- 19 - Section 6662 imposes an accuracy-related penalty equal to 20 percent of the portion of the underpayment attributable to negligence or disregard of rules or regulations. "Negligence" means any failure to make a reasonable attempt to comply with the provisions of the Internal Revenue Code, and "disregard" means any careless, reckless, or intentional disregard. Sec. 6662(c); see also Neely v. Commissioner, 85 T.C. 934, 947 (1985). No accuracy-related penalty is imposed with respect to any portion of the understatement in which the taxpayer acted with reasonable cause and in good faith. Sec. 6664(c)(1). Mr. Rungrangsi testified that he relied on his accountants in preparing the tax returns for the years in issue. However, he did not establish that he provided his accountants with all the information necessary for them to prepare petitioners' returns properly. Petitioners' accountants did not testify at trial, and the parties stipulated that petitioners did not have any books or records reflecting the income or expenses of Stanton Mexicatessen for the years in issue. Reliance on an accountant to prepare tax returns is not sufficient by itself to establish reasonable cause. See Metra Chem Corp. v. Commissioner, 88 T.C. 654, 662 (1987). The taxpayer must also show that he supplied the tax preparer with complete and accurate information so that the return could be properly prepared, an incorrect return was the result of the tax preparer's mistakes,Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011