# UNITED STATES TAX COURT > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/agency%3Atax-court%3Ae9f117e4dacda9ed ## Record - **Collection:** Agency decision - **Document type:** Agency decision ## Text T.C. Memo. 2011-156 UNITED STATES TAX COURT RONALD V. AND DONNA-KAY SWANSON, Petitioners . COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 30714 08. Filed July 5, 2011. R dete mined tax deficiencies and accuracy-related penalties pursuant to seå. 6662 (a) , I. R. C. , for Ps' 2001 through 2007 tax years. The determinations stem from R's dete~rmination that ,P-H m de excess contributions to his Roth individual retirement account (Roth IRA) . The parties stipulated Ps' tax deficiencies for the 2001 through 2006 tax years and R conceded iall adjustments relating to the 2007 tax year, leaving only the accuracy-related penalties for Ps' 2001 through 200d tax years in dispute. Held: Ps' are liable fòr sec. 6662( ), I.R.C., accUral:y-related penalti s for their 2001 thiough 2006 tax years . Howard 'S. Fisher, for petitidners MiclíaeÝ W. "Ian and Cindy a - o res ondent Smvåb JUL - 5 2011 - 2 MEMORANDUM FINDINGS OF FACT AND OPINION WHERRY, Judge: This case is before the Court on a petition for redetermination of respondent's determination in a notice of deficiency that petitioners owe tax deficiencies and section 6662(a) accuracy-related penalties for their 2001 through 2007 tax years.1 After concessions,? the sole issue left for decision is whether petitioners are liable for section 6662(a) accuracyrelated penalties for their 2001 through 2006 tax years. FINDINGS OF FACT Some of the facts have'been stipulated, and the stipulations, with the accompanying exhibits, are incorporate'd herein by this reference. At the time they filed their petition with this Court, petitioners resided in Nevada. Petitioners filed joint Federal income tax returns for all relevant years. This case stems from petitioner husband Ronald V. Swanson's attempt to "turn ran IRA into a Roth IRA": (Roth Unless otherwise indicated, all section references are to the Internal Revenue Code of 1986, as amended and in effect for the years at issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. 2The parties stipulated that petitioners are liable for excise tax deficiencies of $61,277.78, $45,207.79, $58,564.58, $63,774.17, $65,637.06, and $73,911.11 for their 2001; 2002, 2003, 2004, 2005, and 2006 tax years', respectively. The parties further stipulated that petitioners have no excise or income tax deficiency for their 2007 tax year and are not liable for the accuracy-related penalty for their 2007 tax year. restructure) 3 The Roth erestructure was designed and implemented by A. Blair Stover, Jr. (Mr. Stover) and his colleagues at- the accounting firm of Grant Thornton, LLP (Grant: Thornton).e The parties have stipúlatedethat in 2000 Mr. Swanson made -an excess contribution intosa Roth indi idual,retirement account (Roth IRA) of $1.61 million and that- as of December 31,- 2006,sit remains in his account. I. Petitioners* Backgroundå Petitioner wife, Donna-Kay Swanson, was a homemaker for all tax years in issuesand 'rel·ied on her -husband to determine wheth'er to engage in the Rotherestruc ure. iMr. Swanson attended college at the Universit of Michigan where he graduated with a degree in mechanical engin ering and mathematics After graduation, Mr. Swanson began wo king for Hughes Aircraft '(Hughes)s .Mr. Swanson worked for Hughes or one of its subsidiažies for his entire 36 -year - career . While working .at Hughes; Mr. Swanson attended graduate school at the University of California Los Angeles i(UCLA) where 3The basic tax characteristics of.a traditional IRA are ,(1) deductible contrLbutions, (2) the accrual of ta -free earnings (except with res>ect to sec. 511 unrelated business income), and (3) the inclusiofof diètrib tions in gross income. See secs. 219 (a) , 408 (a) , (d) (1) , .(e) ; see also Taproot Admin. Servs . , Inc . v. Commissioner, 133 T.C. 202, 206 (2009). The basic tax characteristics of a Roth IRA are (1) nondeductible contkibutions, (2) the accrual of tax-free earnings, and (3) the exclusion of qualified distributions from gross income. See sec. 408A (a) , (c) (1) , (d) (1) , and (2) (A) ; see also Taproot Admin. Servs., Inc. v. Commissioner, supra at 206. 