FLAUM, Circuit Judge.
This appeal raises the issue of whether the tax return preparer negligence penalty, section 6694(a) of the Internal Revenue Code,1 can be assessed against a preparer who understates income tax liability because he relied solely on information supplied to him by the taxpayers. The Inter[1250]*1250nal Revenue Service (“IRS”) assessed a penalty against appellant John Brockhouse. Pursuant to section 6694(c), the appellant paid 15% of the penalty and sued for a refund.2 The district court, 577 F.Supp. 55, denied the refund. For the reasons stated below, we affirm.
I.
The appellant is a certified public accountant. In January 1979, he was hired by the CPA firm of Goldman, Weiss, Gelman & Sered (“Goldman, Weiss”). For several years Goldman, Weiss had prepared the income tax returns of Rubert-Busch, M.D., S.C., an Illinois professional corporation, and those of Dr. Robert Busch, the corporation’s sole shareholder. The appellant’s first contact with the tax affairs of Rubert-Busch and Dr. Busch was in March 1979.
The appellant prepared Rubert-Busch’s corporate income tax return for its fiscal year ended February 28, 1979. He used a trial balance sheet prepared by the corporation’s bookkeeper. The trial balance sheet showed loans to the corporation from Dr. Busch and from a bank. It also showed that the corporation had made payments for interest expense; however, it did not show whether any of the interest had been paid to Dr. Busch.
The appellant also prepared the 1978 income tax return for Dr. and Mrs. Busch. Goldman, Weiss had adopted a procedure of sending a data questionnaire to its individual income tax clients. The client was either to complete and return the questionnaire or to use it as a guide in collecting the information necessary to prepare the return. The Busches chose not to complete a questionnaire. Rather, the information was supplied by the corporation’s business manager or bookkeeper. The information was then entered on input sheets of an outside computer service. The appellant reviewed the sheets and compared them with the information supplied and the information shown on the Busches’ 1977 return. There were no items shown on the 1977 return that were not accounted for in the 1978 return. The appellant signed the 1978 return and sent it to the Busches for signature and filing. The appellant never inquired whether any of the interest expense shown on the corporate trial balance sheet had been paid to the Busches.
In May 1980, an IRS agent began an examination of the corporate return. The agent requested an analysis of the corporation’s interest expense account. The appellant went to the corporation’s offices and examined the general ledger and disbursements journal. From this, he learned that the corporation had paid interest to Dr. Busch. The appellant promptly brought the omission to the attention of the IRS agent.
The corporation had paid Dr. Busch interest income in the amount of $15,291.20. The Busches had not reported the income on their 1978 return. This resulted in an underpayment of federal income taxes in the amount of $10,538.76.
[1251]*1251The IRS assessed a $100 tax preparer penalty against the appellant. Pursuant to section 6694(c), the appellant paid $15 and filed a claim for refund. The refund was disallowed, and he filed suit in district court.
The district court denied the refund. It found that the appellant was negligent in omitting interest income from the return. The court found that he knew that the corporation had borrowed money from Dr. Busch and also that it had made interest payments. The court held that under these circumstances, a reasonable, prudent person would have made inquiries to determine whether any interest was paid to Dr. Busch. The court held that appellant was negligent in failing to obtain a completed data questionnaire from the Busches. Finally, the court relied on the factors listed in Revenue Procedure 80-40, which deals with liability under section 6694(a), to hold that the appellant had negligently disregarded a tax rule or regulation and thus was liable.
On appeal, the appellant argues that section 6694(a) does not apply to a tax return preparer’s negligence in gathering facts from the taxpayer. He contends that section 6694(a) only applies where a preparer negligently misapplies a rule or regulation to a known item, and that where the preparer does not know of an item, he is not required to make inquiries or verify data. The appellant maintains that even if section 6694(a) does apply to a negligent failure to gather facts, his actions in this case were not negligent.
II.
Section 6694(a) allows a penalty of $100 to be assessed against an income tax return preparer whose negligent disregard of rules or regulations results in an understatement of tax liability.3 The preparer has the burden of proving the absence of negligence. Treas.Reg. § 1.6694-1(a)(5).
Section 6694 was one of several provisions added by the Tax Reform Act of 1976 to regulate income tax return preparers. Congress generally was concerned with deterring abusive practices by preparers. Prior to 1976, preparers were subject only to criminal penalties for willfully aiding or assisting in the preparation of a fraudulent return. Congress found that these criminal penalties were inadequate. See H.R.Rep. No. 658, 94th Cong., 2d Sess. 273-76, reprinted in 1976 U.S.Code Cong. & Ad.News 2897 at 3169-71. Although Congress was concerned with abuses by “commercial” preparers — those who are not accountants or lawyers — it determined that regulation of all preparers was appropriate. Id. at 274-75, 1976 U.S.Code Cong. & Ad.News at 3169-70. Section 6694 was added primarily to deter preparers from engaging in negligent or fraudulent practices designed to understate tax liability. Id. at 278, 1976 U.S.Code Cong. & Ad.News at 3174. However, Congress did not limit the applicability of section 6694(a) to situations involving disregard of rules or regulations applicable to the facts as provided by the taxpayer. Rather, section 6694(a) applies generally to “negligent disregard.” We therefore hold that a tax preparer negligently disregards a rule or regulation under section 6694(a) if his or her negligent failure to inquire into information provided by the taxpayer results in the filing of a return that violates a rule or regulation.
