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A Graev Matter: § 6751

In Defenses, Penalties by Zach MontgomeryLeave a Comment

According to the Internal Revenue Code, the IRS must follow certain specific procedures when assessing penalties, such as approval in writing by the immediate supervisor of the individual making the penalty determination. The IRS must comply with these procedures for the Tax Court to uphold the penalties. Supreme Court Justice Kavanaugh previously held: “A court’s assessment of an agency’s compliance …

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IRS Tax Penalties on the Rise, Particularly Employment Tax Penalties

In Audit, Employment Tax, Penalties, Trust Fund Penalty by Jason Freeman1 Comment

The IRS recently issued its annual Data Book, providing a glimpse into the world of tax administration during the past fiscal year.  The recent release provides a number of interesting takeaways, but here are a few of the highlights: The IRS assessed $27.3 billion in civil penalties during FY 2016. The IRS assessed close to $12.5 billion in additional taxes …

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IRS Hits Business Owner with $4.3 Million Trust Fund Penalty for Business’s Unpaid Payroll Taxes—Federal Court Upholds Assessment

In Employment Tax, Penalties, Trust Fund Penalty by Jason FreemanLeave a Comment

A recent ruling by a federal Texas district court serves as yet another reminder of the exposure that business owners face when it comes to personal liability for the unmet payroll taxes of their businesses.  In McClendon v. United States, the district court recently held a doctor-taxpayer/business owner personally responsible for $4.3 million of the business’s outstanding payroll taxes, upholding …

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The Accuracy-Related Penalty and the Reasonable Cause Defense

In Defenses, Penalties by Jason Freeman1 Comment

The Tax Court, in Kauffman v. Commissioner, (2017) TC Memo 2017-38, recently addressed a commonly-encountered issue in tax litigation: The application of the reasonable cause defense to the IRS’s assertion of the accuracy-related negligence penalty.  The case, while not breaking new ground, stands as a reminder of the limits of the reasonable cause defense and the need to present evidence …

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Litigating IRS Penalties

In Defenses, Penalties by Jason FreemanLeave a Comment

Litigating IRS tax penalties is a central part of practicing tax law and representing taxpayers.  The Taxpayer Advocate, in her last Annual Report to Congress, provided a studied summary of reported cases during the 2015 fiscal year litigating the failure-to-file penalty under § 6651(a)(1), the failure-to-pay penalty under § 6651(a)(2), and the failure to pay estimated tax penalty under § …