The process for assessment of tax penalties is a critical issue for taxpayers and businesses. In pursuit of its mandate to encourage accurate tax filings and the collection of federal revenue, the IRS can assess a penalty for any number of reasons, including the following:
According to the IRS, when you have been assessed a penalty, you should receive a notice through the mail that identifies the event by number, describes the fine, and advises you of the next steps. It is your responsibility to review the letter and your tax situation carefully to ensure the penalty is appropriate. If you do not challenge the penalty or send the applied fine in full, you can be charged interest which continues to accrue until the total amount owing is paid.
Earlier this year, we talked about recommendations made by the Taxpayer Advocate Service (TAS) during their Annual Report to Congress. In August, TAS revisited a particularly egregious practice by the IRS of allowing the assessment of certain penalties without the approval of a supervisor. The courts have gone either way on the issue. The IRS recently proposed new rule-making around the issue and the TAS blogged its own comments in response:
A public hearing on the issue was held in early September of this year. The IRS will draw from hearing comments regarding its proposed rules. Although these processes are not well publicized, they are of importance to taxpayers of all income levels.
Disputing an action taken by the IRS requires a careful look at the action and any related penalties and interest. When large sums are disputed, getting the guidance and support of a tax attorney is a wise idea.
The tax group at Robert J. Fedor, Esq., LLC helps you respond strategically to questions about taxes, failure to file tax returns, or your FBAR report. We serve local and international clients from offices in Chicago and Cleveland. Call 800-579-0997 or reach out to us today.