The IRS is quick to impose penalties. Many penalties are automatically imposed by the IRS’s computers. Even on audit, the IRS’s lead sheets direct IRS auditors to consider penalties before closing the audits. Most penalties can be abated if the taxpayer can establish reasonable cause. This is a facts and circumstances analysis. The courts have…
Category: IRS Penalties
IRS Penalties
Monetary sanctions imposed by the IRS for various tax-related violations. Give us a call to see how we can help, (713) 909-4906.
Avoiding Tax Penalties for Bookkeeper’s Mistakes
Taxes are computed based on accounting records. Accounting records are often complied by bookkeepers who have no tax training or experience. The bookkeepers may not intend to provide tax advice. Their work product may be used to prepare tax returns, however. The tax return preparer may move the numbers from the bookkeeper’s profit and loss…
What Counts as Tax Advice?
What if a CPA talks to you and tells you about a tax law? You have received tax advice, right? What if a CPA sends you a letter or email saying the same thing he would have said to you in person, had he spoke to you in person? Probably still tax advice, no? What…
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…
Illness as a Defense to Late Filing Penalties
Will the IRS penalize you if you are unable to file your tax return on time due to the burden of caring for a loved one with COVID? The IRS has not provided penalty relief for taxpayers impacted by COVID-19. The existing penalty relief rules may provide a remedy for some taxpayers. These rules do…
Fixing Trust Fund Recovery Penalties
The public may not be fully cognizant of this, but, the IRS is in the business of processing information and making decisions. It accomplishes this by siloing work on tax returns and accounts. The siloed work is intended to allow the IRS to process and make consistent decisions based on a very large volume of…
The Tax Preparer’s Right to Appeal Return Penalties
The IRS has been focusing on tax return preparer audits. The aim of these audits is to impose penalties on tax return preparers. The IRS typically provides a means for tax preparers to appeal these penalties administratively, but there are cases where it doesn’t provide this opportunity. In those cases, the IRS will assess the…
Substantial Authority, When the Authority is Not Clear
What if you have a tax question and find a court case that: (1) has the same facts as your case, (2) addresses the same tax item as in your case (such as a tax deduction, credit, etc.), and (3) the court case is decided in the taxpayer’s favor, but the court case does not…
About Tax Preparer Penalty Audits
The IRS’s power to regulate tax return preparers was limited by the Loving v. Internal Revenue Service, 742 F.3d 1013 (D.C. Cir. 2014) line of cases. These cases generally limit the IRS’s ability to regulate tax preparer conduct at an administrative level. But the IRS still has a number of tools at its disposal to…
Timing for Written IRS Manager Approval for Penalties
The courts recently held that penalties have to be abated if the IRS does not obtain written manager approval for the penalties. The IRS has been abating penalties for this since the ruling. But there is a question as to when does the IRS have to obtain manager approval? Is it sufficient that the IRS…