Penalties Abusive tax shelters

These penalties are known as Investor (participant) penalties.

Why you received this penalty

You entered into a transaction that did not have economic substance resulting in understatement.

Visit R&TC 19774 for more information.

Penalty

  • 40% of the understatement
  • 20% of the understatement if the transaction is adequately disclosed

Relief of penalty

To request relief from the penalty:

Complete form Request for Chief Counsel to Relieve Penalties (FTB 626)

  • Attach a statement specifying the facts and reasons supporting the request for relief from the penalty
  • FTBs Chief Counsel may reduce all or a portion of the penalty once assessed

The taxpayer cannot appeal or challenge the Chief Counsel's decision.

R&TC 19774

Why you received this penalty

You entered into a transaction that did not have economic substance resulting in understatement.

Visit R&TC 19774 for more information.

Penalty

100% of the interest payable on the additional tax for that transaction.

Relief of penalty

  • 50% of the interest payable on the additional tax for that transaction reported on your amended return
  • 100% of the interest payable on the additional tax for that transaction not reported on your amended return

R&TC 19777

Why you received this penalty

You met one of the ground(s) under IRC Section 6662.

Penalty

20% of the underpayment of tax.

Visit Penalty Reference Chart (FTB 1024) for more information.

Relief of penalty

Visit IRC 6664 for more information.

R&TC 19164

Why you received this penalty

You have additional tax related to a reportable or listed transaction.

Penalty

  • 20% of the understatement
  • 30% of the understatement, if you did not report the transaction (IRC 6011)

Relief of penalty

Complete form Request for Chief Counsel to Relieve Penalties (FTB 626)

  • Attach a statement specifying the facts and reasons supporting the request for relief from the penalty
  • FTBs Chief Counsel may reduce all or a portion of the penalty once assessed

The taxpayer cannot appeal or challenge the Chief Counsel's decision. Chief Counsel relief does not apply to listed transactions.

R&TC 19164.5

Why you received this penalty

You met all of the following:

  • You participated in a reportable or listed transaction
  • You did not report it per R&TC 18407
  • Your taxable income is over $200,000

Penalty

Listed transaction

$30,000 for each unreported listed transaction

Relief does not apply to listed transactions.

Reportable transaction (other than listed)

$15,000 for each unreported reportable transaction

Relief of penalty

Complete form Request for Chief Counsel to Relieve Penalties (FTB 626)

  • Attach a statement specifying the facts and reasons supporting the request for relief from the penalty
  • FTBs Chief Counsel may reduce all or a portion of the penalty once assessed

The taxpayer cannot appeal or challenge the Chief Counsel's decision.

R&TC 19772