Tax
Oct. 3, 2012
US Tax Court hears cases on professional reliance in tax preparation
Two recent tax cases demonstrate the circumstances in which a "reliance" defense arises. By Bruce Givner and Owen Kaye of Givner & Kaye APC
The most common penalty facing an individual taxpayer is the "substantial understatement" penalty. It is imposed for any taxable year if the understatement exceeds the greater of (i) 10 percent of the tax or (ii) $5,000. The penalty is 20 percent of the underpayment for federal tax purposes, Internal Revenue Code Section 6662(a), but 40 percent for California tax purposes, Revenue and Taxation Code Section 19164(a)(1)(B)(i)...
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