Rejected e-File Return is a Valid Tax Return

Rejected E-file Return Is A Valid Tax Return

The IRS’s Identity Protection Personal Identification Number (“IP PIN”) is intended to protect those who are victims of identity theft. It does so by making it harder for third parties to file fraudulent tax returns. The IP PIN can also cause problems for taxpayers. This is particularly true for tax returns that are filed close…

Is IRS Manger Approval Required for Computer Generated Penalties?

Is Irs Manger Approval Required For Computer Generated Penalties?

The IRS and the courts have invalidated penalties where the IRS fails to obtain IRS manager approval before assessing the penalty. It has done so in cases where the penalties are manually assessed by IRS personnel. But what about penalties that are automatically assessed by the IRS’s computers? The court addresses this in Atl &…

Court Rejects the ‘Taking All Necessary Steps’ Defense to Penalties

Some Filing Deadlines Are Strict, Others Are Not

If you take all of the steps to prepare and remit a tax return to the IRS except for placing it in the mail, is this sufficient to avoid a failure to timely file penalty?  There is case law suggesting that it may be in some circumstances.  The U.S. Tax Court recently addressed this in…

Proof of Cash on Hand to Abate Failure to Pay Penalty

Proof Of Cash On Hand To Abate Failure To Pay Penalty

The failure to pay penalty is one of the most commonly assessed penalties. The penalty does not apply and can be abated or removed if the taxpayer can establish that the failure to pay is due to reasonable cause and not to willful neglect.  But how do you establish reasonable cause?  In C1 Design Group, LLC…

Accuracy Related Penalties Do Not Apply to Full Understatement of Tax

Accuracy Related Penalties Do Not Apply To Full Understatement Of Tax

In Hatcher v. Commissioner, T.C. Memo. 2016-188, the court considered a very common error IRS agents make in computing the Section 6662 accuracy related penalty. The IRS applied the penalty to the entire understatement of tax, rather than the portion of the understatement that was not subject to the reasonable cause defense. This is one…

Abate Tax Penalties for Anxiety & Depression for 911 Attacks

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…

Drug Addiction Excuse for Filing Tax Return Late?

Drug Addiction Excuse For Filing Tax Return Late?

Can drug addiction or migraines be an excuse for filing a tax return late? The court addresses this in Jordan v. Commissioner, T.C. Memo. 2005-266, for a life insurance salesman who became addicted to OxyContin prescribed for his severe headaches. Facts & Procedural History Mr. Jordan was a life insurance salesman. Mr. Jordan had a…