To determine whether a tax preparer’s actions constitute negligence under section 6694(a), we must first determine the applicable standard of care. Negligence in this context is defined generally as a “lack of due care or failure to do what a reasonable and ordinarily prudent person would do under the circumstances.” Marcello v. Commissioner, 380 F.2d 499, 506 (5th Cir.1967), cert. denied, 389 U.S. 1044, 88 S.Ct. 787, 19 L.Ed.2d 835 (1968); see also Zmuda v. Commissioner, 731 F.2d [1252]*12521417, 1422 (9th Cir.1984).4 The regulation under section 6694(b), relating to willful disregard of rules or regulations, expressly provides that a preparer may not rely without verification on information supplied by the taxpayer if that information appears incomplete or incorrect. Treas.Reg.
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FLAUM, Circuit Judge.
This appeal raises the issue of whether the tax return preparer negligence penalty, section 6694(a) of the Internal Revenue Code,1 can be assessed against a preparer who understates income tax liability because he relied solely on information supplied to him by the taxpayers. The Inter[1250]*1250nal Revenue Service (“IRS”) assessed a penalty against appellant John Brockhouse. Pursuant to section 6694(c), the appellant paid 15% of the penalty and sued for a refund.2 The district court, 577 F.Supp. 55, denied the refund. For the reasons stated below, we affirm.
I.
The appellant is a certified public accountant. In January 1979, he was hired by the CPA firm of Goldman, Weiss, Gelman & Sered (“Goldman, Weiss”). For several years Goldman, Weiss had prepared the income tax returns of Rubert-Busch, M.D., S.C., an Illinois professional corporation, and those of Dr. Robert Busch, the corporation’s sole shareholder. The appellant’s first contact with the tax affairs of Rubert-Busch and Dr. Busch was in March 1979.
The appellant prepared Rubert-Busch’s corporate income tax return for its fiscal year ended February 28, 1979. He used a trial balance sheet prepared by the corporation’s bookkeeper. The trial balance sheet showed loans to the corporation from Dr. Busch and from a bank. It also showed that the corporation had made payments for interest expense; however, it did not show whether any of the interest had been paid to Dr. Busch.
The appellant also prepared the 1978 income tax return for Dr. and Mrs. Busch. Goldman, Weiss had adopted a procedure of sending a data questionnaire to its individual income tax clients. The client was either to complete and return the questionnaire or to use it as a guide in collecting the information necessary to prepare the return. The Busches chose not to complete a questionnaire. Rather, the information was supplied by the corporation’s business manager or bookkeeper. The information was then entered on input sheets of an outside computer service. The appellant reviewed the sheets and compared them with the information supplied and the information shown on the Busches’ 1977 return. There were no items shown on the 1977 return that were not accounted for in the 1978 return. The appellant signed the 1978 return and sent it to the Busches for signature and filing. The appellant never inquired whether any of the interest expense shown on the corporate trial balance sheet had been paid to the Busches.
In May 1980, an IRS agent began an examination of the corporate return. The agent requested an analysis of the corporation’s interest expense account. The appellant went to the corporation’s offices and examined the general ledger and disbursements journal. From this, he learned that the corporation had paid interest to Dr. Busch. The appellant promptly brought the omission to the attention of the IRS agent.
The corporation had paid Dr. Busch interest income in the amount of $15,291.20. The Busches had not reported the income on their 1978 return. This resulted in an underpayment of federal income taxes in the amount of $10,538.76.
[1251]*1251The IRS assessed a $100 tax preparer penalty against the appellant. Pursuant to section 6694(c), the appellant paid $15 and filed a claim for refund. The refund was disallowed, and he filed suit in district court.
The district court denied the refund. It found that the appellant was negligent in omitting interest income from the return. The court found that he knew that the corporation had borrowed money from Dr. Busch and also that it had made interest payments. The court held that under these circumstances, a reasonable, prudent person would have made inquiries to determine whether any interest was paid to Dr. Busch. The court held that appellant was negligent in failing to obtain a completed data questionnaire from the Busches. Finally, the court relied on the factors listed in Revenue Procedure 80-40, which deals with liability under section 6694(a), to hold that the appellant had negligently disregarded a tax rule or regulation and thus was liable.
On appeal, the appellant argues that section 6694(a) does not apply to a tax return preparer’s negligence in gathering facts from the taxpayer. He contends that section 6694(a) only applies where a preparer negligently misapplies a rule or regulation to a known item, and that where the preparer does not know of an item, he is not required to make inquiries or verify data. The appellant maintains that even if section 6694(a) does apply to a negligent failure to gather facts, his actions in this case were not negligent.
