[Code of Federal Regulations]
[Title 27, Volume 1]
[Revised as of April 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 27CFR70.98]

[Page 960-961]
 
            TITLE 27--ALCOHOL, TOBACCO PRODUCTS AND FIREARMS
 
 CHAPTER I--ALCOHOL AND TOBACCO TAX AND TRADE BUREAU, DEPARTMENT OF THE 
                                TREASURY
 
PART 70--PROCEDURE AND ADMINISTRATION--Table of Contents
 
     Subpart D--Collection of Excise and Special (Occupational) Tax
 
Sec. 70.98  Penalty for underpayment of deposits.

    (a) General rule. If any person is required by the provisions of 26 
U.S.C. enforced and administered by the Bureau or regulations prescribed 
thereunder to deposit any tax in a government depository that is 
authorized under 26 U.S.C. 6302(c) to receive the deposit, and fails to 
deposit the tax within the time prescribed therefor, a penalty shall be 
imposed on such person unless the failure is shown to be due to 
reasonable cause and not due to willful neglect. The penalty shall be:
    (1) For penalties assessed before October 22, 1986, 5 percent of the 
amount of the underpayment without regard to the period during which the 
underpayment continues.
    (2) For penalties assessed after October 21, 1986, on deposits of 
taxes required to be made before January 1, 1990, 10 percent of the 
amount of the underpayment without regard to the period during which the 
underpayment continues.
    (3) For deposits of taxes required to be made after December 31, 
1989.
    (i) 2 percent of the amount of the underpayment if the failure is 
for not more than 5 days,
    (ii) 5 percent of the amount of the underpayment if the failure is 
for more than 5 days but not more than 15 days,
    (iii) 10 percent of the amount of the underpayment if the failure is 
for more than 15 days,
    (iv) 15 percent of the amount of the underpayment if the tax is not 
deposited before the earlier of:
    (A) The day 10 days after the date of the first delinquency notice 
to the taxpayer under section 6303, or
    (B) The day on which notice and demand for immediate payment is 
given under 26 U.S.C. 6862 or the last sentence of 26 U.S.C. 6331(a).

[[Page 961]]


For purposes of this section, the term ``underpayment'' means the amount 
of tax required to be deposited less the amount, if any, that was 
deposited on or before the date prescribed therefor. Section 7502(e) of 
the Internal Revenue Code applies in determining the date a deposit is 
made.
    (b) Assertion of reasonable cause. To show that the underpayment was 
due to reasonable cause and not due to willful neglect, a taxpayer must 
make an affirmative showing of all facts alleged as a reasonable cause 
in a written statement containing a declaration that it is made under 
the penalties of perjury. The statement must be filed with the 
appropriate ATF officer. If the appropriate ATF officer determines that 
the underpayment was due to reasonable cause and not due to willful 
neglect, the penalty will not be imposed.

(26 U.S.C. 6656)

[T.D. ATF-251, 52 FR 19314, May 22, 1987, as amended by T.D. ATF-301, 55 
FR 47615, Nov. 14, 1990; T.D. ATF-353, 59 FR 2523, Jan. 18, 1994]