Legal Definitions - tax negligence

Definition: Tax negligence is a type of negligence that arises from the disregard of tax-payment laws. It refers to the failure to exercise the standard of care that a reasonably prudent person would have exercised in a similar situation, resulting in a penalty imposed by the Internal Revenue Service.

Example: If a taxpayer fails to file their tax return or pay their taxes on time, they may be charged a penalty of 5% of the amount underpaid. This penalty is imposed because the taxpayer did not exercise the standard of care that a reasonably prudent person would have exercised in complying with tax-payment laws.

This example illustrates tax negligence because the taxpayer failed to exercise the standard of care that a reasonably prudent person would have exercised in complying with tax-payment laws, resulting in a penalty imposed by the Internal Revenue Service.