- 13 - imposition of the penalty or addition to tax is appropriate. Higbee v. Commissioner, supra. Once the Commissioner meets his burden of production, the taxpayer must come forward with evidence sufficient to persuade a court that the Commissioner’s determination is incorrect. Id. at 447. Respondent determined that a section 6662 accuracy-related penalty is due with respect to petitioners’ tax return for 2001. Section 6662 imposes a penalty equal to 20 percent of the portion of the underpayment attributable to negligence or disregard of rules or regulations. Sec. 6662(a) and (b)(1). The term “negligence” is defined as any failure to make a reasonable attempt to comply with the provisions of the Internal Revenue Code, and the term “disregard” includes any careless, reckless, or intentional disregard. Sec. 6662(c). Negligence also includes any failure by the taxpayer to keep adequate books and records or to substantiate items properly. Sec. 1.6662-3(b)(1), Income Tax Regs. Respondent has carried his burden of production in this case by showing that petitioners failed to fully substantiate their itemized deductions in several categories. The accuracy-related penalty will apply unless petitioners demonstrate that there was reasonable cause for the underpayment and that they acted in good faith with respect to the underpayment. Sec. 6664(c). Whether a taxpayer acted with reasonable cause and good faith depends on the pertinent factsPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011