The 75% penalty imposed by the IRS for tax underpayment due to fraud is referred to as?

The 75% penalty on tax underpayment due to fraud is regarded as civil fraud. This penalty is applied by the IRS when a taxpayer is found to have intentionally omitted income or claimed improper deductions with the intent to evade taxes. The term "civil fraud" indicates that the matter is handled within civil court proceedings rather than through criminal prosecution. In this context, it's distinct from criminal fraud, which could lead to imprisonment and criminal fines. Civil fraud is focused on the taxpayer’s deceitful actions concerning tax obligations and results in significant financial consequences, such as the high penalty rate associated with underpayment.

Other options like criminal fraud pertain to illegal actions that can result in jail time and are pursued through the criminal justice system, while negligence involves a failure to take due care in meeting tax obligations, resulting in lower penalties. A frivolous return refers to a tax return that has no basis in law or fact, which also doesn't apply to the context of the significant penalty for fraud.