See 3 Penalties For Taxpayers And Preparers

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7 civil penalties for taxpayers

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1-Failure to file

2-Failure to Pay

3-Combined penalties

4-Accuracy related penalties

5-Frivolous tax submission

6-Fraud

7-Failure to supply s.s.

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Failure to file (by due date/extension)

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5% per month or part/no more 25%

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Failure to file (due to fraud)

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15% per month or part/max 75%

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Failure to File (After 60 days of due date/ext)

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Min of 100% of unpaid or $435 per return

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Failure to Pay

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1/2 of 1% each month or part Max of 25% (does not apply during 6 months automatic ext)

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combined penalties(failure to pay and file)

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Failure to pay penalty will reduce the failure to file penalty Ex: 5% or 5% of Fail to file - 1/2 of 1% of Fail to pay

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Accuracy related penalty. Underpaid due to negligence or disregard of rules

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20% of unpaid tax

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Accuracy related penalty. Substantial understatement if + 10% of corrected tax or $5k

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20%

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Frivolous Tax submission means

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Do not include enough info to figure correct tax or tax reported is substantially incorrect

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Frivolous tax submission Penalty

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$5000

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Fraud penalty for taxpayers

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75% of underpayment

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Failure to supply social security (for taxpayers)

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$50 per each failure

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Interest stop accruing when

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IRS received their money (taxpayer paid)

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Abate reduce

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interest

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Abatement is due to

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unreasonable error or delay by IRS (agents, etc) due to ministerial or managerial act

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Can all taxes be abated?

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No

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What taxes can have their interest abated?

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income taxes, estate, gift, generation skipping or excise tax

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To avoid penalties you can

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apply reasonable cause

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Reasonable cause are

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situations that are beyond one's control even though you apply normal care and prudence.

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whar are the reasonable causes to avoid penalties

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death (taxpayer and immediate relatives)

serious illness

unavoidable absence

inability to obtain needed records

reliance on IRS advice

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What are unavoidable absences to avoid penalties

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natural disaster, incarcelation, military deployment, emergency hospitalization,

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Criminal penalty attempt to evade

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No more than 5 years in prison/ 250K(ind)500k (corp) or both

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Criminal penalty Willful Failure to collect or pay over tax

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No more than 6 years in prison, 250k(ind) or 500(corp) or both

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Criminal Penalty Willful Failure to file return, supply info o pay tax

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No more than 1 year of prison (misdemeanor) 100k (ind) or 200k (corp) or both

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Criminal Penalty Fraud and False Statement (Under penalty of perjury)

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No more than 3 year of prison

250k (ind) 500k(corp) or both w/ cost of prosecution

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Criminal Penalty Attempt to interfere w/administration of IRS

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No more than 3 years of prison. 250K (ind) 500 (Corp) or both

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Tax preparer penalties are stated on

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Section 7216, 6694, 6695

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Tax Preparer penalty sec 7216 Knowingly & Recklessly disclose tax return info/Unauthorized disclosure of info

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$250 per each

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Tax preparer Unreasonable position Sec 6694

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$1,000 or 50% of preparer's fee or whichever is greater.

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what is unreasonable position

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that lacks of substantial authority and preparer knew or does not have reasonable basis for disclosed position.

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when position lacks substantial authority and reasonable basis for disclosed position is

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unreasonable position

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unreasonable position would more likely than

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not be sustained on its merits for tax shelter.

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Sect 6694 Tax preparer penalty for Willful or Reckless conduct

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$5000 or 75% of preparer's fee whichever is greater

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Willful or Reckless conduct includes

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understated tax and intentional disregard of rules/regulations

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The penalty of willful or reckless conduct is REDUCED BY

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penalty of unreasonable position ($1000)

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Tax preparer penalty Sec.6695(1) Failures to furnish copy, sign, furnsih ID, retain, file correct info

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$50 per each falure up to 27k a year

UNLESS Failure is due to reasonable cause and not willful neglect

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What failures related to return/claim of refund w/ $50 penalty states Section 6695(1)?

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Failure to furnish copy to taxpayer

Failure to sign

Failure to furnish identifying number

Failure to retain copy or list

Failure to file correct info return.

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Tax preparer penalty Sec 6695(2) Failure related to Negotiation/Endorsement check

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$545 per check

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A tax preparer can only

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deposit check into taxpayer's account

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Tax preparer penalty Sec. 6695(3)Failure to due diligent in determining eligibility for EIC, HOH

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$545 per each failure and not annual LIMIT

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Tax position in order of importance

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Substantial Authority

Reasonable Basis

Not frivolous or patently improper

Not merely arguable

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Reasonable position is

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substantial authority and reasonable basis

cannot be frivolous position

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Substantial authority MORE STRINGENT THAN

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reasonable basis

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Reasonable basis has higher standard than

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not frivolous or not patently imporper or not merely arguable

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tax shelter is

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substantial understatement on accuracy related penalty, a partnership or entity or plan with intent to avoid or evade

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tax shelter has

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higher standard in confident (more likely than not) greater than 50 % likelihood that 1 or + significant issues would be resolved in the taxpayer's favor

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To avoid penalties tax preparer can use

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form 8275 or 8275R to disclose items or positions that were not disclosed in return but it is based on reasonable basis.

