MODIFICATIONS RELATING TO RETURNS REQUIRED TO BE FILED BY REASON OF CHANGES IN OWNERSHIP INTERESTS IN FOREIGN PARTNERSHIP.

SEC. 1143. MODIFICATIONS RELATING TO RETURNS REQUIRED TO BE FILED BY REASON OF CHANGES IN OWNERSHIP INTERESTS IN FOREIGN PARTNERSHIP. (a) No Return Required Unless Changes Involve 10-Percent Interest in Partnership.— (1) In general.—Subsection (a) of section 6046A (relating to returns as to interests in foreign partnerships) is amended by adding at the end the following new sentence: “Paragraphs (1) and (2) shall apply to any acquisition or disposition only if the United States person directly or indirectly holds at least a 10-percent interest in such partnership either before or after such acquisition or disposition, and paragraph (3) shall apply to any change only if the change is equivalent to at least a 10-percent interest in such partnership.”. (2) 10-percent interest.—Section 6046A is amended by redesignating subsection (d) as subsection (e) and by inserting after subsection (c) the following new subsection: “(d) 10-Percent Interest.—For purposes of subsection (a), a 10-percent interest in a partnership is an interest described in section 6038(e)(3)(C)”. (b) Modification of Penalty on Failure to Report Changes in Ownership Interests in Foreign Corporations and Partnerships.—Subsection (a) of section 6679 (relating to failure to file returns, etc., with respect to foreign corporations or foreign partnerships) is amended to read as follows: “(a) Civil Penalty.—111 STAT. 984 “(1) In general.—In addition to any criminal penalty provided by law, any person required to file a return under section 6035, 6046, or 6046A who fails to file such return at the time provided in such section, or who files a return which does not show the information required pursuant to such section, shall pay a penalty of $10,000, unless it is shown that such failure is due to reasonable cause. “(2) Increase in penalty where failure continues after notification.—If any failure described in paragraph (1) continues for more than 90 days after the day on which the Secretary mails notice of such failure to the United States person, such person shall pay a penalty (in addition to the amount required under paragraph (1)) of $10,000 for each 30-day period (or fraction thereof) during which such failure continues after the expiration of such 90-day period. The increase in any penalty under this paragraph shall not exceed $50,000. “(3) Reduced penalty for returns relating to foreign personal holding companies.—In the case of a return required under section 6035. paragraph (1) shall be applied by substituting ‘$1,000’ for ‘$10,000’, and paragraph (2) shall not apply.”. (c) Effective Date.—The amendments made by this section shall apply to transfers and changes after the date of the enactment of this Act.