Question

Which of the following is not a reason for relief from the substantial understatement​ penalty?A. reasonable cause and a good faith effort to comply with the tax lawB. substantial authority for the tax return positionC. reliance on a tax return preparerD. disclosure of the relevant facts pertaining to the questionable tax return position

Answer 1

c- Reliance on a tax return preparer

Step-by-step explanation

The substantial understatement penalty is a punishment that the IRS applies to taxpayers, it belong to the accuracy-related penalty. The IRS can impose it due to: careless, reckless, or intentional disregard of the rules or regulations. There are ways for taxpayer to avoid the penalty for taking a position on a return that is contrary to a rule or regulation if the taxpayer properly discloses the position, but reliance on a tax return preparer is not among the options, as it does not by itself constitute reasonable reliance in good faith; also, a taxpayer needs to discuss the issue with the adviser.