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(the only year for which we have petitioner’s return), any other
factual basis upon which to impose such penalties.
The question we must decide is whether a taxpayer failing to
assign error to a penalty will be deemed to concede the penalty
notwithstanding that the Commissioner has failed to produce
evidence that imposition of the penalty is appropriate. The
question is suggested by section 7491(c) and Rule 142(a)(2).
Section 7491 was enacted by section 3001(a) of the Internal
Revenue Service Restructuring and Reform Act of 1998 (RRA 1998),
Pub. L. 105-206, 112 Stat. 685, 726. As so added, section 7491
is effective with respect to court proceedings arising in
connection with examinations by the Commissioner commencing after
July 22, 1998, the date of the enactment of RRA 1998. See RRA
1998 sec. 3001(c), 112 Stat. 727. Section 7491 is effective with
respect to this court proceeding. Section 7491(c) provides:
SEC. 7491(c). Penalties.–-Notwithstanding any
other provision of this title, the Secretary shall have
the burden of production in any court proceeding with
respect to the liability of any individual for any
penalty, addition to tax, or additional amount imposed
by this title.
The Commissioner’s burden of production under section
7491(c) is to produce evidence that it is appropriate to impose
the relevant penalty, addition to tax, or additional amount
(without distinction, penalty). See Higbee v. Commissioner, 116
T.C. 438, 446 (2001). Unless the taxpayer puts the penalty into
play, however (by assigning error to the Commissioner’s penalty
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