Description
The new law provides for an increase to the existing accuracy related penalty for an amnesty eligible tax year from twenty percent to forty percent, for any proposed deficiency assessment issued after the end of the amnesty period (March 31, 2005).
Amount
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We may impose the 40% penalty on the underpayment of tax caused by:
- Negligence or disregard of rules or regulations.
- Substantial understatement of income tax.
- Substantial valuation misstatement.
- Substantial overstatement of pension liabilities.
- Substantial estate or gift tax valuation understatement.
When the increased penalty does not apply
The increased penalty does not apply to understatements related to tax shelter items. The increased penalty also does not apply to any understatement that is the subject of an audit, protest, appeal, settlement or litigation as of the start of the amnesty period.
Effective date
Back to Tax Amnesty HomepageThis penalty applies to taxable years 2002 and prior. It applies to notices of proposed assessment issued after March 31, 2005.