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conclude that petitioner's reliance on the alleged expertise of
Russell was neither reasonable nor prudent.
Application of Section 6653(a)(1) and (2) to 1979 and 1980
Petitioner argues that respondent erred in her determination
that the addition to tax under section 6653(a)(2) applies to her
underpayments of tax for 1979 and 1980 because this provision is
effective only for returns due after December 31, 1981.
Paragraph (2) of section 6653(a) was added to the Code by
section 722(b) of the Economic Recovery Tax Act of 1981 (ERTA),
Pub. L. 97-34, 95 Stat. 172, 342. The provision was meant to
augment the existing negligence penalty and to "encourage
accurate and good faith actions in compliance with tax laws."
H. Rept. 97-201, at 245 (1981), 1981-2 C.B. 352, 399.
ERTA section 722(b)(2), 95 Stat. 342, provides that section
6653(a)(1) and (2) "shall apply to taxes the last date prescribed
for payment of which is after December 31, 1981." The last date
prescribed for the payment of taxes for petitioner's 1979 and
1980 calendar years is April 15, 1980, and April 15, 1981,
respectively. Secs. 6072(a), 6151(a). We find therefore that
petitioner's position is correct; section 6653(a)(2) does not
apply to her 1979 and 1980 tax returns.
Respondent has also asserted that section 6653(a)(1) applies
to 1979 and 1980. For taxes due on or before December 31, 1981,
the addition to tax for negligence is found in section 6653(a).
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