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What conducts cannot use form 8275 to avoid penalties

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negligence

disregard of rules

any substantial understatement of income on a tax shelter item

any substantial valuation misstatement under chapter 1 of the IRC

Any substantial overstatement of pension liability

any substantial estate or gift tax valuation understatement

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Cases with 50k or less can go to

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small tax case procedure (US TAX COURT)

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Decisions made in Small Tax Case procedure are

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not appelable

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If amount owed is not more than 50k (50K OR LESS) for payment agreements, can

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apply online

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If amount owed is more than 50K or +, for payment agreement can

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fill out form 9465 to apply for payment agreement

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Section 7216 is a criminal provision enacted by

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US Congress in 1071 that prohibits preparers of tax returns from knowingly or recklessly disclosing or using tax return info

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When a tax prepare can use/disclose tax return info

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When prepare obtain consents to use tax return info before tax return info is used and before returns are provided to the taxpayer for signature

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If you pay additional tax when you sign the agreement, the interest is

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figured from the due date of the return until the date of payment.

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to make a payment, if you owe less than 100k you have

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21 days from the date of the notice to pay and stop interest from accruing

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To make payment, if you owe 100k or +, you have

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10 days to make a payment and stop interest from accrouing

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A written consent to disclose info is effective for

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a period of 1 year from the date the taxpayer signs the consent

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Written consent due to conflict of interest are kept for

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36 months from the date of the conclusion of the representation

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the penalty for unreasonable position reduces a

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penalty for misconduct (willfull or reckless)

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If taxpayer omits for 25% or + the amount reported, then the statute of limitation is

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extended to 6 years

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Statute of limitation of return under reported is

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6 years

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penalty for unauthorized disclosure for tax preparers

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$250 per each

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if the lien encumbers other assets whose value exceeds twice the IRS lien then

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IRS may issue a discharge

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How long is the PROMPT ASSESSMENT

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18 months

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Ban to claim EITC/AOTC/CTC/ODC for fraudulently claiming EIC/CTC (false documents)

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10 years of disallowance

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How a Fiduciary report to IRS a fiduciary relationship to a trust ?

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Form 56 filed by a fiduciary

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e-file mandate applies to form 1040. 1040 SR 1041 but does not apply to

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form 940/941/944

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A large taxpayer is a business or entity with assets of

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10 million or + or partnership with more than 100 partners

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if practicioner EA fails to file her personal returns can be

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charged with disreputable conduct and sanctioned

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if you fails to file a return, there is not

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statute of limitation to assess and collect.

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For a tax debt to be forgiven in bankruptcy must meet certain conditions. The tax assessment must be

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at least 240 days old in order to be discharged

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Are ROTH IRA accounts exempt from Levy

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No Retirement accounts are not exempt.

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if you don't remit withheld payroll taxes to IRS, the penalty is

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trust fund recovery penalty 100% of unpaid of trust fund taxes + interest

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form 4868 requests

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an extension to file

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who is responsible for FBAR enforcement

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IRS. FinCEN (Fin Crim and Enforc Netw) delegate enforcement of FBAR to IRS

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Taxpayer that has specific tax question can request

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a private letter ruling from IRS

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The perfection period for 1040 and 4868 Individual forms extensions() is

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5 days ending on April 20

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The perfection period for business is

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10 days

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How many days from a date or a rejected return right on April 15 can resubmit the return and still have the return be considered timely-filed?

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5 days (Perfection period for individuals) or 10 days (Perfection period for business)

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A form 1065 US Partnership return must be filed electronically or on magnetic media if

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number of partners exceeds 100

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penalty may be abated under The 1st Time abatement FTA policy

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for reasonable cause

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INTEREST CANNOT BE

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ABATED FOR REASONABLE CAUSE

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What can be abated for reasonable cause

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penalty

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FBAR requirements is under

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Title 31 of the US Code

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if you owe and are unemployed can set installment payments for a minimum of

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$25 monthly in a period of 5 years (60 months)

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If taxpayer owes up to 50k,can set instalment payments for a period of

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6 years (72 months) as long they use direct debit

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The IRS will release a Notice of Federal Tax Lien

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within 45 days from payment of the outstanding tax liability

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Effect a bankruptcy proceeding have on an IRS levy of property

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The taxpayer receives an automatic stay and IRS must release the levy while bankruptcy is pending

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Rule of retain copy of communication of fee information is different to the rule of ERO uses radio, television internet to advertise IRS-E-file

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Copies to transmission that ERO advertise E-file are mantianed until end of the calendar year and copies of communication of practitioner must keep is 3 years.

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In general how long should a taxpayer retain records

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until the statute of limitations expires

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tax shelter position even though it is disclosed and has substantial authority, it is considered

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unreasonable and it does not meet the Standard of More Likely than Not.