Elena Swain - Page 9




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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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