Several types of IRS pronouncements provide recognized authority for the possible defense of the negligent and substantial understatement penalties provisions of IRC 6662. IRC 6662 imposes a 20% penalty for significant understatement of income tax liability. However, the penalty is waived if the taxpayer relied on "substantial authority" for the position taken on the return.
According to Treas. Reg. 1.662-4(d)(3)(iii), "substantial authority" includes the following:
- Internal Revenue Code
- Other statutory provisions
- Treasury regulations of all types
- Court cases
- Revenue rulings
- Revenue procedures
- Tax treaties
- Treasury decision official explanations of treaties
- Committee Reports
- Floor statements made prior to bill enactment by manager
- Blue book
- Private letter rulings
- Technical advice memoranda
- Actions on Decisions
- General Counsel memoranda
- IRS press releases, notices, and announcements
- Other IRS pronouncements published in the Internal Revenue Bulletin