- 19 - was to ensure that the Nortons would not strip down the value of the bank’s lien on the property by failing to remedy environmental hazards.) The $15,000 deposit into the controlled savings account did not pay environmental cleanup costs. Thus, we sustain respondent’s determination on this issue. Issue 5. Section 6662(a) Accuracy-Related Penalty The final issue is whether the Nortons are liable for the section 6662(a) accuracy-related penalty. Section 6662 imposes a penalty equal to 20 percent of any portion of an understatement that is attributable to negligence or disregard of rules or regulations or substantial underpayment of tax. See sec. 6662(a) and (b)(1). “Negligence” includes any failure of the taxpayer to make a reasonable attempt to comply with the provisions of the Code, and “disregard” includes any careless, reckless, or intentional disregard of rules and regulations. Sec. 6662(c). The accuracy-related penalty will be imposed unless the taxpayers can demonstrate that there was reasonable cause and they acted in good faith with respect to the underpayment. See sec. 6664(c)(1). In determining the applicability of section 6664(c)(1), we weigh the particular facts and circumstances of each case. See sec. 1.6664-4(b), Income Tax Regs. One of the most important factors that we take into account is the extent of the taxpayer’s effort to assess the proper tax liability. See id.Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Next
Last modified: May 25, 2011