- 19 -
Section 6662(a) imposes an accuracy-related penalty equal to
20 percent of the underpayment of tax resulting from, inter alia,
negligence or disregard of rules or regulations, sec. 6662(b)(1),
or a substantial understatement of income tax, sec. 6662(b)(2).
For purposes of section 6662(a), an understatement is equal to
the excess of the amount of tax required to be shown in the tax
return over the amount of tax shown in the tax return, sec.
6662(d)(2)(A), and is substantial in the case of an individual if
it exceeds the greater of 10 percent of the tax required to be
shown in the return or $5,000, sec. 6662(d)(1)(A). For purposes
of section 6662(a), the term “negligence” includes any failure to
make a reasonable attempt to comply with the Code, and the term
“disregard” includes any careless, reckless, or intentional
disregard. Sec. 6662(c). Negligence has also been defined as a
lack of due care or failure to do what a reasonable person would
do under the circumstances. Leuhsler v. Commissioner, 963 F.2d
907, 910 (6th Cir. 1992), affg. T.C. Memo. 1991-179; Antonides v.
Commissioner, 91 T.C. 686, 699 (1988), affd. 893 F.2d 656 (4th
Cir. 1990).
The accuracy-related penalty under section 6662(a) does not
apply to any portion of an underpayment if it is shown that there
was reasonable cause for, and that the taxpayer acted in good
faith with respect to, such portion. Sec. 6664(c)(1). The
determination of whether the taxpayer acted with reasonable cause
Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 NextLast modified: May 25, 2011