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Section 6662(a) imposes a 20-percent penalty on the portion
of the underpayment attributable to any one of various factors,
one of which is negligence or disregard of rules or regulations.
Sec. 6662(b)(1). Respondent determined that petitioner is liable
for the accuracy-related penalty imposed by section 6662(a) for
his underpayment of taxes, and that such underpayment was due to
negligence or disregard of rules or regulations. "Negligence"
includes a failure to make a reasonable attempt to comply with
the provisions of the Internal Revenue laws or to exercise
ordinary and reasonable care in the preparation of a tax return.
Sec. 6662(c); sec. 1.6662-3(b)(1), Income Tax Regs. "Disregard"
includes any careless, reckless, or intentional disregard of
rules or regulations. Sec. 6662(c); sec. 1.6662-3(b)(2), Income
Tax Regs.
Section 6664(c)(1), however, provides that the penalty under
section 6662(a) shall not apply to any portion of an
underpayment, if it is shown that there was reasonable cause for
the taxpayer's position with respect to that portion and that the
taxpayer acted in good faith with respect to that portion. The
determination of whether a taxpayer acted with reasonable cause
and in good faith is made on a case-by-case basis, taking into
account all the pertinent facts and circumstances. Sec.
1.6664-4(b)(1), Income Tax Regs. The most important factor is
the extent of the taxpayer's effort to assess his proper tax
liability for the year. Id.
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Last modified: May 25, 2011