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Petitioners did not introduce evidence to show that the untimely
filing was attributable to any reasonable reliance on their
accountant(s). We sustain the section 6651(a)(1) addition to tax
which respondent determined.26
Respondent determined accuracy-related penalties under
section 6662(a) for petitioners’ 1996 and 1997 taxable years.
Under section 6662(a), an accuracy-related penalty of 20 percent
is imposed on any portion of an underpayment of tax that is
attributable to negligence or to any substantial understatement
of income tax. For the 1996 taxable year, respondent determined
that petitioners are liable for an accuracy-related penalty
attributable to negligence or disregard of rules or regulations.
For the 1997 taxable year, respondent determined that petitioners
are liable for an accuracy-related penalty attributable to a
substantial understatement of tax or, in the alternative, due to
negligence or disregard of the rules or regulations.
Negligence is defined as a lack of due care or failure to do
what a reasonable and prudent person would do under like
circumstances. Sec. 6662(c). In the instant case, petitioners’
26Petitioners’ only argument on brief is that “Petitioners
would clearly have owed no tax but for the loss of their records.
It is debatable whether having no tax liability was justification
for the petitioners in filing their 1997 return”. Even if a
reasonable belief that no taxes were owing and consequently a
belief that no tax return need be filed might establish
reasonable cause, petitioners did not introduce testimony or
evidence as to this issue.
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