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Reconciliation Act of 1989 (the 1989 Act), Pub. L. 101-239,
103 Stat. 2106, 2395-2398. Prior to the passage of the 1989 Act,
the fraud penalty (or addition to tax, as it was then known) was
contained in former section 6653(b) and (e). This former section
provided:
SEC. 6653(b). Fraud.--
(1) In general.--If any part of any
underpayment * * * of tax required to be
shown on a return is due to fraud, there
shall be added to the tax an amount equal to
75 percent of the portion of the underpayment
which is attributable to fraud.
* * * * * * *
(e) Failure To Pay Stamp Tax.--Any person * * * who
willfully fails to pay any tax imposed by this title
which is payable by stamp, coupons, tickets, books, or
other devices or methods prescribed by this title or by
regulations under authority of this title, or willfully
attempts in any manner to evade or defeat any such tax
or the payment thereof, shall, in addition to other
penalties provided by law, be liable to a penalty of 50
percent of the total amount of the underpayment of the
tax.
Section 7721(a) of the 1989 Act amended former section 6653 to
read almost verbatim with former section 6653(e); i.e., section
6653 now applies only to a failure to pay tax by way of stamps,
coupons, tickets, books, or other devices or methods prescribed
by the Code or regulations thereunder. Section 7721(a) of the
1989 Act also created section 6663(a) to impose the fraud penalty
on "tax required to be shown on a return". Congress did not
intend for the 1989 Act, as it applied to the fraud and
accuracy-related penalties, to create a new body of law that
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Last modified: May 25, 2011