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The taxpayer bears the burden of establishing that this
reasonable cause exception is applicable, as respondent’s
determination of an accuracy-related penalty is presumed correct.
See Rule 142(a).
Regulations interpreting section 6664(c) state:
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 pertinent facts
and circumstances. * * * Generally, the most important
factor is the extent of the taxpayer’s effort to assess
the taxpayer’s proper tax liability. * * * [Sec.
1.6664-4(b)(1), Income Tax Regs.]
Furthermore, reliance upon the advice of an expert tax
preparer may, but does not necessarily, demonstrate reasonable
cause and good faith in the context of the section 6662(a)
penalty. See id.; see also Freytag v. Commissioner, supra at
888. Such reliance is not an absolute defense, but it is a
factor to be considered. See Freytag v. Commissioner, supra at
888. In order for this factor to be given dispositive weight,
the taxpayer claiming reliance on a professional such as an
accountant must show, at minimum, that (1) the accountant was
supplied with correct information and (2) the incorrect return
was a result of the accountant’s error. See, e.g., Ma-Tran Corp.
v. Commissioner, 70 T.C. 158, 173 (1978); Pessin v. Commissioner,
59 T.C. 473, 489 (1972); Garcia v. Commissioner, T.C. Memo. 1998-
203, affd. without published opinion 190 F.3d 538 (5th Cir.
1999).
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Last modified: May 25, 2011