In Eaton Corporation & Subsidiaries v. Commissioner, the U.S. Tax Court concluded that raising the reasonable cause/good faith defense to tax penalties waived the work product, attorney-client, and federal tax practitioner privileges. This is a serious issue that has to be considered when submitting penalty abatement requests based on a reasonable cause defense. APA (Advance… Continue reading Reasonable Cause Defense for Penalty Waives Privilege
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.
Do IRS Penalties Assessed by Computers Need Manager Approval?
The courts have been abating penalties if the IRS fails to obtain manager approval for the penalties. But what about penalties assessed by the IRS computer? Do they need to be approved by a manager? The court addresses this in Grace Foundation v. Commissioner, T.C. Memo. 2014-229. Facts & Procedural History R.S. Ohendalski created and… Continue reading Do IRS Penalties Assessed by Computers Need Manager Approval?
Wife Can Rely on Husband (to Avoid a Tax Penalty)
Marriage can be challenging. This is particularly true when it comes to finances. And it is even more so when it comes to taxes. But what if a spouse reports something wrong? Can the other spouse get out of penalties for the wrong doing? The court answers this in Miller v. Commissioner, T.C. Summary Opinion 2014-74,… Continue reading Wife Can Rely on Husband (to Avoid a Tax Penalty)
Abate Tax Penalties for Anxiety & Depression for 911 Attacks
Can tax penalties be abated for anxiety and depression due to the death of a spouse to cancer and the September 11, 2001 terrorist attacks on the World Trade Center? The court addressed this in Kwosh v. Commissioner, T.C. Memo. 2008-204, in light of the 10 percent addition to tax on early retirement distributions and… Continue reading Abate Tax Penalties for Anxiety & Depression for 911 Attacks
Taxpayer Cannot Rely on Incompetent Tax Attorney
The IRS can impose a number of different types of penalties. It often does so when it should not. The recent Wilson v. Commissioner, T.C. Summary Opinion 2008-91, case considers a situation where the court concludes that the tax attorney was incompetent and could not be relied on to avoid the imposition of penalties. Facts &… Continue reading Taxpayer Cannot Rely on Incompetent Tax Attorney
The New Tax Return Preparer Penalty
The IRS has the ability to impose penalties on income tax return preparers for certain conduct. These rules changed last year, which makes it due time to provide an overview of the new rules. A Little Background As mentioned above, Congress amended the Code just over a year ago to beef up the tax return… Continue reading The New Tax Return Preparer Penalty
Courts Says No Criminal Fraud, IRS Imposes Civil Fraud Penalty
Say you are convicted of a tax crime and the criminal judge finds that your conduct has not risen to the level of tax fraud. Should a civil court later say that this same conduct does in fact rise to the level of tax fraud? In Maciel v. Commissioner, the Ninth Circuit Court of Appeals… Continue reading Courts Says No Criminal Fraud, IRS Imposes Civil Fraud Penalty
Strategy for Paying Late Employment Taxes
How does the IRS apply partial payments when a trust fund penalty has been assessed? Can the IRS apply payments to the trust fund portion of the employment taxes or must it apply the payment to the non-trust fund penalty portions? Trust Fund & Non-Trust Fund Tax Employers are generally required to withhold employment taxes… Continue reading Strategy for Paying Late Employment Taxes
The Improved Frivolous Return Penalty
The tax penalty for filing a frivolous income tax return has been set so low and its reach so limited that the penalty has not been of much concern to taxpayers. Unfortunately, those days are now gone. The Tax Relief and Health Care Act of 2006 has made sweeping changes to the Section 6702 frivolous… Continue reading The Improved Frivolous Return Penalty
No Tax Penalties for Obscure Tax Forms
Bad facts can create bad law. This describes the law for IRS penalties. The IRS abates or removes penalties at the administrative level for most taxpayers who have good facts. The rest of the cases are litigated–resulting in a lot of court cases where the government wins. It is somewhat rare for taxpayers to prevail… Continue reading No Tax Penalties for Obscure Tax Forms