PENALTIES.

SEC. 10704. PENALTIES. (a) General Rule.— Subsection (c) of section 6652 (relating to returns by exempt organizations and by certain trusts) is amended to read as follows: “(c) Returns by Exempt Organizations and by Certain Trusts.— “(1) Annual returns under section 6033.— “(A) Penalty on organization.— In the case of— “(i) a failure to file a return required under section 6033 (relating to returns by exempt organizations) on the date and in the manner prescribed therefor (determined with regard to any extension of time for filing), or “(ii) a failure to include any of the information required to be shown on a return filed under section 6033 or to show the correct information, there shall be paid by the exempt organization $10 for each day during which such failure continues. The maximum penalty under this subparagraph on failures with respect to any 1 return shall not exceed the lesser of $5,000 or 5 percent of the gross receipts of the organization for the year. “(B) Managers.— “(i) In general.— The Secretary may make a written demand on any organization subject to penalty under subparagraph (A) specifying therein a reasonable future date by which the return shall be filed (or the information furnished) for purposes of this subparagraph. “(ii) Failure to comply with demand.— If any person fails to comply with any demand under clause (i) on or before the date specified in such demand, there shall be paid by the person failing to so comply $10 for each day after the expiration of the time specified in such demand during which such failure continues. The maximum penalty imposed under this subparagraph on all persons for failures with respect to any 1 return shall not exceed $5,000. “(C) Public inspection of annual returns.— In the case of a failure to comply with the requirements of subsection (d) or (e)(i) of section 6104 (relating to public inspection of annual returns) on the date and in the manner prescribed therefor (determined with regard to any extension of time for filing), there shall be paid by the person failing to meet 101 STAT. 1330–462such requirements $10 for each day during which such failure continues. The maximum penalty imposed under this subparagraph on all persons for failures with respect to any 1 return shall not exceed $5,000. “(D) Public inspection of applications for exemption.— In the case of a failure to comply with the requirements of section 6104(e)(2) (relating to public inspection of applications for exemption) on the date and in the manner prescribed therefor, there shall be paid by the person failing to meet such requirements $10 for each day during which such failure continues. “(2) Returns under section 6034 or 6043 (b).— “(A) Penalty on organization or trust.— In the case of a failure to file a return required under section 6034 (relating to returns by certain trusts) or section 6043(b) (relating to terminations, etc., of exempt organizations), on the date and in the manner prescribed therefor (determined with regard to any extension of time for filing), there shall be paid by the exempt organization or trust failing so to file $10 for each day during which such failure continues, but the total amount imposed under this subparagraph on any organization or trust for failure to file any 1 return shall not exceed $5,000. “(B) Managers.— The Secretary may make written demand on an organization or trust failing to file under subparagraph (A) specifying therein a reasonable future date by which such filing shall be made for purposes of this subparagraph. If such filing is not made on or before such date, there shall be paid by the person failing so to file $10 for each day after the expiration of the time specified in the written demand during which such failure continues, but the total amount imposed under this subparagraph on all persons for failure to file any 1 return shall not exceed $5,000. “(3) Reasonable cause exception.— No penalty shall be imposed under this subsection with respect to any failure if it is shown that such failure is due to reasonable cause. “(4) Other special rules.— “(A) Treatment as tax.— Any penalty imposed under this subsection shall be paid on notice and demand of the Secretary and in the same manner as tax. “(B) Joint and several liability.— If more than 1 person is liable under this subsection for any penalty with respect to any failure, all such persons shall be jointly and severally liable with respect to such failure. “(C) Person.— For purposes of this subsection, the term ‘person’ means any officer, director, trustee, employee, or other individual who is under a duty to perform the act in respect of which the violation occurs.” (b) Willful Failure To Permit Public Inspection.— (1) In general.— Section 6685 (relating to assessable penalty with respect to private foundation annual returns) is amended to read as follows: 101 STAT. 1330–463 “SEC. 6685. ASSESSABLE PENALTY WITH RESPECT TO PUBLIC INSPECTION REQUIREMENTS FOR CERTAIN TAX-EXEMPT ORGANIZATIONS. “In addition to the penalty imposed by section 7207 (relating to fraudulent returns, statements, or other documents), any person who is required to comply with the requirements of subsection (d) or (e) of section 6104 and who fails to so comply with respect to any return or application, if such failure is willful, shall pay a penalty of $1,000 with respect to each such return or application.” (2) Clerical amendment.— The table of sections for part I of subchapter B of chapter 68 is amended by striking out the item relating to section 6685 and inserting in lieu thereof the following: “Sec. 6685. Assessable penalty with respect to public inspection requirements for certain tax-exempt organizations.” (c) Furnishing Fraudulent Information.— Section 7207 (relating to fraudulent returns, statements, or other documents) is amended by striking out “subsection (d) of section 6104” and inserting in lieu thereof “subsection (d) or (e) of section 6104”. (d) Effective Date.— The amendments made by this section shall apply— (1) to returns for years beginning after December 31, 1986, and (2) on and after the date of the enactment of this Act in the case of applications submitted to the Internal Revenue Service— (A) after July 15, 1987, or (B) on or before July 15, 1987, if the organization has a copy of the application on July 15, 1987.