Accuracy-related penalty: Corporations can't rely on employee-tax professional, should be an independent third party.

According to a recent Tax Court opinion in Seven W. Enterprises, Inc. & Subsidiaries and Highland Supply Corporation & Subsidiaries, (2011) 136 TC No. 26, which can be found here, a Corporation could not rely on its employee-tax professional to avoid accuracy related penalties under (under IRC §§ 6662(a) and 6662(b)(2)). 

The Court held that while the Corporation engaged an independent consultant tax professional to prepare returns, the Corporation could reasonably rely on him to avoid accuracy related penalties.  However, when that Corporation later employed that same tax professional as Vice President, and he prepared tax returns, the Corporation no longer had reasonable cause to avoid the penalty.  The Court reasoned that while the tax professional was independent from supervision of the Corporation that it could reasonably rely on his advice.  The Corporation lost its reasonable cause once the tax professional was made an officer of the Corporation.