- 18 -
or intentional disregard of rules or regulations. Petitioners
claim that they are not liable for this addition to tax because
they relied upon their accountant to prepare their 1988 return.
Section 6653(a) imposes an addition to tax equal to 5
percent of the underpayment of tax if any part of the
underpayment is due to negligence or intentional disregard of
rules or regulations. Negligence is a lack of due care or
failure to do what a reasonable and ordinarily prudent person
would do under the circumstances. Marcello v. Commissioner, 380
F.2d 499, 506 (5th Cir. 1967), affg. in part and remanding in
part 43 T.C. 168 (1964); Neely v. Commissioner, 85 T.C. 934, 947
(1985). Petitioners must rebut the presumption of correctness by
showing that the addition to tax is unjustified. Rule 142(a);
Bixby v. Commissioner, 58 T.C. 757 (1972).
Good faith reliance on the advice of a competent,
independent tax professional may offer relief from the imposition
of the negligence addition. United States v. Boyle, 469 U.S.
241, 251 (1985); Otis v. Commissioner, 73 T.C. 671, 675 (1980).
Petitioners bear the burden of proving that their reliance on
professional advice was reasonable. Freytag v. Commissioner, 89
T.C. 849, 888 (1987), affd. 904 F.2d 1011 (5th Cir. 1990), affd.
501 U.S. 868 (1991). Moreover, reliance on professional advice,
standing alone, is not an absolute defense to negligence but
rather a factor to be considered. Id.
In order for the reliance on professional advice to excuse a
Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 NextLast modified: May 25, 2011