Under Section 6662(a), the accuracy-related penalty is “20% of the underpayment.”[i] It applies both inside and outside of the OVDP regime. The penalty applies whenever any one of five conditions is present. The two most common are: (1) “negligent or intentional disregard of tax rules” and (2) “substantial understatement of income tax.”[ii]

Has the statute of limitations expired on the IRS’s ability to assert the accuracy-related penalty? Assuming no return has been filed, the answer is “no.” As discussed above, there is no statute of limitations for assessing and collecting tax if no return has been filed.

Here’s how the accuracy-related penalty is calculated. Assuming a tax deficiency of $ 500, including interest, the accuracy-related penalty would be $ 100 (.20 x $ 500).

[i] Tax Crimes, Townsend, John, Campagna, Larry, Johnson, Steve, LexisNexis, 2008 at p. 381.

[ii] Id.