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are to be considered in relation to the “statute on its face”,
and “only the clearest proof” will suffice to override
legislative intent that a remedy be civil in nature. Id. at 100.
After considering the “guidepost” factors, we hold that the
accuracy-related penalty for negligence and/or the civil tax
liability on the forfeited espionage income are not so punitive
as to overcome clear congressional intent that they be civil
rather than criminal in nature. The imposition of a tax
liability, or a civil tax penalty, does not amount to an
affirmative disability or restraint, nor has it historically been
regarded as punishment. See Louis v. Commissioner, 170 F.3d at
1235 (for penalties); Murillo v. Commissioner, T.C. Memo. 1998-13
(for tax liability). The Court of Appeals for the Ninth Circuit
has applied the Hudson test in Louis and held that the addition
to tax for fraud and its purpose were remedial.11 Louis v.
Commissioner, supra. The fraud penalties “are provided primarily
as a safeguard for the protection of the revenue and to reimburse
11 The Court of Appeals for the Ninth Circuit, in holding
that the civil fraud penalty was not punitive within the meaning
of Hudson v. United States, 522 U.S. 93 (1997), noted that the
civil fraud penalty contained some of the guideposts, such as
intent. See Louis v. Commissioner, 170 F.3d 1232, 1235-1237 (9th
Cir. 1999), affg. per curiam T.C. Memo. 1996-257. In that
regard, the negligence penalty does not require specific intent
and thus has less coincidence with the guideposts. In addition,
the negligence penalty is 20 percent of the affected portion of
the underpayment, whereas the fraud penalty is 75 percent of the
same portion.
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