One of the requirements for a document to be a tax return is that it is signed by the taxpayer under penalties of perjury. Most tax forms that are intended to be tax returns include a declaration at the bottom that includes the penalty of perjury language. But most tax returns today are filed electronically.…
Category: Filing & Payment Penalties
Filing & Payment Penalties
Penalties assessed for late or incomplete tax filings or payments. Give us a call to see how we can help, (713) 909-4906.
Can You File a Zero-Income Tax Return if You Do Not Owe Any Tax?
If you do not owe any tax for a year and you are certain of it, can you just file an income tax return that reports all zeros for income and lists the amount you paid to the IRS that you want refunded? I’ll refer to this as a “zero income-tax return.” This is a…
Family Court Orders are No Excuse for Unpaid Taxes
Financial ups and downs are a normal part of life, and many of us will face a time when our finances take a hit. This can be challenging, especially when we have to juggle different financial needs and demands. Divorce and marital problems often lead to major financial troubles. During a divorce, it’s common for…
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?
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
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
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
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 911 Attacks
Many taxpayers face unexpected challenges in their lives that can make it difficult to meet their tax obligations. For example, the death of a loved one or the trauma of a major event can have a significant impact on a person’s mental health and their ability to manage their finances. In such cases, individuals may…
Drug Addiction Excuse for Filing Tax Return Late?
Drug addiction is a medical condition. It can be a very serious and life-altering medical condition. This begs the question as to whether drug addiction or migraines be an excuse for filing a tax return late or for abating late filing penalties. The court addresses this in Jordan v. Commissioner, T.C. Memo. 2005-266, for a…