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petitioners have the burden of proving that the failure to file
did not result from willful neglect and that the failure was due
to reasonable cause. See United States v. Boyle, 469 U.S. 241,
245 (1985). Because petitioners failed to present any
explanation of their late filing, they remain liable under
section 6651.
Section 6662 imposes a penalty for substantial
understatement of tax liability if the understatement exceeds the
greater of 10 percent of the correct tax or $5,000. See sec.
6662(d)(1)(A) and (B). The term "understatement" is defined as
the excess of the amount of tax required to be shown on the
return for the taxable year over the amount of tax shown on the
return for the taxable year. Sec. 6662(d)(2)(A). In view of our
determination that petitioners underreported their income by
$105,000, a prima facie case exists for imposition of the
penalty. Because petitioners failed to present any evidence or
argument that the penalty was incorrectly imposed, we uphold
respondent’s determination.
To reflect the foregoing,
Decision will be entered
for respondent.
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Last modified: May 25, 2011