- 47 -
conduct that constitutes negligence and petitioner can offer no
excuse, it is liable for the addition to tax.7
Section 6662(a) and (b)(1)8 imposes an accuracy-related
penalty equal to 20 percent of the portion of an underpayment of
tax that is attributable to negligence. For purposes of section
6662, unlike section 6653, the amount shown on a late return is
not treated as an underpayment. Sec. 6664(a)(1). Consequently
delinquency, by itself, is not grounds for the accuracy-related
penalty. Sec. 1.6662-2(a), Income Tax Regs. As under prior law,
“negligence” includes any failure to make a reasonable attempt to
comply with the provisions of the Code. Sec. 6662(c). A
position with respect to an item is attributable to negligence if
the taxpayer failed to maintain adequate records to substantiate
7 Cf. Lazore v. Commissioner, 11 F.3d 1180, 1188-1189 (3d
Cir. 1993), revg. in relevant part T.C. Memo. 1992-404 (holding
that an underpayment was not attributable to delinquency because
the taxpayers would have reported no tax due even if they had
filed on time). In a footnote to its decision, the Court of
Appeals for the Third Circuit questioned the soundness of the
holding in Emmons v. Commissioner, 92 T.C. 342 (1989), affd. 898
F.2d 50 (5th Cir. 1990), that in the absence of extenuation
delinqency is grounds for imposition of the addition to tax under
sec. 6653. Lazore v. Commissioner, supra at 1189 n.4. Although
we reaffirm our belief in the logic of Emmons v. Commissioner,
supra and Condor Intl., Inc. v. Commissioner, 98 T.C. 203 (1992),
affd. in part and revd. in part 78 F.3d 1355 (9th Cir. 1996), we
note that our result for TYE 8/31/89 would not differ under the
negligence analysis we use in applying sec. 6662(a) and (b)(1) to
TYE 8/31/90 and TYE 8/31/91, infra. See Pessin v. Commissioner,
59 T.C. 473, 489 (1972).
8 Although the notice of deficiency determined negligence
(sec. 6662(b)(1)) and substantial understatement (sec.
6662(b)(2)) as alternative theories for imposition of the
penalty, on brief respondent pursued only the former theory.
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