- 30 -
the taxpayer acted in good faith with respect to such portion.”
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 a tax professional
may, but does not necessarily, demonstrate reasonable cause and
good faith for purposes of avoiding the section 6662(a) penalty.
See id.; see also Freytag v. Commissioner, 89 T.C. 849, 888
(1987), affd. 904 F.2d 1011 (5th Cir. 1990), affd. 501 U.S. 868
(1991). 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 tax professional must show,
at minimum, that (1) the adviser was supplied with correct
information and (2) the incorrect return was a result of the
adviser’s error. See, e.g., Ma-Tran Corp. v. Commissioner, 70
Page: Previous 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 NextLast modified: May 25, 2011