- 10 -
percent floor. Accordingly, respondent’s determination is
sustained.
IV. Accuracy-Related Penalty
Initially, the Commissioner has the burden of production
with respect to any penalty, addition to tax, or additional
amount. Sec. 7491(c). The Commissioner satisfies this burden of
production by coming “forward with sufficient evidence indicating
that it is appropriate to impose the relevant penalty.” Higbee
v. Commissioner, 116 T.C. 438, 446 (2001). Once the Commissioner
satisfies this burden of production, the taxpayer must persuade
the Court that the Commissioner’s determination is in error by
supplying sufficient evidence of reasonable cause, substantial
authority, or a similar provision. Id.
In pertinent part, section 6662 imposes an accuracy-related
penalty equal to 20 percent of the underpayment that is
attributable to negligence or disregard of rules or regulations
or a substantial understatement of income tax.6 Sec. 6662(a) and
(b)(1) and (2). “Negligence” is defined to include “any failure
to make a reasonable attempt to comply with the provisions of
this title”, and “disregard” is defined to include “any careless,
reckless, or intentional disregard.” See sec. 6662(c).
Negligence also includes any failure by the taxpayer to keep
6 Because the Court finds for respondent on the negligence
ground, the Court need not discuss the substantial understatement
of income tax ground.
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Last modified: March 27, 2008