Treasury Regulations · 26 CFR
§ 1.6694-4. Extension of period of collection when tax return preparer pays 15 percent of a penalty for understatement of taxpayer's liability and certain other procedural matters.
Regulation text, no changes From the eCFR, current as of October 15, 2026. The eCFR is an authoritative but unofficial editorial compilation of the Code of Federal Regulations; the official text is the annual CFR on govinfo. Compare it with this section on ecfr.gov (external site) or the official annual CFR on govinfo (external site).
Regulation under 26 U.S.C. § 6694
Cite as 26 CFR § 1.6694-4
At a glance
Read from the text and its source citation. Not part of the regulation.
- Status
- In the current eCFR
- Issued
- December 22, 2008 by T.D. 9436
- Issued under
- 26 U.S.C. § 6694
- Length
- 822 words · about 4 min to read
- Cross-references
- cites 5 Code sections and 1 regulation; cited by 17
¶(a) In general.
¶(1) The Internal Revenue Service (IRS) will investigate the preparation by a tax return preparer of a return of tax under the Internal Revenue Code (Code) or claim for refund of tax under the Code as described in § 301.7701-15(b)(4) of this chapter, and will send a report of the examination to the tax return preparer before the assessment of either—
¶(i) A penalty for understating tax liability due to a position for which either it was not reasonable to believe that the position would more likely than not be sustained on its merits under section 6694(a) or no substantial authority, as applicable (or not a reasonable basis for disclosed positions); or
¶(2) Unless the period of limitations (if any) under section 6696(d) may expire without adequate opportunity for assessment, the IRS will also send, before assessment of either penalty, a 30-day letter to the tax return preparer notifying him of the proposed penalty or penalties and offering an opportunity to the tax return preparer to request further administrative consideration and a final administrative determination by the IRS concerning the assessment. If the tax return preparer then makes a timely request, assessment may not be made until the IRS makes a final administrative determination adverse to the tax return preparer.
¶(4) Within 30 days after the day on which notice and demand of either of the two penalties described in section 6694(a) and section 6694(b) is made against the tax return preparer, the tax return preparer must either—
¶(i) Pay the entire amount assessed (and may file a claim for refund of the amount paid at any time not later than 3 years after the date of payment); or
¶(ii) Pay an amount which is not less than 15 percent of the entire amount assessed with respect to each return or claim for refund and file a claim for refund of the amount paid.
¶(5) If the tax return preparer pays an amount and files a claim for refund under paragraph (a)(4)(ii) of this section, the IRS may not make, begin, or prosecute a levy or proceeding in court for collection of the unpaid remainder of the amount assessed until the later of—
¶(i) A date which is more than 30 days after the earlier of—
¶(A) The day on which the tax return preparer's claim for refund is denied; or
¶(B) The expiration of 6 months after the day on which the tax return preparer filed the claim for refund; and
¶(6) The IRS may counterclaim in any proceeding begun as provided in paragraph (b) of this section for the unpaid remainder of the amount assessed. Final resolution of a proceeding includes any settlement between the IRS and the tax return preparer, any final determination by a court (for which the period for appeal, if any, has expired) and, generally, the types of determinations provided under section 1313(a) (relating to taxpayer deficiencies). Notwithstanding section 7421(a) (relating to suits to restrain assessment or collection), the beginning of a levy or proceeding in court by the IRS in contravention of paragraph (a)(5) of this section may be enjoined by a proceeding in the proper court.
¶(b) Preparer must bring suit in district court to determine liability for penalty. The IRS may proceed with collection of the amount of the penalty not paid under paragraph (a)(4)(ii) of this section if the preparer fails to begin a proceeding for refund in the appropriate United States district court within 30 days after the earlier of—
¶(1) The day on which the preparer's claim for refund filed under paragraph (a)(4)(ii) of this section is denied; or
¶(2) The expiration of 6 months after the day on which the preparer filed the claim for refund.
¶(c) Suspension of running of period of limitations on collection. The running of the period of limitations provided in section 6502 on the collection by levy or by a proceeding in court of the unpaid amount of a penalty or penalties described in section 6694(a) or section 6694(b) is suspended for the period during which the IRS, under paragraph (a)(5) of this section, may not collect the unpaid amount of the penalty or penalties by levy or a proceeding in court.
