Negligent or fraudulent underpayment

—(1) If tax is underpaid, or might have been underpaid, as a result of an incorrect statement or a material omission in a taxpayer’s tax return, and that statement or omission is a result of intentional conduct or negligence on the part of the taxpayer, the taxpayer is liable to a penalty in the amount of– (a) 25 percent of the underpayment; or (b) 75 percent of the underpayment if the amount of the underpayment is greater than– (i) one hundred and fifty thousand dollars; or (ii) 25 per cent of the person’s tax liability for the period.