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Filing & Payment Penalties IRS Penalties Tax Procedure

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 & […]

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Filing & Payment Penalties Tax Procedure

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 […]

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Filing & Payment Penalties Reasonable Cause Tax Procedure

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 […]

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Filing & Payment Penalties IRS Penalties Tax Procedure

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 […]

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Filing & Payment Penalties IRS Penalties Reasonable Cause Tax Procedure

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 […]

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Filing & Payment Penalties IRS Penalties Tax Procedure

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 […]