Tax Relief News: Geithner’s TurboTax Defense is Not Reasonable Cause for Understatement of Taxes
In recent U.S. Tax Court News, Treasury Secretary Tim Geithner, who owed $34,000 in back taxes and didn’t pay all of it until Obama nominated him, was not granted penalty abatement. His defense that he relied on TurboTax to prompt him to pay his self- employment taxes was rejected and does not excuse him from penalty or errors on his tax return.
I know from negotiating cases with the IRS day in and day out on behalf of taxpayers that Geithner’s defense would not hold. The standard is the same for all Americans and ignorance of the law is no excuse.
Here’s a great example of someone who is really smart and yet still can’t seem to get it right when it comes to paying federal taxes. Even if TurboTax didn’t prompt him to pay his self-employment taxes, this is not reasonable cause for the understatement of taxes. If you’ve had a life-altering event such as divorce, business closing, severe illness, or loss of a job, you can argue that you have a reasonable cause and in certain situations, the IRS will work with you and forgive some penalties.
But blaming TurboTax for inadequate tax filings will not excuse you from paying penalties even if you are the head of the Treasury department.
At TRS, we are very successful in reducing IRS penalties for our clients in need of tax relief. We have the client complete an in-depth questionnaire and request that they submit proof or documentation that supports their good reason. We take this information and compose a legal letter, citing recent or past court cases where these verdicts were in favor of the client with the same or similar set of circumstances you have.
Generally, our penalty abatement request cases are heard and settled, in the client’s favor, at the appellate level of the IRS, as IRS personnel, at the first line of defense, are trained to just “say no”. Remember, the IRS is not in the business of writing off penalties. They are most brutal Collection Agency (and penalty happy bunch) on the planet.
If you have unfiled tax returns or other IRS problems, contact our specialized staff of tax attorneys, CPAs, EAs and tax professionals. Visit the Tax Resolution Services web site for a free tax relief consultation or call us at 888-699-7630.
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Tags: Back Taxes, IRS penalties, Penalty Abatement, tax penalties, tax relief, Timothy Geithner, turbotax defense, turbotax geithner