¶(d) Effective/applicability date. This section is applicable to returns and claims for refund filed, and advice provided, after December 31, 2008.
[T.D. 9436, 73 FR 78446, Dec. 22, 2008]
Cross-references
Computed from the citations in the text of 26 CFR.
Code sections it cites
- § 6694 Understatement of taxpayer’s liability by tax return preparer
- § 6696 Rules applicable with respect to sections 6694, 6695, 6695A, and 6695B
- § 1313 Definitions
- § 7421 Prohibition of suits to restrain assessment or collection
- § 6502 Collection after assessment
Regulations it cites
Cited by 17 other regulations
- § 1.6694-0 Table of contents.
- § 1.6696-1 Claims for credit or refund by tax return preparers or appraisers.
- § 20.6694-4 Extension of period of collection when preparer pays 15 percent of a penalty for understatement of taxpayer's liability and certain other procedural matters.
- § 25.6694-4 Extension of period of collection when tax return preparer pays 15 percent of a penalty for understatement of taxpayer's liability and certain other procedural matters.
- § 26.6694-4 Extension of period of collection when preparer pays 15 percent of a penalty for understatement of taxpayer's liability and certain other procedural matters.
- § 28.6694-4 Extension of period of collection when tax return preparer pays 15 percent of a penalty for understatement of taxpayer's liability and certain other procedural matters.
- § 31.6694-4 Extension of period of collection when tax return preparer pays 15 percent of a penalty for understatement of taxpayer's liability and certain other procedural matters.
- § 40.6694-4 Extension of period of collection when tax return preparer pays 15 percent of a penalty for understatement of taxpayer's liability and certain other procedural matters.
- § 41.6694-4 Extension of period of collection when preparer pays 15 percent of a penalty for understatement of taxpayer's liability and certain other procedural matters.
- § 44.6694-4 Extension of period of collection when preparer pays 15 percent of a penalty for understatement of taxpayer's liability and certain other procedural matters.
- § 53.6694-4 Extension of period of collection when tax return preparer pays 15 percent of a penalty for understatement of taxpayer's liability and certain other procedural matters.
- § 54.6694-4 Extension of period of collection when tax return preparer pays 15 percent of a penalty for understatement of taxpayer's liability and certain other procedural matters.
- § 55.6694-4 Extension of period of collection when tax return preparer pays 15 percent of a penalty for understatement of taxpayer's liability and certain other procedural matters.
- § 56.6694-4 Extension of period of collection when tax return preparer pays 15 percent of a penalty for understatement of taxpayer's liability and certain other procedural matters.
- § 58.6694-1 Section 6694 penalties.
- § 156.6694-4 Extension of period of collection when tax return preparer pays 15 percent of a penalty for understatement of taxpayer's liability and certain other procedural matters.
- § 157.6694-4 Extension of period of collection when preparer pays 15 percent of a penalty for understatement of taxpayer's liability and certain other procedural matters.
Amendment history
From the source citation at the end of the section, newest first. T.D. is a Treasury decision; FR is the Federal Register.
- Issued by T.D. 9436 (73 FR 78446)
Where it sits in 26 CFR
- Subchapter A Income tax
- Part 1 Income taxes
- Additions to the tax, additional amounts, and assessable penalties
Nearby sections
- § 1.6694-0 Table of contents.
- § 1.6694-1 Section 6694 penalties applicable to tax return preparers.
- § 1.6694-2 Penalty for understatement due to an unreasonable position.
- § 1.6694-3 Penalty for understatement due to willful, reckless, or intentional conduct.
- § 1.6694-4 Extension of period of collection when tax return preparer pays 15 percent of a penalty for understatement of taxpayer's liability and certain other procedural matters.
- § 1.6695-1 Other assessable penalties with respect to the preparation of tax returns for other persons.
- § 1.6695-2 Tax return preparer due diligence requirements for certain tax returns and claims.
- § 1.6696-1 Claims for credit or refund by tax return preparers or appraisers.
- § 1.6709-1T Penalties with respect to mortgage credit certificates (temporary).