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IRS Penalties Reasonable Cause Tax Procedure

What Facts are Needed to Abate Penalties?

The IRS is authorized to abate penalties for reasonable cause. There is no set of standard facts or factors that show reasonable cause. Taxpayers have made various arguments, with the IRS and courts rejecting most of them. How bad does life have to be for there to be reasonable cause? The court addresses this in […]

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IRS Penalties Reasonable Cause Tax Procedure

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 […]

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Reasonable Cause Tax Procedure

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, […]

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Filing & Payment Penalties IRS Penalties Reasonable Cause Tax Procedure

Abate Tax Penalties for Anxiety & Depression for 911 Attacks

Can tax penalties be abated for anxiety and depression due to the death of a spouse to cancer and the September 11, 2001 terrorist attacks on the World Trade Center? The court addressed this in Kwosh v. Commissioner, T.C. Memo. 2008-204, in light of the 10 percent addition to tax on early retirement distributions and […]

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IRS Penalties Reasonable Cause Tax Procedure

Taxpayer Cannot Rely on Incompetent Tax Attorney

The IRS can impose a number of different types of penalties.  It often does so when it should not.  The recent Wilson v. Commissioner, T.C. Summary Opinion 2008-91, case considers a situation where the court concludes that the tax attorney was incompetent and could not be relied on to avoid the imposition of penalties. Facts & […]

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Reasonable Cause Tax Procedure

Missing Form 1099 May Establish Reasonable Cause

If you do not receive a Form 1099 to report income to you and you omit it from your tax return, are you liable for penalties if the IRS later notices the issue and makes an adjustment?  The Mabinuori v. Commissioner, T.C. Summary Opinion 2006-109, case provides an opportunity to consider this question. Facts & Procedural […]

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Reasonable Cause Tax Procedure

Abatement of Tax Penalties and Interest

Many unfortunate taxpayers find themselves in the position of owing a tax debt that consists of a small tax liability and a large assessment of tax penalties and interest. In many of these cases the penalties and interest can be substantially larger than the original tax debt. This situation often forces taxpayers to seek the […]