2023 District of Columbia Code › Title 47 - Taxation, Licensing, Permits, Assessments, and Fees. [Enacted title] › Chapter 42 - Interest and Penalties › Subchapter II - Penalties › § 47–4211. Imposition of accuracy-related penalty

§ 47–4211. Imposition of accuracy-related penalty.
(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).
(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.)
Section References
This section is referenced in § 47-2763 and § 47-4221.
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”.
Emergency Legislation
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).
Temporary Legislation
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).