§6701 Penalties for Aiding and Abetting Understatement of Tax Liability

Summary

Anyone who helps prepare or present a tax return, affidavit, claim, or other document, knowing it will be used for a material tax matter and knowing it would understate someone else's tax, owes a penalty. The penalty is $1,000, or $10,000 if the document relates to a corporation's tax, and applies only once per taxpayer per tax period no matter how many documents are involved. "Helping" includes ordering a subordinate to do the act, or knowing about a subordinate's participation and not trying to stop it. The penalty applies even if the taxpayer never knew about or agreed to the understatement. Simply typing, copying, or providing other mechanical help does not count. The penalty is in addition to other penalties, except that the same document cannot also draw certain preparer or promoter penalties.