Civil Tax Penalties (Portfolio 634)

Description

Bloomberg Tax Portfolio, Civil Tax Penalties, No. 634, analyzes the many civil tax penalties that can be imposed for various tax offenses. These penalties are designed to regulate the conduct of preparers, payors and tax-exempt entities, in addition to that of taxpayers. The Internal Revenue Service Penalty Handbook (Chapter 20.1 of the Internal Revenue Manual) is intended to ensure that the penalties are applied uniformly.

The civil tax penalties can be divided into seven major categories:

The failure to file and failure to pay penalties (which are primarily set forth in §6651 relating to the general penalty and §6721–§6724 relating to certain information returns and payee statements);

The accuracy-related penalties of §6662 and §6662A;

The fraud penalty of §6663;

The tax return preparer penalties under §6694–§6696;

The promoter, protester and tax shelter penalties under §6700–§6703, §6707–§6708, and §6111–§6112;

Penalties relating to compensation statements and exempt organizations
Penalties relating to certain foreign persons.

The estimated tax penalties, trust fund recovery penalty, and criminal penalties are covered in other Bloomberg Tax Portfolios.

The Portfolio also describes the exception to many of the penalties for reasonable cause, including an analysis of the most common reasons advanced as constituting reasonable cause. In addition, the Portfolio summarizes how the various penalties can be assessed and collected by the IRS.

This Portfolio can be cited as Tarr and Drucker, 634 T.M., Civil Tax Penalties.

Table of Contents

I. Introduction
II. Failure to File Penalties
III. Failure to Pay Penalties
IV. Accuracy-Related Penalties
V. Fraud Penalty
VI. Certain Information Returns and Payee Statements
VII. Tax Return Preparer Penalties
VIII. Promoter and Protester Penalties
IX. Compensation Statements, Pension Plans, Exempt Organizations, Education Programs and Other Reporting
X. Certain Foreign Persons
XI. Reasonable Cause Exception
XII. Assessment and Collection
XIII. Seriously Delinquent Tax Debt