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Accuracy-Related Penalties
Section 6662(a) imposes a penalty equal to 20 percent of any
portion of the underpayment attributable to, inter alia,
negligence or disregard of rules or regulations. Sec.
6662(b)(1). Negligence is defined as the lack of due care or
failure to do what a reasonable and ordinarily prudent person
would do under the circumstances. Neely v. Commissioner, 85 T.C.
934, 947 (1985). Negligence includes any failure to make a
reasonable attempt to comply with the law. Sec. 6662(c).
Failure to maintain adequate records constitutes negligence.
Schroeder v. Commissioner, 40 T.C. 30, 34 (1963); Johnson v.
Commissioner, T.C. Memo 1991-346, affd. without published opinion
8 F.3d 811 (3d Cir. 1993). Similarly, adopting a position that
lacks a reasonable basis constitutes negligence. Sec. 1.6662-
3(b)(1), Income Tax Regs. Disregard of the rules or regulations
includes any careless, reckless, or intentional disregard. Sec.
6662(c). Disregard of the rules or regulations is careless if
the taxpayer does not exercise reasonable diligence to determine
the correctness of a return position that is contrary to a rule
or regulation. Sec. 1.6662-3(b)(2), Income Tax Regs.
No penalty may be imposed under section 6662(a) for any
portion of an underpayment with respect to which the taxpayer
acted with reasonable cause or in good faith. Sec. 1.6664-4(a),
Income Tax Regs. The determination of whether a taxpayer acted
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