26 U.S.C. § 6695A | Substantial and gross valuation misstatements attributable to incorrect appraisals

(a)

Imposition of penalty

If—

(1)

a person prepares an appraisal of the value of property and such person knows, or reasonably should have known, that the appraisal would be used in connection with a return or a claim for refund, and

(2)

the claimed value of the property on a return or claim for refund which is based on such appraisal results in a substantial valuation misstatement under chapter 1 (within the meaning of section 6662(e)), a substantial estate or gift tax valuation understatement (within the meaning of section 6662(g)), or a gross valuation misstatement (within the meaning of section 6662(h)), with respect to such property,

then such person shall pay a penalty in the amount determined under subsection (b).

(b)

Amount of penalty

The amount of the penalty imposed under subsection (a) on any person with respect to an appraisal shall be equal to the lesser of—

(1)

the greater of—

(A)

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

(B)

$1,000, or

(2)

125 percent of the gross income received by the person described in subsection (a)(1) from the preparation of the appraisal.

(c)

Exception

No penalty shall be imposed under subsection (a) if the person establishes to the satisfaction of the Secretary that the value established in the appraisal was more likely than not the proper value.

Pub. L. 109–280, title XII, § 1219(b)(1)Aug. 17, 2006120 Stat. 1084 Pub. L. 110–172Dec. 29, 2007121 Stat. 2474(Added , , ; amended , §§ 3(e)(1), 11(a)(40), , , 2488.)

Editorial Notes

Codification

Section 1219(b)(1) of Pub. L. 109–280, which directed the addition of section 6695A at the end of part I of subchapter B of chapter 68, without specifying the act to be amended, was executed by adding section 6695A at the end of part I of subchapter B of chapter 68 of this title, which consists of the Internal Revenue Code of 1986, to reflect the probable intent of Congress.

Amendments

Pub. L. 110–172, § 11(a)(40)2007—Subsec. (a). , designated the words “then such person shall pay a penalty in the amount determined under subsection (b).”, appearing in par. (2), as concluding provisions of subsec. (a).

Pub. L. 110–172, § 3(e)(1)Subsec. (a)(2). , inserted “a substantial estate or gift tax valuation understatement (within the meaning of section 6662(g)),” before “or a gross valuation misstatement”.

Statutory Notes and Related Subsidiaries

Effective Date of 2007 Amendment

section 3(e)(1) of Pub. L. 110–172 Pub. L. 109–280 section 3(j) of Pub. L. 110–172 section 170 of this titleAmendment by effective as if included in the provisions of the Pension Protection Act of 2006, , to which such amendment relates, see , set out as a note under .

Effective Date

Aug. 17, 2006Pub. L. 109–280 section 170 of this titleSection applicable to appraisals prepared with respect to returns or submissions filed after , with special rule for certain easements, see section 1219(e)(2), (3) of , set out as an Effective Date of 2006 Amendments note under .