significant omission of income in connection with foreign assets (1) Paragraph (1) of section 6501(e) of the Internal Revenue Code of 1986 is amended by striking subparagraph (A) and by redesignating subparagraphs (B) and (C) as subparagraphs (A) and (B), respectively. (2) Subparagraph (A) of section 6501(e) of such Code, as redesignated by paragraph (1), is amended by striking all that precedes clause (i) and inserting the following: (A) General rule If the taxpayer omits from gross income an amount properly included therein which is in excess of 25 percent of the amount of gross income stated in the return, the tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time within 6 years after the return was filed. For purposes of this subparagraph— . (3) Paragraph (2) of section 6229(c) of such Code is amended by striking and such amount is described in clause (i) or (ii) of section 6501(e)(1)(A) and inserting which is in excess of 25 percent of the amount of gross income stated in its return . (4) Paragraph (8) of section 6501(c) is amended— (A) by striking pursuant to an election under section 1295(b) or , (B) by striking 1298(f) , and (C) by striking 6038D, . (c) Clerical amendment The table of sections for subpart A of part III of subchapter A of chapter 61 of such Code is amended by striking the item related to section 6038D. (d) Effective date (1) In general Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years ending after the date of the enactment of this Act. (2) Returns The amendments made by subsection (b) shall apply to returns filed after the date of the enactment of this Act. 3. Repeal of penalties for underpayments attributable to undisclosed foreign financial assets (a) In general Section 6662 of the Internal Revenue Code of 1986 is amended— (1) in subsection (b), by striking paragraph (7) and redesignating paragraph (8) as paragraph (7), and (2) by striking subsection (j) and