidiaries

Effective Date

Section applicable to certifications provided after Dec. 31, 2025, see section 70512(l)(3) of Pub. L. 119–21, set out in an

Effective Date

of 2025 Amendment note under section 45 of this title.

§6695B Penalty for Substantial Misstatements on Certification Provided by Supplier

Summary

Title 26, §6695B

Notes & Related Subsidiaries

Statutory Notes and Related Subsidiaries

Effective Date

Effective Date

Citations & Metadata