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Title 26 — Internal Revenue CodeRelease 119-73not60

§6701 Penalties for Aiding and Abetting Understatement of Tax Liability

Title 26 › Subtitle Subtitle F— Procedure and Administration › Chapter 68— ADDITIONS TO THE TAX, ADDITIONAL AMOUNTS, AND ASSESSABLE PENALTIES › Subchapter B— Assessable Penalties › Part I— GENERAL PROVISIONS › § 6701

Last updated Apr 5, 2026|Official source

Summary

You can be fined if you help prepare or advise on any part of a tax return, claim, affidavit, or other tax document, you know (or should know) that part will be used in an important tax matter, and you know it would make someone owe less tax than they should. The fine is $1,000 normally, and $10,000 if the document is about a corporation. Only one fine can be charged for a given taxpayer for each tax year (or taxable event). “Procures” means ordering a subordinate to act or letting a subordinate take part and not stopping it. A subordinate is anyone you direct or control. The rule applies even if the person who files the document did not know or agree. Typing, copying, or other mechanical help is not counted as preparing the document. The fine is in addition to other penalties, but you won’t get certain overlapping penalties for the same document.

Full Legal Text

Title 26, §6701

Internal Revenue Code — Source: USLM XML via OLRC

(a)Any person—
(1)who aids or assists in, procures, or advises with respect to, the preparation or presentation of any portion of a return, affidavit, claim, or other document,
(2)who knows (or has reason to believe) that such portion will be used in connection with any material matter arising under the internal revenue laws, and
(3)who knows that such portion (if so used) would result in an understatement of the liability for tax of another person,
(b)(1)Except as provided in paragraph (2), the amount of the penalty imposed by subsection (a) shall be $1,000.
(2)If the return, affidavit, claim, or other document relates to the tax liability of a corporation, the amount of the penalty imposed by subsection (a) shall be $10,000.
(3)If any person is subject to a penalty under subsection (a) with respect to any document relating to any taxpayer for any taxable period (or where there is no taxable period, any taxable event), such person shall not be subject to a penalty under subsection (a) with respect to any other document relating to such taxpayer for such taxable period (or event).
(c)(1)For purposes of subsection (a), the term “procures” includes—
(A)ordering (or otherwise causing) a subordinate to do an act, and
(B)knowing of, and not attempting to prevent, participation by a subordinate in an act.
(2)For purposes of paragraph (1), the term “subordinate” means any other person (whether or not a director, officer, employee, or agent of the taxpayer involved) over whose activities the person has direction, supervision, or control.
(d)Subsection (a) shall apply whether or not the understatement is with the knowledge or consent of the persons authorized or required to present the return, affidavit, claim, or other document.
(e)For purposes of subsection (a)(1), a person furnishing typing, reproducing, or other mechanical assistance with respect to a document shall not be treated as having aided or assisted in the preparation of such document by reason of such assistance.
(f)(1)Except as provided by paragraphs (2) and (3), the penalty imposed by this section shall be in addition to any other penalty provided by law.
(2)No penalty shall be assessed under subsection (a) or (b) of section 6694 on any person with respect to any document for which a penalty is assessed on such person under subsection (a).
(3)No penalty shall be assessed under section 6700 on any person with respect to any document for which a penalty is assessed on such person under subsection (a).

Legislative History

Notes & Related Subsidiaries

Editorial Notes

Amendments

1989—Subsec. (a)(1). Pub. L. 101–239, § 7735(a)(1), struck out “in connection with any matter arising under the internal revenue laws” after “other document”. Subsec. (a)(2). Pub. L. 101–239, § 7735(a)(2), inserted “(or has reason to believe)” after “who knows”. Subsec. (a)(3). Pub. L. 101–239, § 7735(a)(3), substituted “would result” for “will result”. Subsec. (f)(1). Pub. L. 101–239, § 7735(b)(2), substituted “paragraphs (2) and (3)” for “paragraph (2)”. Subsec. (f)(3). Pub. L. 101–239, § 7735(b)(1), added par. (3).

Statutory Notes and Related Subsidiaries

Effective Date

of 1989 Amendment Pub. L. 101–239, title VII, § 7735(c), Dec. 19, 1989, 103 Stat. 2404, provided that: “The

Amendments

made by this section [amending this section] shall take effect on December 31, 1989.”

Effective Date

Pub. L. 97–248, title III, § 324(c), Sept. 3, 1982, 96 Stat. 616, provided that: “The

Amendments

made by this section [enacting this section] shall take effect on the day after the date of the enactment of this Act [Sept. 3, 1982].”

Reference

Citations & Metadata

Citation

26 U.S.C. § 6701

Title 26 — Internal Revenue Code

Last Updated

Apr 5, 2026

Release point: 119-73not60