Glossary

IRC Section 6662

Section 6662 imposes the 20 percent accuracy-related penalty on underpayments due to negligence, substantial understatement of income tax, or substantial valuation misstatements.

How it works

Section 6662 imposes the 20 percent accuracy-related penalty on underpayments attributable to negligence, substantial understatement of income tax, or substantial valuation misstatements, rising to 40 percent for gross valuation misstatements and undisclosed foreign financial asset understatements. Section 6664 waives it for reasonable cause and good faith. It cannot be stacked with the fraud penalty on the same underpayment.

Why it matters

It is the penalty attached to nearly every CP2000 and audit adjustment, and the one professional reliance and opinion letters defend against.

Related: accuracy-related penalty.

Guides that cover iRC Section 6662

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Definitions are general information, not legal advice, and may not reflect the most recent changes in law.

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