If the tax deficiency is attributable to fraud, the negligence penalty will not be imposed.

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If the IRS determines that a taxpayer's tax deficiency is due to fraud, they may impose a fraud penalty instead of a negligence penalty. The fraud penalty is much more severe than the negligence penalty and can result in substantial fines and even criminal prosecution. Therefore, the negligence penalty is not imposed when fraud is involved.

If the Tax Deficiency Is Attributable to Fraud, the Negligence