                  T.C. Summary Opinion 2006-64



                     UNITED STATES TAX COURT



                   ELAINE HANG, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 4950-05S.               Filed April 25, 2006.


     Elaine Hang, pro se.

     Michael Berwind, for respondent.



     DEAN, Special Trial Judge:     This case was heard pursuant to

the provisions of section 7463 of the Internal Revenue Code in

effect at the time the petition was filed.    Unless otherwise

indicated, subsequent section references are to the Internal

Revenue Code as in effect for the year at issue.    The decision to

be entered is not reviewable by any other court, and this opinion

should not be cited as authority.
                                - 2 -

     Respondent determined for 2001 a deficiency in petitioner’s

Federal income tax of $12,406 and a section 6662(a) accuracy-

related penalty of $2,481.20.   Petitioner has conceded that she

is liable for the deficiency.   The only issue remaining for

decision is whether petitioner is liable for a section 6662(a)

accuracy-related penalty.

                            Background

     At the time the petition in this case was filed, petitioner

resided in Las Vegas, Nevada.

     Petitioner filed a Form 1040, U.S. Individual Income Tax

Return, for 2001, which was prepared by a certified public

accountant (C.P.A.).   On February 2, 2005, respondent issued to

petitioner a statutory notice of deficiency for 2001.   Respondent

determined that petitioner was liable for an accuracy-related

penalty under section 6662(a), because there was a substantial

understatement of income tax.

                            Discussion

     Section 7491(c) imposes the burden of production in any

court proceeding on the Commissioner with respect to the

liability of any individual for penalties and additions to tax.

Higbee v. Commissioner, 116 T.C. 438, 446 (2001); Trowbridge v.

Commissioner, T.C. Memo. 2003-164, affd. 378 F.3d 432 (5th Cir.

2004).   In order to meet the burden of production under section

7941(c), the Commissioner must come forward with sufficient
                                - 3 -

evidence indicating that it is appropriate to impose the relevant

penalty.    Higbee v. Commissioner, supra.

     Pursuant to section 6662(a), a taxpayer may be liable for a

penalty of 20 percent of the portion of an underpayment of tax

(1) due to negligence or disregard of rules or regulations or (2)

attributable to a substantial understatement of income tax.    See

sec. 6662(b)(1) and (2); see also DeCleene v. Commissioner, 115

T.C. 457, 476 (2000).    A substantial understatement of tax exists

if the amount of the understatement of tax exceeds the greater of

10 percent of the tax required to be shown on the tax return, or

$5,000.    See sec. 6662(d)(1)(A).

     Respondent has met his burden of production, because he has

shown that petitioner has mathematically understated her income

tax liability within the meaning of section 6662(d)(1)(A).

     Once the Commissioner meets his burden of production, the

taxpayer must come forward with evidence sufficient to persuade

the Court that the Commissioner’s determination is incorrect.

Higbee v. Commissioner, supra at 446-447.

      The accuracy-related penalty is not imposed with respect to

any portion of the understatement as to which the taxpayer acted

with reasonable cause and in good faith.     See sec. 6664(c)(1).

The decision as to whether the taxpayer acted with reasonable

cause and in good faith depends upon all the pertinent facts and

circumstances.    See sec. 1.6664-4(b)(1), Income Tax Regs.
                               - 4 -

Generally, the most important factor is the extent of the

taxpayer’s efforts to evaluate his proper tax liability.     Id.

Reliance on the advice of a professional tax adviser does not

necessarily demonstrate reasonable cause and good faith.     Id.

     The responsibility to file returns and pay tax when due

rests upon the taxpayer and cannot be delegated, and the

taxpayer, generally, must bear the consequences of any negligent

errors committed by his or her agent.     Pritchett v. Commissioner,

63 T.C. 149, 173-175 (1974); Ellwest Stereo Theatres, Inc. v.

Commissioner, T.C. Memo. 1995-610.

     For a taxpayer to rely reasonably upon advice so as to

negate a section 6662(a) accuracy-related penalty determined by

the Commissioner, the taxpayer must prove by a preponderance of

the evidence that the taxpayer meets all of the following

requirements:   (1) The adviser was a competent professional who

had sufficient expertise to justify reliance, (2) the taxpayer

provided necessary and accurate information to the adviser, and

(3) the taxpayer actually relied in good faith on the adviser’s

judgment.   See Neonatology Associates, P.A. v. Commissioner, 115

T.C. 43, 99 (2000), affd. 299 F.3d 221 (3d Cir. 2002); Ellwest

Stereo Theatres v. Commissioner, supra.

     Petitioner testified that, in the preparation of her tax

return, she submitted “everything” to her C.P.A.    Once the return

had been prepared, petitioner signed it without reviewing the
                              - 5 -

return or any of the attached schedules.    Petitioner contends

that she is not liable for the penalty, because she relied on her

C.P.A. to prepare her tax return and to ensure tax compliance.

Petitioner relies solely on her oral testimony and has not shown,

by a preponderance of the evidence, that her C.P.A. possessed

sufficient relevant information or expertise to warrant her

reliance on the C.P.A.’s judgment.

     Respondent’s determination that petitioner is liable for an

accuracy-related penalty under section 6662(a) is accordingly

sustained.

     Reviewed and adopted as the report of the Small Tax Case

Division.


                                           Decision will be entered

                                     for respondent.
