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Administrative Procedure And The Internal Revenue Service: Delimiting The Substantial Understatement Penalty, Peter A. Appel
Administrative Procedure And The Internal Revenue Service: Delimiting The Substantial Understatement Penalty, Peter A. Appel
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In the early 1980's, Congress faced the mounting problems of tax shelters and other forms of tax avoidance. It responded by passing a series of laws.1 One of these provisions, section 6661 of the Internal Revenue Code, penalizes "substantial understatement" of tax liability.2 While section 6661 may appear to be a typical, innocuous tax code provision, close examination reveals that the substantial understatement penalty threatens to expand quietly the power of the Internal Revenue Service (IRS) over taxpayers, violating the spirit of the Administrative Procedure Act (APA) in the process.
Section I of this Note explores the background of section …