Tax Topic #3   Back to Misc. Tax Topics


IRS ADDED PENALTIES TO A BILL DETERMINED
FROM A TAX AUDIT

CONSEQUENCE:

The trauma of a tax audit is exacerbated by the fact that penalties are added to the bill.

SOLUTION:

Demand that the penalties be excluded. Even if you owe the tax alleged in connection with an audit, the penalties must be excluded when you can prove good faith, reasonable cause. Before you sign off on any audit decision, review the report to see whether it includes penalties. If so, challenge the penalties by submitting a detailed abatement request to the auditor who conducted the examination. Make it clear that you will not accept any audit decision that includes improper penalties. Explain that you intend to exercise your right to appeal the audit decision if they are not removed. If necessary, the IRS's Office of Appeals has the authority to review your challenge to the penalties.

 

 
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