4 - : he graduated with a 'degree -in Applied Mechanics . Additionally,a Mr. Swanson finished a 2-year extension course at UCLA, where he received a certificatet in business management. During his career, Mr. Swanson worked at? Hughes as a parttime- master' s fellow and then held positions in various- areas of structural engineering. Eventually, - he was promoted into administrat ive management . In approximately 1997 Mr. Swanson helped develop Hughes Global Services, a 20-person company and eventual subsidiary of Hughes . Mr. Swanson was appointed president of Hughes Global e Services, where he stayed until his retirement in October 2001. As an employee of Hughes, Mr. Swanson was the beneficiary of,a thrift and savings plan (Hughes TSP) to help with retirement. II. Introduction to the Roth Restructure A. • Initial Introduction Mr. Swanson initially heard about the Roth restructure from Fred Nardi (Mr . Nardi) , a f riend and coworker . Mr . - Nardi told Mr. Swansonathat on the basise of his discussions with other tax, professionals, including his tax return preparer, Creal & Mather, he understood they felt that the Roth restructure "was solid". Mr. Nardi showed Mr. Swanson an unsigned opinion letter from Grant Thornton (Nárdi letter) detailing the Roth restructure. Mr . Swanson claimed he relied on the Nandi letter in deciding whether to engage in the Roth restructure . Apparently, the Nárdi - 5 letter discussed Listed transactions, and because of this, Mr. - Swanson looked at the Internal Reirenue Service- (IRS) Web site.' In addition to Mr . Nardi, Mr Swanson -alsó talked with Jim Patton (Mr. Pattol)' and Bob Mather (Mr.- Mathef) before contacting Grant Thornton. vir. Patton is"anninvestment. adviser who began advising Mr.I Swanson in 2000 and is-'the 'only ihvestment adviser Mr. Sûanson has ever consultedN Mr2 Patton was also of the impression that the Roth restzucture ""was above 'boird" . Mr . Mather wa s Mr . Nardi ' s tax preparer . Ac chiding to - Mr . Swanson, he contacted Mr . Mather, who had other" cliànts doing * * Roth restructures and apparently did not see any~ problêms with B. * Inti-oduction to Mr. Stover In 'approximately March 2OOÔ 'Mr. Stover metrMr. Swanson while he was on vacat ion ih Las Vegas . - Mr . Swansön' asked Mr . S tover 4A-listed -transaction is a transaction that -is the -same as, or substantially similar to, one of the types of transactions that -the IRS has -determined to be used-for tax avoidance and has identified by no -..ice, .regulation, or other form of published guidance as a listed transac6ion. See »McGehee Family Clinic, P.A. v. Commissioner, T.C. Memo. 2010-202 (citing sec. 6707A(c) (2) ; sec. 1.6011-4, Income Tax Regs. (incorporating by reference sec. 1.6011-4T(b) (i), Temporary Income Tax Regs., 65 Fed. Reg. 11207 (Mar. 2, 2000)); see also BLAK Invs. v. Commissioner, 133 T.C. 431, 44'0-441 (2009)). «Sec. 6707A became effective Oct. 23, 2004, and imposed penalties on those who failed tö report a-reportable transaction"as required undér sec. 6011. Sec . 6707 entitled o'Failure to 3Furnish IInformation Regarding Tax Shalten" was effectiverthrough Oct. 22, 2004, and imposed penalties on those who faïled*to register a 'tax shelter under sec . 6111 (1) . - -6 - several questions, claiming his basic concern -was that het "did not want to do anything illegal". Mr. Stover explained the Roth restructure in detail and told Mr. Swanson that the transaction was not only legal but had been "court tested" .5 1 - After deciding« to engage int the Roth restructure, Mr. Swanson met with Mr. Stover on other occasions, again inquiring at one or more of these meetings about the legality of the Roth restructure and whether it was a listed transaction. He also visited 'the IRS Web site and cconcluded the Roth restructure was not a listed transaction. C. Engagement Letter On April 11, 2000, Mr. Swanson executed an engagement letter with Grant Thornton. The engagement letter contained a clause providing that Grant «Thornton would represent and defend Mr. Swanson or any, related entity at no additional cost in case of audit by the IRS. The engagement letter also contained an indemnity clause providing that Grant- Thornton would.reimbùrse and indemnify the Swansons and any related entity for any civi negligence or fraud penalty assessed against them by Federal or State tax authorities. sMr . S tover told Mr . Swanson - that the Roth restruc ture had been approved, in Swanson v. Commissioner, 106 T.C. 76, 78-81 (1996) . i s The names- are coincidental- -the taxpayer in Swanson v. Commissioner, supra, has no connection with petitioners. Mr. Swanson read the case and thought that it was very similar to what Mr. Stover was proposing for him. - 7 Petitioners paid - $120 , O00 for the Roth restructure, the engagemente letter providing that the fee was&to be. split equally between Grant- Thornton and, Nevada Corp: Assòciations (NCA) , a law firm. Mr.» Swanson assumed NCA was an "outside leg'al firm providing services to Grant Thornton"r a Mr. Swansoni did not ask for a formal opinion letter, när was oneGever issued. - Mr Swanson believed that since he and Mr. Nardi were engaging in the saine, transaction he did not need his own opinion letter. * Da a - Kruse Me nnillo and Individuals i Other iThan Mr . -Stover In addition to Mr. -Stove4, ;Mr. Swanson had contact with" other individuals at Grant- ThorntonoincludingiLùthèr IOliver; a tax lawyer",1 and Ruth Donovan, at certifiëdopublic -accountant. In - September 20 015Mr . Stover ; alóng withe otheriindividualsi he worked with, left Grant Thornton for Kruse Mennillo,iLLP (KruseMennillo) , another accounting firm. Neither party prèsented evidence explaining the reason behind'Mr.- Stover's abrupt move. At the time Mr. Stover left Grant Thornton Mr. -Swansonsbegan using Kruse Mennillo instead òf Grant Thornton Petitioners request. -that wes take udicial noticesof. a Feb. 21, 2008, Department of Justice Press Release and a Complaint for Permanent Injunc -ion against Mr. Stover filed Feb. 21, 2008. This Court shall grant petitioners' request and pas taken judicial notice of the documents requested and United States v. Stover, 731 F. Supp. 2d 887, 914-915 (W.D. Mo'. 2010) , holding that Mr. "Stover had reason td know that various structures he 1 promoted lacked any legitimate business purgode and gi-anting injunctive relie E against him. ~ The case fotu'sed on: "three (continued. . . ) - 8 E. Independent Advice and Knowledge Despite the remarkable promised tax benefits of converting taxable,IRA distributions to nontaxable Roth IIUt distributions, Mr. Swanson did not ask anyone who was completely independent of the Mr. Patton and Mr. Stover groups for an opinion on-the viability of the Roth restructure. Mr. Swanson knew that there were contribution limits to Roth IRAs, specifically that in 2000 the contribution- limit was $2,000. III. The Roth Restructure .. - - Before the years in issue and before petitioners engaged GranteThornton; Mr. Swanson had opened a traditional IRA wi-th Charles Schwab with an account-number ending in 6050 (Schwab IRA). Grant Thornton (specifically, Mr. Stover) and NCA, oversaw all of the steps in the Roth restructure. The Roth restructure was implemented as follows: • March 20, 2000--A corporation, Sierra West Global Holdings Inc. (Sierra West), was created by NCA. It then joined Northstar Acquisition and Investment Co., Inc. (Northstar) also formed by NCA sometime in the first 6 months of 2000. Sierra-West and Northstar shared the same registered agent and registered office during all relevant periods. Mr. Swanson served:asapresident, secretary, and treasurer of both corporations during 2000 and 2001. At some point, a James Hoeppner began serving as president and secretary of Sierra West, but acted as Mr. Swanson's nominee when doing ( . . . cont inued) multiple business entity structures sold and arranged by" Mr. Stover. The third structure, referred to by the district court as the Roth/S structure -"[skirted] the contribution limits applicable to Roth IRAs." Id. at 900. - 9 so. NEach corporation opened arbank account with can initial deposit of $250 on May 4, 2000 • April 25 , 20 30 - -On or aroundSApril 25 , 20 0 0 , Mr . Swanson opened a Rota IRA accoun with First Union with an account number endinfin 0381 (FU Roth IRA) . • April 28, 2030--On or around April 28 2000, Mr. Swanson opened a Sel-f-Directed Tbaditional IRAsat the First Trust Company.of Osaga with:an account number ending 0500 .