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Penalties

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The Internal Revenue Code (IRC, 26 U.S.C.) provides a wide range of penalties for noncompliance with the various rules associated with filing returns and paying taxes. These apply to individuals, corporations, partnerships, exempt organizations, trusts, estates, and other entities.

For example, the Internal Revenue Service can assess and abate several different types of civil penalties in connection with income taxes, employment taxes, excise taxes, and estate and gift taxes. These penalties concern accuracy of the return, delinquency (late filing or late payment), estimated tax, failure to pay, fraud, erroneous refunds, and other noncompliant activity. Treasury regulations and other published guidance on each specific penalty section are available through Tax Analysts. Many court opinions address the imposition of accuracy-related penalties against individuals, corporations, partnerships, and other entities. This broad category includes penalties for negligence, substantial understatement of income tax, substantial valuation misstatement, substantial estate or gift tax valuation understatement (IRC section 6662), and understatement of reportable transactions (IRC section 6662A).

Special penalties apply to return preparers (IRC sections 6694 and 6695) and tax shelter promoters (IRC section 6700). Also, the IRS assesses trust fund recovery penalties against employees, business owners, and other “responsible persons” who fail to collect, account for, and timely pay employment taxes (IRC section 6672). Further, there are penalties associated with tax crimes, such as fraud and false statements (IRC section 7206), fraudulent returns or other documents (IRC section 7207), and the unauthorized disclosure of returns or return information.

Tax Analysts has many subject matter experts who can discuss tax-related topics, including penalties and additions to tax. To schedule an interview or a background session, please contact us at communications@taxanalysts.org or 1-800-955-2444.