II.
Section 6694(a) allows a penalty of $100 to be assessed against an income tax return preparer whose negligent disregard of rules or regulations results in an understatement of tax liability.3 The preparer has the burden of proving the absence of negligence. Treas.Reg. § 1.6694-1(a)(5).
Section 6694 was one of several provisions added by the Tax Reform Act of 1976 to regulate income tax return preparers. Congress generally was concerned with deterring abusive practices by preparers. Prior to 1976, preparers were subject only to criminal penalties for willfully aiding or assisting in the preparation of a fraudulent return. Congress found that these criminal penalties were inadequate. See H.R.Rep. No. 658, 94th Cong., 2d Sess. 273-76, reprinted in 1976 U.S.Code Cong. & Ad.News 2897 at 3169-71. Although Congress was concerned with abuses by “commercial” preparers — those who are not accountants or lawyers — it determined that regulation of all preparers was appropriate. Id. at 274-75, 1976 U.S.Code Cong. & Ad.News at 3169-70. Section 6694 was added primarily to deter preparers from engaging in negligent or fraudulent practices designed to understate tax liability. Id. at 278, 1976 U.S.Code Cong. & Ad.News at 3174. However, Congress did not limit the applicability of section 6694(a) to situations involving disregard of rules or regulations applicable to the facts as provided by the taxpayer. Rather, section 6694(a) applies generally to “negligent disregard.” We therefore hold that a tax preparer negligently disregards a rule or regulation under section 6694(a) if his or her negligent failure to inquire into information provided by the taxpayer results in the filing of a return that violates a rule or regulation.
To determine whether a tax preparer’s actions constitute negligence under section 6694(a), we must first determine the applicable standard of care. Negligence in this context is defined generally as a “lack of due care or failure to do what a reasonable and ordinarily prudent person would do under the circumstances.” Marcello v. Commissioner, 380 F.2d 499, 506 (5th Cir.1967), cert. denied, 389 U.S. 1044, 88 S.Ct. 787, 19 L.Ed.2d 835 (1968); see also Zmuda v. Commissioner, 731 F.2d [1252]*12521417, 1422 (9th Cir.1984).4 The regulation under section 6694(b), relating to willful disregard of rules or regulations, expressly provides that a preparer may not rely without verification on information supplied by the taxpayer if that information appears incomplete or incorrect. Treas.Reg. § 1.6694—1(b)(2)(ii). The regulation under section 6694(a) does not contain such an express provision, but it does provide that a preparer is not negligent if he or she “exercises due diligence in an effort to apply the rules and regulations to the information given” to him or her. Treas.Reg. § 1.6694-1(a)(1). This due diligence requirement means that a preparer must act as a reasonable, prudent person with respect to the information supplied to the preparer. We hold that if the information supplied would lead a reasonable, prudent preparer to seek additional information, it is negligent not to do so. A reasonable, prudent preparer would inquire as to additional information where it is apparent that the information supplied was incorrect or incomplete and it is simple to collect the necessary additional information.
We find this standard of care to be consistent with the congressional purpose behind section 6694(a). Congress passed section 6694 as part of an attempt to curb abusive practices by preparers. For a preparer to ignore the implications of information furnished where the error is apparent and simple to correct would be an abusive practice. We note that the IRS has interpreted section 6694(a) to apply to situations where the preparer has reason to know that the information supplied is incomplete or incorrect. See Rev.Rul. 80-265, 1980-2 C.B. 878 (under section 6694(a), although the preparer is not required to audit information, “the preparer may not ignore the implications of information furnished to the preparer”) (citing guidelines set forth in Rev.Proc. 80-40, 1980-2 C.B. 774-75).
Applying the standard of care outlined above to the facts in this case, we agree with the district court that the appellant was negligent in failing to inquire whether any of the interest paid by the corporation had been paid to Dr. Busch. The error involved was relatively apparent. The appellant was aware that Dr. Busch had made loans to the corporation and that the corporation had made interest payments.5 This should have alerted him to the possibility that interest had been paid to Dr. Busch. The appellant also was aware that the Busches did not report any interest paid on the loans made to the corporation. This should have alerted him to the possibility that the information supplied to him was not complete. The fact that a loan from a shareholder to a corporation could bear interest and that such interest would be income to the shareholder is not uncommon. Moreover, the appellant could have discovered the error merely by asking the corporation or the Busches whether any of the interest paid by the corporation had been paid to the Busches or by requesting and examining the corporate ledger. A prudent preparer would have inquired about interest payments on the loans rather than ignoring the implications of the information furnished.6 Appellant’s negligent failure to inquire led him to disregard the applicability of section 61, [1253]*1253which provides that gross income includes interest income.7 Thus, appellant is liable under section 6694(a).
Affirmed.