- 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 Next
Last modified: November 10, 2007