6694 & 6662

The negligence standards for taxpayers, as you know, are highly relevant to 66694 standards. The Tompson case below has a most interesting statement that elevates "due diligence" in 6662 and 6694 statements. The standard for "reasonable cause" is much higher in 6694 cases. Therefore, anything that flunks 6662 reasonable cause will flunk 6694 reasonable cause. Citing Walter v. United States, 148 F.3d 1027, 1030 (8th Cir. 1998, the most important factor in determining whether there was reasonable cause for underpayment is extent of taxpayer's effort to assess proper tax liability. I read that as "due diligence" which appears to ba a factor that will be considered in 6694 penalty cases. I do not recall seeing a similar statement in another case as the one quoted in this 8th Circuit case.


Gregory Eugene Thompson, Appellant v. Commissioner of Internal Revenue, Appellee.

U.S. Court of Appeals, 8th Circuit; 07-3917, March 2, 2009.

Unpublished opinion affirming, per curiam, the Tax Court, 94 TCM 430, Dec. 57,158(M), TC Memo. 2007-327.

[ Code Sec. 6662]


The Tax Court did not abuse its discretion in determining that an individual had not shown reasonable cause warranting an exception to the accuracy-related penalty. The individual had not shown enough of an effort to assess his proper tax liability; thus, he was liable for the accuracy-related penalty assessed against him.




Before: Wollman, Murphy and Melloy, Circuit Judges.

PER CURIAM: Gregory Thompson appeals the tax court's 1 decision upholding a notice of deficiency (NOD) issued by the Internal Revenue Service for the 2004 tax year. Upon review, we hold that the tax court did not abuse its discretion in determining that Thompson had not shown reasonable cause warranting an exception to the accuracy-related penalty assessed in the NOD. See Walter v. United States, 148 F.3d 1027, 1030 (8th Cir. 1998) (most important factor in determining whether there was reasonable cause for underpayment is extent of taxpayer's effort to assess proper tax liability); Caulfield v. Comm'r, 33 F.3d 991, 994 (8th Cir. 1994) (decision not to waive accuracy-related penalty reviewed for abuse of discretion); Higbee v. Comm'r, 116 T.C. 438, 446 (2001) (taxpayer bears burden of proof to justify grant of reasonable-cause exception to accuracy-related penalty). Thompson has waived the remaining tax issues that are before this court. See Chay-Valesquez v. Ashcroft, 367 F.3d 751, 756 (8th Cir. 2004) (issues not meaningfully argued in opening brief are deemed waived).

The decision of the tax court is affirmed. See 8th Cir. R. 47B.

1 The Honorable Diane L. Kroupa, United States Tax Court Judge.