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filing of a tax return is not excused by the taxpayer’s reliance
on an agent, and such reliance is not ‘reasonable cause’ for a
late filing under § 6651(a)(1).” United States v. Boyle, 469
U.S. 241, 252 (1985).
Respondent’s determination that petitioners are liable for
the addition to tax for failing timely to file their 2001 Federal
income tax return is sustained.
D. Section 6662 Accuracy-Related Penalty
The final issue for decision is whether petitioners are
liable for an accuracy-related penalty under section 6662(a) for
2001. Section 6662(a) imposes a penalty equal to 20 percent of
any underpayment of tax that is attributable to negligence or
disregard of rules or regulations, or a substantial
understatement of income tax. See sec. 6662(a) and (b)(1) and
(2).
An “understatement” of income tax is defined as the excess
of the tax required to be shown on the return over the tax
actually shown on the return. Sec. 6662(d)(2)(A). An
understatement is “substantial” if it exceeds the greater of 10
percent of the tax required to be shown on the return, or $5,000.
Sec. 6662(d)(1)(A).
Whether the accuracy-related penalty is applied because of
negligence or disregard of rules or regulations, or a substantial
understatement of income tax, section 6664 provides a defense if
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Last modified: March 27, 2008