Reasonable cause can be a defense to civil penalties
Article Abstract:
IRC Secs. 6651 through 6724 contain more than 150 civil penalties that are aimed at compelling taxpayers to voluntarily comply with the current tax system. However, reasonable cause can be used as a defense to these civil penalties, although some more requirements also may have to be satisfied. Tax professionals should understand how to properly apply reasonable cause as a defense to avoid being penalized. According to the Internal Revenue Manual, common types of reasonable cause are reliance on tax advisor; reasonable reliance; death, grave illness or unavoidable absence; lack of records; unavailability of funds; error or forgetfulness; ignorance of the law; and wrong advice from the IRS. Situations that do not create reasonable doubt are neglect or misfeasance by employee or agent of the taxpayer, heavy workload of taxpayer, unacceptable extension, constitutional objections and religious beliefs, and service in combat.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1997
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Forewarned is forearmed at IRS audits
Article Abstract:
Tax professionals can protect their clients from additional tax and penalties by learning the strategies that have to be employed when representing clients at IRS audits. More importantly, tax professionals must educate their clients, and themselves, about the entire IRS audit process, from the initial screening process of the tax return to preparing for actual tax audits. To best serve clients who are under audit, tax professionals must prepare their tax preparation workpapers, explain how the IRS selects tax returns for audit, attempt to obtain any missing documentation regarding tax records for the clients, and review tax returns, prior and subsequent returns, and limitations periods.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1998
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