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Accuracy-Related Penalty
Respondent determined that petitioners are liable for each
of their taxable years 1999 and 2000 for the accuracy-related
penalty under section 6662(a) because of: (1) Negligence or
disregard of rules or regulations under section 6662(b)(1) or
(2) a substantial understatement of tax under section 6662(b)(2).
Section 6662(a) imposes an accuracy-related penalty equal to
20 percent of the underpayment to which section 6662 applies.
Section 6662 applies to the portion of any underpayment which is
attributable to, inter alia, (1) negligence or disregard of rules
or regulations, sec. 6662(b)(1), or (2) a substantial understate-
ment of tax, sec. 6662(b)(2).
The term “negligence” in section 6662(b)(1) includes any
failure to make a reasonable attempt to comply with the Code.
See sec. 6662(c). Negligence has also been defined as a failure
to do what a reasonable person would do under the circumstances.
See Leuhsler v. Commissioner, 963 F.2d 907, 910 (6th Cir. 1992),
affg. T.C. Memo. 1991-179; Antonides v. Commissioner, 91 T.C.
686, 699 (1988), affd. 893 F.2d 656 (4th Cir. 1990). The term
“disregard” includes any careless, reckless, or intentional
disregard. Sec. 6662(c).
For purposes of section 6662(b)(2), an understatement is
equal to the excess of the amount of tax required to be shown in
the tax return over the amount of tax shown in such return. See
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Last modified: November 10, 2007