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Penalty Relief

IRS Appeal Results in Tax Penalty Abatement

Our Boca Raton office recently represented a taxpayer before the IRS Appeals Office seeking penalty relief and was successful in removing the penalty due to reasonable cause.

The taxpayer had received a final notice of intent to levy relating to unpaid taxes from a 2008 IRS tax audit. In addition, the taxpayer had been assessed a 20% accuracy related penalty in the audit. Upon receipt of the final notice of intent to levy we filed a request for a collection due process (CDP) hearing. A CDP hearing is conducted by a Settlement Officer from the IRS Appeals Office. The request for a hearing immediately stops IRS enforced collection activities and provides taxpayers the opportunity to present payment alternatives such as an installment agreement or offer in compromise and seek penalty abatement.

The taxpayer in this case had the ability to pay the tax in full and did so prior to the hearing. Therefore, we only argued for abatement of the penalty during the hearing.

The request for penalty relief was based upon reasonable cause as a result of reliance on advice from a previous tax professional. The tax professional who prepared the taxpayer’s 2008 return advised the taxpayer that he was entitled to a particular deduction. The deduction was fairly substantial and involved a complex issue. Based upon the facts and circumstances of the case it was clear that the taxpayer was not entitled to the deduction.

The law and regulations state that the accuracy related penalty should not be assessed when the taxpayer acted with reasonable cause and in good faith. Reliance on advice from a tax professional may be deemed to be acting with reasonable cause and in good faith if the taxpayer believes that the professional has knowledge of the relevant tax laws and has been provided with the information needed to reach an professional opinion.  The IRS also considers the education, experience and background of the taxpayer to determine whether reliance on the tax advisor is grounds for reasonable cause relief.

In this case the IRS agreed with our position that the taxpayer should be granted penalty abatement as a result of advice from his former tax professional. An added benefit to penalty relief is that interest that has accrued on the unpaid penalty is also removed.

There are reasons other than reliance on a tax professional that are considered reasonable cause for abatement of a tax penalty. If you reside or work in Delray Beach, Boca Raton, Coral Springs or other areas of Palm Beach or Broward Counties and have been assessed an IRS tax penalty, call the CPAs at East Coast Tax Consulting today to request a free consultation for penalty relief.

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You deserve the best in IRS tax representation, tax preparation, and tax planning services. At East Coast Tax Consulting Group, you’ll work with a licensed CPA who will handle your case from beginning to end. We invite you to contact our team to schedule a free, confidential consultation.