The U.S. Tax Court recently issued a memorandum opinion in the case of Betz v. Commissioner, T.C. Memo 2023-84. The ruling pertains to the eligibility of taxpayers for a research tax credit under IRC section 41. The court ruled against the taxpayers and disallowed the claimed credits, while also imposing accuracy-related penalties under section 6662(a), in addition to underpayment penalties, for the tax years 2014, 2015, and 2016.
Section 6662(a) imposes an accuracy-related penalties on any portion of an underpayment of tax required to be shown on a return if such underpayment is attributable to negligence or disregard of rules, or substantial underpayment of income tax. Penalties may amount to 20% to 40% of underpaid taxes, depending on the circumstances.