- 5 - evidence with the exception of stipulations of fact and accompanying exhibits submitted therewith. OPINION 1. Burden of Production Petitioners argue that section 7491(c) applies to place upon respondent a burden of production as to the accuracy-related penalty under section 6662(h).3 Section 7491(c) was added to the Code by the Internal Revenue Service Restructuring and Reform Act of 1998 (RRA), Pub. L. 105-206, sec. 3001(a), 112 Stat. 726, effective for “court proceedings arising in connection with examinations commencing after” July 22, 1998. RRA sec. 3001(c)(1), 112 Stat. 727. While the parties agree that the Commissioner started examining TBS 90-1 before the effective date of section 7491(c), the parties dispute whether the Commissioner’s examination of TBS 90-1 is the relevant 3 Sec. 7491(c) provides: SEC. 7491(c). Penalties.--Notwithstanding any other provision of this title, the Secretary shall have the burden of production in any court proceeding with respect to the liability of any individual for any penalty, addition to tax, or additional amount imposed by this title. In order to satisfy that burden of production, the record must establish that it is appropriate to impose the relevant penalty, addition to tax, or additional amount. See Higbee v. Commissioner, 116 T.C. 438, 446 (2001). The burden of production and proof remain on the taxpayer to establish that the penalty, addition to tax, or additional amount does not apply because of reasonable cause, substantial authority, or the like. Id.; see also H. Conf. Rept. 105-599, at 241 (1998), 1998-3 C.B. 747, 995.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 NextLast modified: November 10, 2007