- 7 -
Commissioner’s determination is incorrect. Id. Typically, the
taxpayer would be obliged to prove that he or she acted with
reasonable cause and in good faith. See sec. 6664(c)(1); see
also Higbee v. Commissioner, supra at 448-449; sec. 1.6664-
4(b)(1), Income Tax Regs.
The Commissioner may satisfy his burden of production for
the accuracy-related penalty based on negligence or disregard of
rules or regulations by showing that the taxpayer failed to
report a significant amount of income shown on an information
return the accuracy of which is not in dispute. See sec. 1.6662-
3(b)(1)(i), Income Tax Regs.; cf. Owens v. Commissioner, T.C.
Memo. 2002-253 n.11, affd. in part 67 Fed. Appx. 253 (5th Cir.
2003). The Commissioner may satisfy his burden of production for
the accuracy-related penalty based on substantial understatement
of income tax by showing that the understatement on the
taxpayer’s return satisfies the definition of “substantial”.
E.g., Graves v. Commissioner, T.C. Memo. 2004-140; Janis v.
Commissioner, T.C. Memo. 2004-117.
C. Analysis
The record demonstrates that petitioners failed to report
wage income in the amount of $13,775. The record also
demonstrates that the understatement of income tax on
petitioners’ return attributable to such unreported income was
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011