Given its limited resources and ability to detect foreign assets, accounts and income, the IRS has offered various voluntary programs to entice taxpayers to come clean and report this information. The IRS’s OVDP program and the more recent streamlined procedures are two examples. The Maze v. Internal Revenue Service, Nos. 15-1806 (D.D.C. 2016), highlights several…
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.
Online Account Trigger FBAR Filing, Not Poker Websites
In Hom v. United States, No. 14-16214 (9th Cir. 2016), the court addressed whether an online payment account and poker websites triggered FBAR filing requirements. The stakes are high with FBAR penalties, so those with foreign accounts should take heed. FBAR Filing Requirements Taxpayers with an interest in or authority over certain foreign accounts are…
Failing Business Triggers Trust Fund Penalties
Taxes are often neglected when a business is having financial difficulties. This can have serious repercussions for the business and the individuals who are responsible for having taxes withheld and remitted to the IRS. The IRS has the ability to assess trust fund recovery penalties against these individuals, which essentially makes the business tax liability…
Mentally Incompetent Owes Frivolous Return Penalty
In Chief Counsel Memo 201623010, the IRS addressed whether Section 6702 frivolous return penalty can be abated due to the taxpayer’s mental incapacity. One would think that a mentally incapacitated person would not be liable for a penalty for filing a frivolous tax return. Mental Incapacity, Generally The law recognizes that mental incapacity as a…
You Cannot Dodge Notice for the Trust Fund Recovery Penalty
It is almost always advisable to keep on the lookout for open correspondence from the IRS. The Haben v. Commissioner, T.C. Summary Opinion 2015-55, case provides an example. In Haben, the U.S. Tax Court concluded that a taxpayer could not contest a trust fund recovery penalty during a collection due process hearing because he had…
Tax Attorney’s Brain Cancer Insufficient to Avoid Penalties
If a tax return is filed late or taxes are paid late, penalties may be imposed by the IRS. However, there are exceptions to these penalties if the taxpayer can prove that the failure was due to reasonable cause and not due to willful neglect. One might think that brain cancel might fit the bill…
Reasonable Cause Defense for Penalty Waives Privilege
In Eaton Corporation & Subsidiaries v. Commissioner, the U.S. Tax Court concluded that raising the reasonable cause/good faith defense to tax penalties waived the work product, attorney-client, and federal tax practitioner privileges. This is a serious issue that has to be considered when submitting penalty abatement requests based on a reasonable cause defense. APA (Advance…
Do IRS Penalties Assessed by Computers Need Manager Approval?
The courts have been abating penalties if the IRS fails to obtain manager approval for the penalties. But what about penalties assessed by the IRS computer? Do they need to be approved by a manager? The court addresses this in Grace Foundation v. Commissioner, T.C. Memo. 2014-229. Facts & Procedural History R.S. Ohendalski created and…
Wife Can Rely on Husband (to Avoid a Tax Penalty)
Marriage can be challenging. This is particularly true when it comes to finances. And it is even more so when it comes to taxes. But what if a spouse reports something wrong? Can the other spouse get out of penalties for the wrong doing? The court answers this in Miller v. Commissioner, T.C. Summary Opinion 2014-74,…
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…