Penalties on tax shelter promoters.

• Author: Manning, Paul

Prior to the AJCA, a $1,000 penalty was imposed on any person who organized, assisted in the organization of, or participated in the sale of any interest in a partnership or other entity, any investment plan or arrangement, or other plan or arrangement, and made or provided a qualifying false or fraudulent statement or a gross valuation overstatement. A penalty on a gross valuation overstatement could be waived if there had been a reasonable basis for the valuation and it was made in good faith.

New Law

AJCA Section 818 modifies Sec. 6700's penalty amount to 50% of the gross income the person derives from the activity for which the penalty is imposed. The...