TREATMENT OF FAILURE OF PARTNERSHIP TO PAY IMPUTED UNDERPAYMENT.

SEC. 205. TREATMENT OF FAILURE OF PARTNERSHIP TO PAY IMPUTED UNDERPAYMENT. (a) In General.—Section 6232 is amended by adding at the end the following new subsection: “(f) Failure to Pay Imputed Underpayment.— “(1) In general.—If any amount of any imputed underpayment to which section 6225 applies or any specified similar amount (or any interest or penalties with respect to any such amount) has not been paid by the date which is 10 days after the date on which the Secretary provides notice and demand for such payment— “(A) section 6621(a)(2)(B) shall be applied by substituting ‘5 percentage points’ for ‘3 percentage points’ with respect to such amount, and “(B) the Secretary may assess upon each partner of the partnership (determined as of the close of the adjustment year or, if the partnership has ceased to exist as of such time, the former partners of the partnership as determined for purposes of section 6241(7)) a tax equal to such partner’s proportionate share of such amount (including any such interest or penalties, determined after application of subparagraph (A)). “(2) Specified similar amount.—For purposes of this subsection, the term ‘specified similar amount’ means— “(A) the amount described in subclause (II) of section 6226(b)(4)(A)(ii) (including any failure to satisfy the requirement of subclause (I) of such section which is treated as a failure to pay such amount under section 6651(i)), and “(B) any amount assessed under paragraph (1)(B) upon a partner which is a partnership. “(3) Proportionate share.—For purposes of paragraph (1), a partner’s proportionate share is such percentage as the Secretary may determine on the basis of such partner’s distributive share. The Secretary shall make determinations under the preceding sentence such that the aggregate proportionate shares so determined total 100 percent. “(4) Coordination with partnership liability.—The liability of the partnership for any amount with respect to which a partner is made liable under paragraph (1) shall be reduced upon payment by the partner of such amount. Paragraph (1)(B) shall not apply with respect to any amount after the date on which such amount is paid by the partnership. “(5) S corporations.—For purposes of this subsection, an S corporation and its shareholders shall be treated in the same manner as a partnership and its partners. “(6) Rules related to assessment and collection “(A) Deficiency procedures not applicable.—Subchapter B shall not apply to any assessment or collection under this paragraph. “(B) Limitation on assessment.—Except as otherwise provided in this subtitle, no assessment may be made (or proceeding in court begun without assessment) with respect to any partner with respect to an amount under paragraph (1) after the date which is 2 years after the date on which the Secretary provides the notice and demand referred to in paragraph (1) with respect to such amount.” . (b) [16 U.S.C. 6501] Conforming Amendment.—Section 6501(c)(4)(A) is amended by striking “in this section”.