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careless, reckless, or intentional disregard. See sec. 6662(c).
A position with respect to an item is attributable to negligence
if it lacks a reasonable basis. See sec. 1.6662-3(b)(1), Income
Tax Regs. Moreover, taxpayers are required to keep adequate
books and records sufficient to establish the amount of
deductions or other items required to be shown on their returns.
Failure to maintain adequate books and records or to substantiate
items properly also constitutes negligence. See id.
Section 6664(c)(1) 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. See sec. 6664(c)(1).
The determination of whether a taxpayer acted with reasonable
cause and good faith within the meaning of section 6664(c)(1) is
made on a case-by-case basis, taking into account all the
pertinent facts and circumstances. See sec. 1.6664-4(b)(1),
Income Tax Regs.
Generally, the duty of filing accurate returns cannot be
avoided by placing the responsibility on a tax return preparer.
See Metra Chem Corp. v. Commissioner, 88 T.C. 654, 662 (1987).
Although a taxpayer remains liable for a deficiency attributable
to a return prepared by an accountant, a taxpayer who supplies a
qualified tax return preparer with all relevant information and
who reasonably and in good faith relies on the preparer’s advice
is not negligent and has not disregarded rules or regulations,
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Last modified: May 25, 2011