$3.$ Accuracy$-$Related Penalty $($Client$)$

Penalty: $20\%$ of the underpaid tax due to negligence, substantial understatement of income tax, or disregard of IRS rules.

Why it's important: For clients with complex financial situations, including a large stock portfolio and real estate holdings, mistakes on tax returns can be costly$.$ The accuracy$-$related penalty can be applied for errors in reporting income, deductions, or credits, which are more likely with complex assets. Being penalized $20\%$ of the underpaid tax can be a significant hit for the client, especially if the understatement is substantial.