The public may not be fully cognizant of this, but, the IRS is in the business of processing information and making decisions. It accomplishes this by siloing work on tax returns and accounts. The siloed work is intended to allow the IRS to process and make consistent decisions based on a very large volume of… Continue reading Fixing Trust Fund Recovery Penalties
Category: IRS Penalties
About IRS Penalties
There are hundreds of different penalties the IRS can assess. The IRS often assesses penalties automatically, even when penalties should not be applied. Most penalties can be abated or removed due to special circumstances, such as hardship or reasonable cause.
If you are not familiar with IRS penalties, please visit this page for an overview of IRS penalties and this page how we can help remove IRS penalties.
This page provides detailed analysis of various aspects of IRS penalties.
If you are looking for information about a particular type of IRS penalty, you can narrow the articles down to that penalty by selecting from the following subtopics:
Accuracy Penalties, Filing & Payment Penalties, Foreign Penalties, Fraud Penalties, Reportable Transactions, Tax Return Preparer Penalty, Trust Fund Penalties, and the Reasonable Cause Defense.
You can also give us a call at (713) 909-4906 if you need help with an IRS penalty.
The Tax Preparer’s Right to Appeal Return Penalties
The IRS has been focusing on tax return preparer audits. The aim of these audits is to impose penalties on tax return preparers. The IRS typically provides a means for tax preparers to appeal these penalties administratively, but there are cases where it doesn’t provide this opportunity. In those cases, the IRS will assess the… Continue reading The Tax Preparer’s Right to Appeal Return Penalties
Substantial Authority, When the Authority is Not Clear
What if you have a tax question and find a court case that: (1) has the same facts as your case, (2) addresses the same tax item as in your case (such as a tax deduction, credit, etc.), and (3) the court case is decided in the taxpayer’s favor, but the court case does not… Continue reading Substantial Authority, When the Authority is Not Clear
About Tax Preparer Penalty Audits
The IRS’s power to regulate tax return preparers was limited by the Loving v. Internal Revenue Service, 742 F.3d 1013 (D.C. Cir. 2014) line of cases. These cases generally limit the IRS’s ability to regulate tax preparer conduct at an administrative level. But the IRS still has a number of tools at its disposal to… Continue reading About Tax Preparer Penalty Audits
Timing for Written IRS Manager Approval for Penalties
The courts recently held that penalties have to be abated if the IRS does not obtain written manager approval for the penalties. The IRS has been abating penalties for this since the ruling. But there is a question as to when does the IRS have to obtain manager approval? Is it sufficient that the IRS… Continue reading Timing for Written IRS Manager Approval for Penalties
Foreign Trust Beneficiary Liable for a Double Tax Penalty?
Can the sole owner of a foreign trust who is also its sole beneficiary be penalized twice for not filing a single Form 3520? Can the IRS choose the higher penalty for the beneficiary in this situation? In Wilson v. United States, No. 19-cv-5037 (BMC) (E.D.N.Y. 2019), the IRS argued that it could impose pick… Continue reading Foreign Trust Beneficiary Liable for a Double Tax Penalty?
Reasonable Cause: Proving Reliance on a Tax Advisor
If you hire a competent tax advisor and end up having a late filed return, you may be able to avoid penalties for the late filing. But this is a defense. It is something that you, the taxpayer, have to prove. So how does a taxpayer prove that they relied on a tax advsior? The… Continue reading Reasonable Cause: Proving Reliance on a Tax Advisor
Is Reliance on a CPA Sufficient for a Late Filed Tax Form?
The IRS often turns a deaf ear to taxpayers who miss a filing deadline due to some action or inaction by their CPA or tax preparer. This is the case for late filing tax penalties. But what about a late filed accounting method change? Is reliance on a CPA or tax preparer sufficient for a… Continue reading Is Reliance on a CPA Sufficient for a Late Filed Tax Form?
CPA Penalized for Knowledge of Understatement
Section 6701 imposes a penalty for assisting another person in understating their tax liability. The Section 6701 penalty is not subject to a statute of limitations. The IRS can assess these penalties at any time, even years and decades after the fact. This can result in very large penalty assessments for those who prepare tax… Continue reading CPA Penalized for Knowledge of Understatement
Return Preparer Liable for Returns She Didn’t Prepare
The IRS has been increasing its focus on tax return preparers who file false or fraudulent tax returns. Congress recently beefed up the due diligence requirements preparers have to comply with and the penalty amounts have also been increased. But these laws only apply to tax returns the preparer actually prepared. In Tolentino v. United… Continue reading Return Preparer Liable for Returns She Didn’t Prepare