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section 6662(a) accuracy-related penalty for the reasons
discussed hereinafter.
Section 6662(a) applies to any portion of an underpayment of
tax required to be shown on a return in an amount equal to 20
percent of the portion of the underpayment to which section 6662
applies. Section 6662(b)(1) provides that the penalty shall
apply to any underpayment attributable to negligence or disregard
of rules or regulations.
Section 6662(c) provides that the term “negligence” includes
any failure to make a reasonable attempt to comply with the
provisions of the Internal Revenue laws, and the term “disregard”
includes any careless, reckless, or intentional disregard of
rules or regulations. Negligence is the lack of due care or
failure to do what a reasonable and ordinarily prudent person
would do under the circumstances. Neely v. Commissioner, 85 T.C.
934, 947 (1985).
Negligence frequently takes the form of overstated
deductions. Alberico v. Commissioner, T.C. Memo. 1995-542.
Overstatement of deductions can reflect the taxpayer’s inability
to maintain adequate records; this inadequacy alone may be
grounds for imposing the penalty. Id. A taxpayer is required to
maintain records sufficient to establish information provided on
a tax return. Id. Failure to maintain records to substantiate
claimed deductions is evidence, therefore, of taxpayer
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Last modified: March 27, 2008