[Code of Federal Regulations]
[Title 26, Volume 13]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR]

[Page 506]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
Procedure and Administration--Table of Contents
 
Sec.  1.6662-7  Omnibus Budget Reconciliation Act of 1993 changes to 
the accuracy-related penalty.

    (a) Scope. The Omnibus Budget Reconciliation Act of 1993 made 
certain changes to the accuracy-related penalty in section 6662. This 
section provides rules reflecting those changes.
    (b) No disclosure exception for negligence penalty. The penalty for 
negligence in section 6662(b)(1) may not be avoided by disclosure of a 
return position.
    (c) Disclosure standard for other penalties is reasonable basis. The 
penalties for disregarding rules or regulations in section 6662(b)(1) 
and for a substantial understatement of income tax in section 6662(b)(2) 
may be avoided by adequate disclosure of a return position only if the 
position has at least a reasonable basis. See Sec.  1.6662-3(c) and 
Sec. Sec.  1.6662-4(e) and (f) for other applicable disclosure rules.
    (d) Reasonable basis. For purposes of Sec. Sec.  1.6662-3(c) and 
1.6662-4(e) and (f) (relating to methods of making adequate disclosure), 
the provisions of Sec.  1.6662-3(b)(3) apply in determining whether a 
return position has a reasonable basis.

[T.D. 8617, 60 FR 45665, Sept. 1, 1995, as amended by T.D. 8790, 63 FR 
66435, Dec. 2, 1998]

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