- 7 - the Court that the Commissioner’s determination is incorrect. Higbee v. Commissioner, supra at 446-447. The accuracy-related penalty is not imposed with respect to any portion of the understatement as to which the taxpayer acted with reasonable cause and in good faith. See sec. 6664(c)(1). The decision as to whether the taxpayer acted with reasonable cause and in good faith depends upon all the pertinent facts and circumstances. See sec. 1.6664-4(b)(1), Income Tax Regs. Generally, the most important factor is the extent of the taxpayer’s efforts to evaluate his proper tax liability. Id. The taxpayer, generally, must bear the consequences of any negligent errors committed by his or her agent. Pritchett v. Commissioner, 63 T.C. 149, 173-175 (1974); Ellwest Stereo Theatres v. Commissioner, T.C. Memo. 1995-610. For a taxpayer to rely reasonably upon advice so as to negate a section 6662(a) accuracy-related penalty determined by the Commissioner, the taxpayer must prove by a preponderance of the evidence that the taxpayer meets all of the following requirements: (1) The adviser was a competent professional who had sufficient expertise to justify reliance, (2) the taxpayer provided necessary and accurate information to the adviser, and (3) the taxpayer actually relied in good faith on the adviser’s judgment. See Neonatology Associates, P.A. v. Commissioner, 115 T.C. 43, 99Page: Previous 1 2 3 4 5 6 7 8 9 Next
Last modified: May 25, 2011