Accuracy Related Penalties

Accuracy related penalties are a collection of different penalties, the two most common being the “substantial understatement” penalty and the “negligence and disregard of the rules and regulations” penalty. These penalties are calculated as a flat 20% of the net understatement of tax. The accuracy related penalties may usually be avoided by providing adequate disclosures on the tax return, ensuring that the positions taken on your return are defensible, or by showing that you acted with reasonable cause and good faith.

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