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…

Court: Complex Tax + Professional Advice = No Tax Penalty

We know that we can take steps to minimize our taxes. Our tax laws allow for this and, on review, the courts have made this clear. Tax penalties are usually the problem with taking tax positions in situations that are not entirely clear. Taxpayers who find themselves having to make decisions in these gray areas…

Failure to Review Tax Return Voids Penalty Defense

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…

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…

Illness as a Defense to Late Filing Penalties

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…

Reasonable Cause: Proving Reliance on a Tax Advisor

The Importance Of Accounting For C Corporation Expenses

If you hire a competent tax advisor and end up having a late filed return, you may be able to avoid penalties for the late filing. But this is a defense. It is something that you, the taxpayer, have to prove. So how does a taxpayer prove that they relied on a tax advsior? The…

Is Reliance on a CPA Sufficient for a Late Filed Tax Form?

Raising A Tax Issue For The First Time In Court

The IRS often turns a deaf ear to taxpayers who miss a filing deadline due to some action or inaction by their CPA or tax preparer. This is the case for late filing tax penalties. But what about a late filed accounting method change? Is reliance on a CPA or tax preparer sufficient for a…

Penalty Abatement for Reliance on Tax Advisor Who Made Obvious Errors

Penalty Abatement For Reliance On Tax Advisor Who Made Obvious Errors

The IRS often willing to abate or remove tax penalties. To do so, taxpayers usually have to show that they acted with reasonable cause and in good faith. Relying on a competent tax professional can be one way taxpayers can make this showing. But what exactly is a competent tax professional? The court addressed this…