30% Penalty Is Not an Excessive Fine
So says the Tax Court in the recent decision involving the 30% penalty imposed under Code §6662A(c). The penalty can be imposed if a taxpayer fails to adequately disclose a reportable transaction giving rise to an understatement of tax. The penalty is 30% of the tax understatement. When the penalty applies, there are no defenses allowed.
The Eighth Amendment to the United States Constitution provides “excessive bail shall not be required, nor excessive fines imposed. . .