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In a proceeding before this Court, the Commissioner’s
obligation under section 7491(c) initially to come forward with
evidence that it is appropriate to apply a particular penalty to
a taxpayer is conditioned upon the taxpayer’s assigning error to
the Commissioner’s penalty determination. In Swain v.
Commissioner, 118 T.C. 358 (2002), we held that a taxpayer who
failed to assign error to a penalty is deemed under Rule 34(b)(4)
to have conceded the penalty, notwithstanding that the
Commissioner failed to produce evidence that the imposition of
the penalty is appropriate. We explained that Rule 34(b)(4) and
section 7491(c) are consistent and described the
interrelationship of Rule 34(b)(4) and section 7491(c) as
follows:
An individual must first challenge a penalty by filing
a petition alleging some error in the determination of
the penalty. If the individual challenges a penalty in
that manner, the challenge generally will succeed
unless the Commissioner produces evidence that the
penalty is appropriate. If an individual does not
challenge a penalty by assigning error to it (and is,
therefore, deemed to concede the penalty), the
Commissioner need not plead the penalty and has no
obligation under section 7491(c) to produce evidence
that the penalty is appropriate.
Id. at 364-365.
Respondent has determined that petitioner is liable for
additions to tax under sections 6651(a)(1) and (2) and 6654. We
examine the record to decide whether petitioner assigned error to
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Last modified: May 25, 2011