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Section 6662(a) does not apply to any portion of an
underpayment subject to the fraud penalty under section 6663.
Sec. 6662(b). When a joint return is filed and one spouse is
found liable for the fraud penalty, imposing the accuracy-related
penalty on the other spouse with respect to the same underpayment
would result in impermissible stacking. Said v. Commissioner,
T.C. Memo. 2003-148; Zaban v. Commissioner, T.C. Memo. 1997-479.
Petitioners filed a joint return for 2002. Respondent
imposed the accuracy-related penalty on Annette C. Talmage for the
same underpayment of tax upon which the Court found petitioner
liable for the fraud penalty. Therefore, the Court finds that
imposing the accuracy-related penalty on her would result in
impermissible stacking. Accordingly, Annette C. Talmage is not
liable for the section 6662(a) accuracy-related penalty for 2002.
C. Section 6651(a)(1) Addition to Tax
Section 6651(a)(1) imposes an addition to tax for failure to
timely file a return. The parties stipulated petitioner failed to
timely file income tax returns for 1998 and 1999. Therefore, the
Court finds respondent met his burden of production.
Because respondent has met his burden, petitioner bears the
burden of proving his failure to timely file was due to reasonable
cause and not willful neglect. To show reasonable cause,
petitioner must show he “exercised ordinary business care and
prudence and was nevertheless unable to file the return within the
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Last modified: March 27, 2008