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The DC Code: § 47-4211 Imposition of accuracy-related penalty.

Index47 Taxation, Licensing, Permits, Assessments, and Fees. (Refs & Annos)
a
For purposes of this section, the term:
1
"Negligence" means a failure to make a reasonable attempt to comply with the provisions of this title or to exercise ordinary and reasonable care in the preparation of a tax return without the intent to defraud. A position with respect to an item is attributable to negligence if it lacks a reasonable basis. Negligence is indicated where:
A
The taxpayer fails to include on an income tax return an amount of income shown on an information return;
B
The taxpayer fails to make a reasonable attempt to ascertain the correctness of a deduction, credit, or exclusion on a return; or
C
The taxpayer fails to keep adequate books and records or to substantiate items properly.
2
"Gross valuation misstatement" means the reporting on any return for a tax imposed by this title of the value of a property or the adjusted basis of a property which is greater than or equal to 400%, or less than or equal to 25%, of the amount determined to be the correct amount of the valuation or adjusted basis.
3
(A) "Substantial understatement of income tax" means, for a taxable year, an understatement made by taxpayer in filing an individual or estate tax return if the amount of the understatement for the taxable year exceeds the greater of:
i
Ten percent of the tax required to be shown on the return for the taxable year; or
ii
$2,000.
B
In the case of a taxpayer other than an individual or estate, subparagraph (A) of this paragraph shall be applied by substituting "$4,000" for "$2,000".
C
(i) For purposes of this section, the term "understatement" means the excess of the amount of tax required to be shown on a return less the tax shown on the return.
ii
The amount of the understatement under sub-subparagraph (i) of this paragraph shall be reduced by the portion of the understatement which is attributable to:
I
The tax treatment of an item by the taxpayer if there is or was substantial authority for the treatment; or
II
An item if:
aa
The relevant facts affecting the item's tax treatment are adequately disclosed in a statement attached to the return; and
bb
There is a reasonable basis for the tax treatment of the item by the taxpayer.
4
"Substantial valuation misstatement" means the reporting on any return for a tax imposed by this title of the value of a property or the adjusted basis of a property which is greater than or equal to 200%, or less than or equal to 50%, of the amount determined to be the correct amount of the valuation or adjusted basis.
b
(1) There shall be added to a tax imposed by this title an amount equal to 20% of the portion of an underpayment which is attributable to one or more of the following:
A
Negligence;
B
A substantial understatement of income tax; or
C
A substantial valuation misstatement.
2
There shall be added to the tax imposed by this title an amount equal to 40% of the portion of an underpayment which is attributable to a gross valuation misstatement.
c
(1) Subsection (b) of this section shall not apply to the portion of an underpayment on which a penalty is imposed under § 47-4212.
2
No penalty shall be imposed under subsection (b) of this section by reason of a substantial valuation misstatement or a gross valuation misstatement unless the portion of the underpayment for the taxable year attributable to the substantial valuation misstatement exceeds $5,000 ($10,000 in the case of a corporation).

Historical and Statutory

Effect of Amendments D.C. Law 14-282, in subsec. (a)(2), substituted "greater than or equal to 400%, or less than or equal to 25%, of" for "400% or more greater or less than"; and in subsec. (a)(4), substituted "greater than or equal to 200%, or less than or equal to 50%, of" for "200% or more greater or less than". Temporary Amendments of Section For temporary (225 day) amendment of section, see § 12(ggg) of Tax Clarity and Recorder of Deeds Temporary Act of 2002 (D.C. Law 14-191, October 5, 2002, law notification 49 DCR 9549). For temporary (225 day) amendment of section, see § 12(ggg) of Tax Clarity and Related Amendments Temporary Act of 2003 (D.C. Law 14-228, March 23, 2003, law notification 50 DCR 2741). Emergency Act Amendments For temporary (90 day) amendment of section, see § 12(fff) of Tax Clarity and Recorder of Deeds Emergency Act of 2002 (D.C. Act 14-381, June 6, 2002, 49 DCR 5674). For temporary (90 day) amendment of section, see § 12(ggg) of Tax Clarity and Related Amendments Emergency Act of 2002 (D.C. Act 14-456, July 23, 2002, 49 DCR 8107). For temporary (90 day) amendment of section, see § 12(ggg) of Tax Clarity and Related Amendments Congressional Review Emergency Act of 2002 (D.C. Act 14-510, October 23, 2002, 49 DCR 10247). Legislative History of Laws For Law 13-305, see notes under § 47-4201. For Law 14-282, see notes following § 47-902. DC CODE § 47-4211 Current through December 11, 2012

Credits

(June 9, 2001, D.C. Law 13-305, § 403(b), 48 DCR 334; Apr. 4, 2003, D.C. Law 14-282, § 11(xx), 50 DCR 896.)