Since the enactment of the Tax Equity and Fiscal Responsibility Act, taxpayers are subject to a penalty if there is a substantial underestimate of tax attributable to a particular treatment for which they have no substantial authority, unless the treatment is disclosed on the tax return.

Question

Quizplus · Accepted Answer

This statement is true. The Tax Equity and Fiscal Responsibility Act (TEFRA) introduced a penalty for substantial understatements of tax attributable to positions for which there is no substantial authority, unless the position is adequately disclosed on the tax return. This penalty is known as the substantial understatement penalty.

Since the Enactment of the Tax Equity and Fiscal Responsibility