(FNBO IRA). On May 5, 2000, the FNBO IRA was funded via a.rollover of $1,207,802.55 from the Hughes TSP. On May 19, 2000, Mr. Swansón dire±ted the-FNBC IRA to purchase 100 percent of the stock of Siecra West for $1,207,7802.55. The purchase -price was deposited intoe the Sierra West account on-May :C9, 2000. • May 1, 2000--On oraaround Mayal,s 2000, Mr. Swanson opened a Self-Directed Roth IRA at -thexGeorge K. Baum Trust Company with an accoant number ending in 8305 (Baum Roth IRA) which was "funded -with ta $2,000icontribution-from a-personal investment a::count :Mr . Sùansondmaintained at Charles Schwab (CS Investment Account). j On May 2, 2000, Mr. Swansons directed the Baum Roth IRA to purchase 100 percent of the stock of Northstar for-$2,000. The" purchase price was a deposited into-the Northàtar accountoon June 6,--2000. • May 16; 2000--Mr. Swansoá-deposited $150,000 into the Northstar account from the CS Investment Account. On May 22, 2000, Mr. Swanson ordered $1,087,802.55 transferred from the "Sierra Wests account t o theGNorthstar account On May 22, 2000, Mr. Swanson,ordered, $1 238,000-transferred from the Northstar account to the Baum Roth IRA under the guise of a dividend declaration." 7For 2000.ard 2001:Sierrá West filed Forms 1120, U.S. Corporation-Income Tax Return, reporting zero gross receipts, it had no employees and only nodinal expenses, and because it saw no need did not maintain books and records. For 2000 through 2007 Northstar filed Forms 1120 showing zero gross reáeipts, it had no employees and only nominal e penses; and saw no-reason to maintain books oc records. The claimed rintention was for Mr. Swanson to eventaal-ly perform consulting services through Northstar after ais retirement, but because"of health.reasons, he never did. AThe transfer was not a dividend because it did not come from Northstar's earnings and profits The- $1,238,000 can (continued. . e ) - 10 - • "June.8, 2000--Mr. Swanson -wired.$250,000 into the Northstar account from the CS Investment Accounty. On June 9, 2000, Mr. Swanson ordered $252,000 transferred from the Northstar account to the Baum Roth IRA.9 • December 19, 2000--Mr. Swanson deposited $120,,000 into the Northstar account from a brokerage account under tihe name Muchestly, Inc . , that Mr . Swanson maintained at Charles Schwab. On December 29, 2000, Mr.aSwanson ordered $120,000 transferred from -the Northstar account to the iBaum Roth • January 8, 20 01- -By January 8 , 2001, $1, 238,.0 00 , , $252, 000 , and $120/000, for a total of $1,610,000, had been transferred into ,the Baum Roth IRA and from there had been transferred to the FU Roth IRA and invested in various mutuals funds . As , of eDecember 31, 20 01, the fair market value -of the FU Roth IRA was , $1, O21, 296 . 28 . • December 2001--Merger documents were executed merging-Sierra West into -Northstar,' with Northstar being the surviving corporation. • December 2002--The fair market value of the FU Roth IRA as of December 31, 2002, was $753,463.24. As of December 31 2003, the fair market value was $976,078.04. 31, • As of December 20 04 , the f air market value was $1, 062, 90 2 . 7 9 . May 2005--All securities held in the FU Roth -IRA were .transferred to a Roth IRA Mr. Swanson opened with:H&R Block Financial Advisors - (H&R Roth IRA) . * ( . . . continued) apparently be traced to (1) $197.45 from the initial $250 capital contribution; (2) a $150,000 transfer from Mr. Swanson's brokerage account- on May 16, 2000;, and (3) a' $1,087,802.55 transfer from Sierra West on May 22, 2000 . "The $252, 000 transfers was made via another purported June 8, 2000, dividend declaration; however, once again the transfer was not a dividend because it did not come from Northstar' s earnings and profits. The transfer may be traced tos (1) a.$2,000 initial Roth IRA contribution and (2) a $250, 000 transfer from Mr. Swanson's brokerage account on June 8, 2000. 1°The $120, 000 transfer was yet again made as a purported dividend but the transfer was also not a dividend because -it edid not come from Northstar's earnings and profits. · 11 - • December -200 5---By December 2005 all securities transferred from the FU oth IRA to the H&R Roth IRA had been liquidated and invested in annuities at "Lincoln National' Life Insurance Co., also known as American Legacy (American Legacy Annuity) . The fair' markét value of the H&R Roth IRA as of December 31, 2005, was $1,093,951.07. The fair market value of the H&R Roth IRA as of December 231, 2006, was $1,231,851.75. • December 200 7--Mr. Swanson surrendered the American Legacy Annuity and withdrew