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Addition to Tax Under Section 6654
Section 6654 imposes an addition to tax for failure to make
timely and sufficient payments for estimated taxes. In order for
respondent to satisfy his burden of production under section
7491(c), he must produce evidence necessary to enable the Court
to conclude that petitioner had an obligation to make an
estimated tax payment. Wheeler v. Commissioner, 127 T.C. 200,
211 (2006). Specifically, respondent must produce evidence
showing that petitioner had a “required annual payment” as
defined by section 6654(d)(1)(B) for the year at issue. Id.
The section 6654 addition to tax is calculated with
reference to four required installment payments of the taxpayer’s
estimated tax liability. Sec. 6654(c)(1). Each required
installment of estimated tax is equal to 25 percent of the
“required annual payment”. Sec. 6654(d)(1)(A).
Under section 6654(d)(1)(B), “required annual payment” means
the lesser of--
(i) 90 percent of the tax shown on the return
for the taxable year (or, if no return is
filed, 90 percent of the tax for such year),
or
(ii) 100 percent of the tax shown on the
return of the individual for the preceding
taxable year.
Clause (ii) shall not apply if the preceding taxable
year was not a taxable year of 12 months or if the
individual did not file a return for such preceding
taxable year.
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Last modified: November 10, 2007