                   T.C. Summary Opinion 2008-91



                     UNITED STATES TAX COURT



         RICHARD W. AND SHIRLEY A. WILSON, Petitioners v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 24500-06S.              Filed July 29, 2008.



     Michael O’Hare, for petitioners.

     Michael W. Bitner, for respondent.



     THORNTON, Judge:   This case was heard pursuant to the

provisions of section 7463 of the Internal Revenue Code in effect

when the petition was filed.1   Pursuant to section 7463(b), the




     1
       Unless otherwise indicated, section references are to the
Internal Revenue Code of 1986, in effect for the year in issue.
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decision to be entered is not reviewable by any other court, and

this opinion shall not be treated as precedent for any other case.

     The sole issue is whether pursuant to section 6662(a)

petitioners are liable for an accuracy-related penalty for

failing to report their Social Security benefits on their 2004

Federal income tax return.

                             Background

     The parties have stipulated some facts, which we incorporate

herein.   When they petitioned this Court, petitioners resided in

Nebraska.

     In 2004, petitioners received $24,504 in Social Security

benefits.    On their 2004 joint Form 1040, U.S. Individual Income

Tax Return, petitioners did not report any Social Security

benefits as income.   Their 2004 tax return was prepared by Tax

Help, Inc., which had prepared their returns for many years.

     On May 22, 2006, respondent sent petitioners a notice that

proposed increasing petitioners’ 2004 Federal income tax by

$5,193 because petitioners had failed to report their Social

Security benefits; respondent also proposed a $1,039 accuracy-

related penalty pursuant to section 6662(a).   Petitioners

promptly filed an amended 2004 return which listed their Social

Security benefits and reported an additional $5,193 of tax

liability.   By notice of deficiency, respondent determined a
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$1,039 accuracy-related penalty under section 6662(a).

Petitioners filed a timely petition for redetermination.

                             Discussion

     Section 6662(a) imposes a 20-percent penalty on any portion

of an underpayment that is attributable to, among other things,

negligence or disregard of rules or regulations.   For this

purpose, negligence includes any failure to make a reasonable

attempt to comply with the tax code; the term “disregard”

includes “careless, reckless, or intentional disregard.”    Sec.

6662(c).

     No penalty shall be imposed under section 6662(a) with

respect to any portion of an underpayment if it is shown that

there was reasonable cause and that the taxpayer acted in good

faith.   See sec. 6664(c).   Whether a taxpayer acted in good faith

depends upon the facts and circumstances of each case.    See sec.

1.6664-4(b)(1), Income Tax Regs.   Reliance on a professional

return preparer may be reasonable and in good faith if the

taxpayer establishes:   (1) The return preparer had sufficient

expertise to justify reliance; (2) the taxpayer provided

necessary and accurate information to the return preparer; and

(3) the taxpayer actually relied in good faith on the return

preparer’s judgment.    Neonatology Associates, P.A. v.

Commissioner, 115 T.C. 43, 99 (2000), affd. 299 F.3d 221 (3d Cir.

2002).
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     There is no dispute that petitioners failed to report their

Social Security income on their 2004 return, resulting in an

underpayment.     Respondent has met his burden of production under

section 7491(c).

     Petitioners failed to demonstrate reasonable and good faith

reliance on their tax return preparer.     In fact, at the trial

petitioners’ attorney, who is also an accountant and employed at

Tax Help, Inc., did not pursue this defense in any meaningful way

but instead rested his case on the baseless contention that the

Commissioner’s alleged failure to impose the section 6662(a)

penalty in allegedly analogous situations involving other

unidentified taxpayers means that the section 6662(a) penalty

cannot be sustained in this case.2

         At trial, petitioner husband conceded that petitioners

signed their Form 1040 without looking at the first page, wherein

the line calling for the reporting of Social Security benefits

was left blank.     We are unable to conclude on this record that

petitioners’ reliance on their return preparer was reasonable,

that they provided their return preparer all necessary

information, or that they exercised the due care of ordinarily

prudent persons in failing even to look at the first page of


     2
       Insofar as they might be indicative of the nature or
quality of advice dispensed at Tax Help, Inc., petitioners’
attorney’s contentions tend to call into question whether the
return preparer had sufficient expertise to justify petitioners’
reliance.
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their return before signing it.    The understatement is due to

negligence and careless disregard of rules and regulations within

the meaning of section 6662(c), and petitioners are liable for

the accuracy-related penalty under section 6662(a).

     To reflect the foregoing,


                                              Decision will be entered

                                         for respondent.
