California Revenue & Taxation Code Section 19164: Defending Against the Accuracy-Related and Fraud Penalties

The accuracy-related and fraud penalties under Cal. Rev. & Tax. Code Section 19164 are generally determined in accordance with federal law. The federal counterparts to Section 19164 are I.R.C. Sections 6662-6665. Defending against the accuracy-related and fraud penalties can be difficult and requires a solid understanding of the applicable exceptions to the imposition of such penalties. Moreover, counsel should also be aware of the enhanced accuracy-related penalty (40 percent instead of 20 percent) for potentially abusive tax shelter items and the modified exceptions to the imposition of such penalty.

(The remainder of this article can be accessed in the June 2006 edition of Lexis California Tax Practice Insights.)