### Question
How does the law define understatement of liability?


### Answer
Under *26 U.S.C. § 6694*, **understatement of liability** is defined as:

> any understatement of the net amount payable with respect to any tax imposed by this title or any overstatement of the net amount creditable or refundable with respect to any such tax

#### Citation:
  - *26 U.S.C. § 6694*
  - Heading: **Subtitle F-Procedure and Administration > CHAPTER 68-ADDITIONS TO THE TAX, ADDITIONAL AMOUNTS, AND ASSESSABLE PENALTIES > Subchapter B-Assessable Penalties > PART I-GENERAL PROVISIONS**

