Save Tax Documents to Prove Your Reasonable Cause When Seeking an IRS Penalty Abatement
If you are being accused of failure to file taxes by the IRS but you have reasonable cause to fight the charges, you will need to provide concrete evidence to substantiate your claim. With IRS audits on the rise due to stricter enforcement, it is wise to keep important records that may later help you prove your innocence to the IRS.
Without strong evidence, it is highly unlikely that you will win an IRS penalty abatement. Make sure that you are protecting yourself by gathering and saving all relevant tax documentations. If you’re unsure of how to resolve your current tax problem, you can get tax help from a tax attorney.
The individual below had failed to provide sufficient evidence to prove that his failure to file his tax returns was due to reasonable cause and thus was not granted a penalty abatement on those grounds.
CCH (http://tax.cchgroup.com) reports:
IRS Additions to Tax Not Imposed on Tax Protestor, Court-Imposed Penalty Was Imposed
An individual’s wages constituted taxable income and he was penalized for making frivolous arguments; however, other penalties were not imposed due to faulty documentation by the IRS. The individual did not dispute that he received compensation from a corporation; however, he disputed that the compensation was wages and, therefore, taxable income. His arguments were characteristic of tax-protestor rhetoric that has been universally rejected by the courts. The individual was liable for additions to tax for failure to file a tax return on the date prescribed under Code Sec. 6651(a)(1). He presented no evidence indicating that his failure to file taxes was due to reasonable cause or that the IRS’s determination was otherwise incorrect.
However, the individual was not liable for an addition to tax where the payment of the amount reported as tax on a return was not timely. The IRS did not prepare a substitute for return (SFR) that satisfied the requirements of Code Sec. 6020(b). Because the IRS relied on an alleged SFR to support its determination under Code Sec. 6651(a)(2), the IRS needed to introduce evidence that an SFR satisfied the requirements Code Sec. 6020(b) requirements and they did not do so. In addition, he was not liable for an addition to tax under Code Sec. 6654(a). The IRS did not introduce evidence showing whether the individual filed a return for the preceding tax year and, if he did, the amount shown on that return. Thus, the court could not conclude that the individual had a required annual payment for the tax year that was payable in installments under Code Sec. 6654.
The individual was, however, liable for a $25,000 penalty under Code Sec. 6673(a)(1). His petition and pre-trial memorandum contained frivolous tax-protestor arguments as to the deficiencies. At trial, the court informed him that his arguments were frivolous. Despite the warning, he presented further frivolous arguments in this post-trial brief.
R.W. Davenport
In order to fight the IRS effectively, you need expert tax help —seeking out a tax attorney is one of the most effective ways you can ensure a better chance of winning your case.
Don’t fight the IRS alone–you can contact our team of experts for a free consultation. Call us at 866-IRS-PROBLEMS (1-866-477-7762) or visit our website at www.TaxResolution.com
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Tags: Back Taxes, delinquent taxes, IRS debt, IRS help, IRS penalty abatement, Michael Rozbruch, tax attorney, tax help
