IRS Penalties Archives

Signature Not Required on Tax Return for Criminal Liability

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.…

No Collection Rights for IRS-Assessed FBAR Penalties

The IRS’s historical abuses led Congress to create specific taxpayer rights, including rights stemming from collection due process (“CDP”) hearings. These administrative hearings are intended to pause IRS collection actions while the IRS Office of Appeals considers whether the collection is both lawful and warranted. One might assume these rights extend to any liability assessed…

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…

Court Says IRS Can Assess Form 5471 Penalties

Our federal tax system is code-based. This means that most of what the law is can be found in statutes. The premise is that one can read the statutes and get a general idea of what the law is. This is why when it comes to tax law, each word matters. Adding or removing a…

Tax Form Mixup Can Extend the IRS’s Statute of Limitations

Suppose you file a tax return and, months or years later, you get a letter from the IRS saying that it will not accept the tax return. The IRS letter says that you used the wrong tax form. And maybe even change the facts so that the IRS mailed this letter to you, but you…

When the IRS Comes Knocking: Addressing Tax Fraud

Tax fraud typically involves neglecting tax responsibilities, such as by not filing returns or evading tax payments, or engaging in deliberate actions to obstruct the IRS’s assessment or collection of taxes. The compliance problems that are later found to be tax fraud usually involve actions that pyramid over time. This timing issue arises as repeated…

When Can Your Tax Preparer’s Fraud Leave You on the Hook?

Say you hire a tax return preparer and get your tax returns filed, and think that everything is fine. Then years later, say more than a decade later, the IRS shows up and asserts that your tax returns were fraudulent. You did not commit fraud and this is news to you, but the IRS asserts…

Blunt Truth: Paying Taxes on Illegal Income

When a taxpayer makes money from something like selling marijuana, they still owe taxes on that income. The law requires the marijuana profits to be reported for income tax purposes. This type of income is usually only reported and tax collected if the IRS catches wind of the illegal activities. This is often limited to…

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…

Does E-Filing Change Late Tax Filing Penalties?

Our tax law imposes penalties on taxpayers who fail to file tax returns or pay taxes on time, unless the taxpayer can show “reasonable cause” for the delay. In United States v. Boyle, the Supreme Court established a bright-line rule that reliance on an accountant or agent does not constitute “reasonable cause.” There are nuances…