- 17 -
by-case basis, taking into account all the pertinent facts and
circumstances. Sec. 1.6664-4(b)(1), Income Tax Regs. The
taxpayer’s education, experience, and knowledge are considered in
determining reasonable cause and good faith. And, generally, the
most important factor is the extent of the taxpayer’s effort to
assess his or her proper tax liability. Sec. 1.6664-4(b)(1),
Income Tax Regs.
Respondent determined an accuracy-related penalty under
section 6662(a) to be applicable in this case because petitioners
understated their income tax by $10,048 on their 2002 return.
Because petitioners’ understatement of tax was greater than 10
percent of the tax required to be shown on the return, or $5,000,
the understatement was a substantial understatement of income tax
pursuant to section 6662(d)(1)(A)(i) and (ii).
Petitioners argue that they should not be held liable for
the penalty because of their reliance on the income tax
preparation provided to them by Mr. Ingram.
Respondent carries the burden of production under section
7491(c) with respect to the accuracy-related penalty under
section 6662. To meet that burden, respondent must come forward
with sufficient evidence indicating that it is appropriate to
impose the penalty. Higbee v. Commissioner, 116 T.C. 438, 446
(2001). Although respondent bears the burden of production with
respect to the penalty, respondent “need not introduce evidence
Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: March 27, 2008