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F. Issue 5. Accuracy-Related Penalty
As applicable herein, section 6662(a) imposes a 20-percent
accuracy-related penalty on any underpayment of tax attributable
to either (1) negligence or disregard of rules or regulations, or
(2) any substantial understatement of income tax. The term
“negligence” includes any failure to make a reasonable attempt to
comply with the Internal Revenue Code, and the term “disregard”
includes any careless, reckless, or intentional disregard. Sec.
6662(c). An understatement of income tax is “substantial” if it
exceeds the greater of 10 percent of the tax required to be shown
on the return or $5,000. Sec. 6662(d)(1)(A). As relevant
herein, an “understatement” is defined as the excess of the tax
required to be shown on the return over the tax actually shown on
the return. Sec. 6662(d)(2)(A).
By virtue of section 7491(c), the Commissioner has the
burden of production with respect to the liability of any
individual for any penalty. “[F]or the Commissioner to meet his
burden of production, the Commissioner must come forward with
sufficient evidence indicating that it is appropriate to impose
the relevant penalty.” Higbee v. Commissioner, 116 T.C. at 446.
Once the Commissioner meets the burden of production, the
taxpayer must come forward with persuasive evidence that the
Commissioner’s determination is incorrect. Id. Typically, the
taxpayer would be obliged to prove that he or she acted with
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