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Section 6662 imposes a penalty of 20 percent on any portion
of an underpayment of tax attributable to negligence or to
disregard of the rules or the regulations. For purposes of
section 6662(a) negligence is a failure to make a reasonable
attempt to comply with the Internal Revenue Code. See sec.
6662(c).
The accuracy-related penalties under section 6662(a) do not
apply to any part of an underpayment if the taxpayer shows
reasonable cause and if the taxpayer acted in good faith based on
the facts and circumstances. See sec. 6664(c). A taxpayer may
establish reasonable cause under section 6662(a) by proving
reasonable reliance in good faith on the advice of a competent,
independent expert or tax professional. See United States v.
Boyle, 469 U.S. 241, 250 (1985).
Where it is common knowledge that a tax planning proposal is
questionable, taxpayers are expected to make reasonable inquiry
as to the legality of the proposal. See Neely v. United States,
775 F.2d 1092, 1095 (9th Cir. 1985).
Petitioner failed to consult with an attorney or accountant
regarding the trust program promoted by Bigelow Charter.
Petitioners negligently disregarded the tax laws and are liable
for the accuracy-related penalties under section 6662(a).
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Last modified: May 25, 2011