Rev. Rul. 60-205

Advice has been requested whether both the penalty imposed by section 6653(b) of the Internal Revenue Code of 1954 and the penalty imposed by section 6653(e) of the Code may be asserted with respect to a person who willfully fails to pay any of the documentary stamp taxes.

Section 6651(a) of the Code provides, in part, that in the case of a failure to file a required return, unless it is shown that such failure to file a return is due to reasonable cause and not due to willful neglect, there shall be added to the amount required to be shown as tax on such return five percent of the amount of such tax if the failure is for not more than one month, with an additional five percent for each additional month or fraction thereof during which such failure continues, not exceeding 25 percent in the aggregate.

Section 6653(b) of the Code provides that if any part of any underpayment (as defined in section 6653(c) of the Code) of tax required to be shown on a return is due to fraud, there shall be added to the tax an amount equal to 50 percent of the underpayment.

Under the provisions of section 6653(d) of the Code, if any penalty is assessed under section 6653(b) of the Code, relating to fraud for an underpayment of tax which is required to be shown on a return, no penalty under section 6651 of the Code, relating to failure to file such return, shall be assessed with respect to the same underpayment.

Section 6653(e) of the Code provides that any person (as defined in section 6671(b) of the Code) who willfully fails to pay any tax which is payable by stamp, coupons, tickets, books, or other devices or methods prescribed by the Code or by regulations under authority of the Code, 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 or 50 percent of the total amount of the underpayment of the tax.

In general, section 6653 of the Code prescribes additions of 50 percent, under certain conditions, with respect to failure to pay any of the Federal taxes. Section 6653(b) provides a penalty applicable to the fraudulent underpayment of those taxes which are required to be shown on a return, while section 6653(e) provides a separate penalty applicable to the willful failure to pay those taxes which are payable by stamp, coupons, etc., for which no return is required. Included in the taxes to which section 6653(e) applies are the documentary stamp taxes imposed by sections 4301, 4311, 4321, 4331, 4361, and 4371 of the Code. Since no return is required with respect to those taxes payable by stamp, coupons, etc., sections 6651(a) and 6653(b) are not considered to be applicable to such taxes.

The phrase `in addition to other penalties provided by law' contained in section 6653(e) is not considered to include the delinquency penalty under section 6651(a) or the fraud penalty under section 6653(b). That phrase is considered to refer to other penalties, such as those provided by sections 7201 and 7271 of the Code, which also might apply to an offense to which section 6653(e) applies. Accordingly, neither the 25 percent (in the aggregate) penalty under section 6651(a) of the Code nor the 50 percent fraud penalty under 6653(b) should be asserted in any case in which the 50 percent fraud penalty under section 6653(e) is held applicable.

Therefore, the penalty provided by section 6653(e) of the Code rather than the penalty provided by section 6653(b) applies with respect to a person who willfully fails to pay any of the documentary stamp taxes.