substantially all the funds from his H&R Roth IRA. IV. Reporting the Roth Restructure With the exception of 1 or 2 years, Mr. Swanson prepared his and Mrs. Swanson' s joint tax returns for 1965 through 1998." While Mr. Swanson had no formal study in taxation, he did "buy a tax book each year to look at the highlights and see if there [was] anything that was new that would affect" him. As part of the fee Mr. Swanso paid for the Roth restructure, Grant Thornton began preparing the Swansons' tax returns in 1999. This was because Mr. Swanson indicated he "wanted to make su.re that the people that had developed the [Roth restructure] * * * continually followed it and knew exactly what they should be doing" . Kruse Mennillo prepared the Swansons' tax returns beginning in 2001. 9Dui-ings the period eMr . anson prepared his own return, it consisted of a Form 1040, U.S. Individual Income Tax Return; Schedule A, Itemized Deductions; and Schedule D Capital Gains and Losses. "The tax returns included Federal income tax returns and Federal excise tax retürn . Nobthstar' s 2000 tax return was prepared'by Grair Thornton, and Northstar's 2001 through 2007 tax (continued. . . ) - 412 In order to facilitate the preparation of therreturns, Mr. Swanson swould provide the information and copies of pertinent documents .asked for each year by either Grant Thornton or Kruse Mennillo . Individuals inc luding Mr . Stover , Mr . Oliver , and Ms . Donovan presumably worked on the returns . None of these individuals testified. When Mr. Swanson received the returns, he reviewed them to make sure that all the information he had given was transcribed properly, that the deductions that were taken were proper, and that each of the corporate entities had a tax return. t Petitioners' tax returns showed excise tax on excess contributions to a Roth IRA of $2, 000 for the 2000, 2001, 2002, 2003, and 2007 tax years; $3,500 for the 2004 tax year; and'$5000 for the 2005 and 2006 tax years. V. The Result of the Roth Restructure and Audit As a result of the Roth restructure, Mr. Swanson made an excess contribution of $1,610,000 into his Baum Roth IRA through three different transfers occurring in 2000. In 2004 Grant Thornton sent Mr. Swanson a letter regarding the Roth restructure (Grant Thornton letter) stating that the Roth restructure was potentially a listed transaction pursuant to IRS " ( . . . continued) returns were prepared by Kruse Menillo. Sierra West's 2000 tax return was prepared by Grant Thornton, sand its 2001 tax return was prepared by Kruse Menillo. -Even though the tax returns were prepared by different firms, they were prepared by the same team of,people. 4 13 Notice 2004--8 2004-1 C.B. 333. Notice 2004-8,séntitled "Abusive Roth IRA Transactions",3 -states, in part, that taxpayers are using transactions "to avoid- the limitations on contributions to Roth IRAs" and- that- "these transactions, as well'as substantially similar transaction" are listed t'ransactions. The transactions described ïn'Notice 2004-83 supra, ainvolve the taxpayer, a Roth or IRA, -and a corporation substandially all the shares of which' are owned or acquired by the Roth t];RA". Mr. Swanson asserts that:he discussed the Grant Thorntons letter-with tax ]:awyerà at Kruše Ménnillo', including Mr. Stover, and was tóld that his transaction was hot' covered by the notice, 7 he would not be penalized for nondisclosure",e and th'at it was up to him whether hei disclosed'. Mr. Swanson did not 'discuss the Grant Thornton letter or attempt to c iscern whether he had engaged in a listed transaction with anyone else.- M .'-Swanson decided to - disclose the transaction anyway "just to make sure * * * [he] wasn't violating anything * * * [and because he wanted to take] the safest route". To disclose, Mr. Swanson attached a Form 8886, Reportable Transaction Disclosure Statement, to Northstar's 2003, 2004, and 2006 tax returns." "While Mr. Swanson explained that Form 8886 was used to disclose his Roth restructure, this Court noteå that there was little'explanation on,Form 8886. Under th'e*Facts section of the form, petitionere typed "TiiE TAXPAYER WAS FORMED TO PERFORM SERVICES FOR MUL' IPLE BUSINESNES IN THE FIELD OF, CONSULTING. THE BUSINESS REASONS-FOR ITS EXISTENCE INCLUDE, BUT ARE NOT LIMITED TO: - ASŠET PROTECTION, SUCCESSION PLANNING, ANI) RETIREMENT (continued...) - 