Failure to Review Tax Return Voids Penalty Defense

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 leadsheets 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 accepted…

Avoiding Tax Penalties for Bookkeeper’s Mistakes

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…

Relying on Tax Attorney for Filing Deadline is Reasonable Cause

Post Office Tracking Data Can Result In Tax Disputes

It is clear that one cannot rely on a tax attorney to file a tax return for purposes of removing penalties if the return is not filed.  But can you rely on an attorney if the attorney provides advice as to the wrong date for filing?  The court addresses this in Estate of Hake v.…

No Reasonable Cause Defense for Some Trust Fund Penalties

Post Office Tracking Data Can Result In Tax Disputes

The IRS is serious about unpaid employment taxes. The trust fund recovery penalty can be used to collect these taxes. This penalty makes a business tax liability a personal liability. With most penalties, the penalty can be abated for reasonable cause. But what about the trust fund penalty? Can it be abated for reasonable cause?…

Proof of Cash on Hand to Abate Failure to Pay Penalty

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…