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records to Mr. Beltran to substantiate their income and expenses;
however, with respect to the itemized deductions claimed, these
records did not, in any way, come close to equaling the amounts
deducted on the returns. After their returns were prepared and
presented to them each year, petitioners did not review the
returns, nor did they go over the returns with Mr. Beltran. When
they subsequently received notices from respondent that their
returns for the 3 years at issue were under audit, Mr. Beltran
advised petitioners "not to worry", and, based on that advice,
petitioners ignored all correspondence they received from
respondent.2
Section 6662(a) provides for an accuracy-related penalty
equal to 20 percent of any portion of an underpayment of tax
required to be shown on the return that is attributable to the
taxpayer's negligence or disregard of rules or regulations. Sec.
6662(a) and (b)(1). Negligence consists of any failure to make a
reasonable attempt to comply with the provisions of the Internal
Revenue Code and disregard consists of any careless, reckless, or
intentional disregard. Sec. 6662(c). The courts have refined
the Code definition of negligence as a lack of due care or
2 This case is one of numerous cases heard by the Court
involving tax returns prepared by Mr. Beltran, which essentially
involve the same inflated deductions. At some point in the audit
process, Mr. Beltran ceased all communications with his former
clients.
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Last modified: May 25, 2011