14 - In 2006, the Swansons' returns were audited by the California* Franchise. Tax Board. According to Mr. Swanson, this' was the first time that he suspected that the Roth restructure swas not -100 percent viable. -Mr. Stover and his colleague, Marc Sommers indicated to Mr . Swanson that their opinion was "that tihe audit would not show any shortcoming. of taxes paid" . concluded in 2007 with "no change". The ,audit was Mr. Swanson "felt that the clearance by the California Tax Board was a further indication that the structure was viablerand proper" . The Swansons etimely filed Forms 1040, U.S. Individual sIncome Tax Return, and Forms 5329, Additional Taxes on Qualified, Plans (Including IRAs)- and Other Tax-Favored Accounts, for all years in issue. On October 6, 2008, respondent issued three notices of defi-ciency collectively showing the following deficiencies and section 6662 (a) accuracy-related- penalties : (. . . continued) PLANNING. THIS PROTECTIVE DISCLOSURE IS BEING FILED BECAUSE IT IS NOT CLEAR WHETHER THE GOVERNMENT WOULD VIEW THE TRANSACTION AS SUBSTANTIALLY SIlvíILAR TO THOSE IDENTIFIED IN NOTICE 2004-8". In the Expected Tax Benefits section, Mr. Swanson typed "THE POTENTIAL BENEFIT IF ANY COULD BE EITHER A TAX SAVINGS OR COST DEPENDING ON THE TAXPAYERS RATE" . .3 ÷ 15 - Penalty Sec . 6662 (a) Tax Yea De iciency 2001 $96,495 $19i299.00 . 20 0 2 96, 111 19 , 222 . 20 20 03 96, O91 19, 218 . 2,0 2004 95,984 19,196.80 2005 95,879 19,175.80 2006 95,863 19,172.60 2007 614, 627 122, 925.40 The deficiencies for tax years 2001 through 2006 were excise tax defidiencies tÅsed upon respondent's determination that Mr. Swansori had malle an ezcess òon ribution of $1.61 million to his Roth IRA in 2000 and a portion of tl e exaess cI>ntriliution remained in the accounÊ through Decembei 31, 2006. T1e deficiency r 2007 was an income tax deficiency bÂsed upon respõndenti's 'determination that Mr. Swanson had unreported income of $1,803,900 and a computational adjÙtment of $3 1è8 t Swansons timely pe tiitioneci thi Court . itemized dedúctions. Thê A tiia] was held on March 5," 2010, iii Los Ar.geles, California. OPINION I. Burden òf Proc.f We Ÿirst address the" Swansons' cont-ention that thë bu den of proof has shifted to respondent. They contend hat Where a petit ioner has introduced credible evidence relevant to ascertain-ing-the petitioner's liability, the burden of proof in court pròceedings shifts so that the Service has the burden of proof with respect- to factual issues related ,to income tax issties (Code Sèction 7491) . The Petitioner in - 16 - this case had introduced the requisite credible evidence, an [sic] had maintained all of the required records, and cooyerated during the audit process with the Service Hende in this proceeding the burden had shifted to the Respondent. Petitioner has confused the burden of proof for pénalties, see sec."7491(c), with the burden of proof for income tax liability, see sec . 7491 (a) . Pursuant to section 7491 (a) , the burden of proof on factual issues that affect the taxpayer's income and estate or gift tax liability (imposed by subtitles A and B of title 26 United States Code) may shift to the Commissioner in certain circumstances . There is no underlying income, estate, or gift tax liability at issue. Accordingl , section 7491(a) is not applicable. Under section 7491(c) , respondent bears the burden óf production with respect to Mr. Swanson's liability for the section 6662 (a) accuracy-related penalty. This means that respondent "must come forward with sufficient evidence indicating that it is appropriate to impose the relevant penalty." Commissioner, 116 T . C. 438, 446 (2001) . See Higbee v. However, respondent does not have the additional burden of producing evidence of reasonable cause, good faith, substantial authority, or lack of willful neglect, except as may be necessary t o rebut evidence introduced by petitioners . II. See & Analysis Section 6662 (a) imposes an accuracy-related penalty of 20 percent on any únderpayment of tax that is attributable to causes 17 - specified in ásubsection (b) . Respondent asserts negligence or disregard of the rules and regulations as the justification for thé imposition of - the penalty . See sec è 6662 (b) (1) . spec if ically, respondent urges that Mr More Swansona was .negligent- in failing -to report