TO BEGIN WITH; LET’S JUST SAY, CIVIL PENALTIES CAN BE IMPOSED UNDER THE INTERNAL REVENUE CODE FOR ALL SORTS OF REASONS! SOME OF THESE PENALTIES CAN BE ABATED. VARIOUS SECTIONS OF THE INTERNAL REVENUE CODE IMPOSES PENALTIES. - CODE SECTION 6676 IMPOSES A 20% PENALTY FOR ERRONEOUS CLAIMS FOR REFUNDS; - CODE SECTION 6701 IMPOSES A $1,000 PENALTY (Individual tax returns) OR $10,000 PENALTY (Corporate tax returns) FOR AIDING & ABETTING UNDERSTATMENT OF TAX LIABILITY BY OTHERS; - CODE SECTION 6682 IMPOSES A $500 PENALTY ON ANY INDIVIDUAL WHO DELIBERATELY AND KNOWINGLY FASIFY THEIR FORM W-4; - INTERNAL REVENUE CODE SECTION 6662 IMPOSES A 20% PENALTY ON UNDERSTATEMENTS OF TAX LIABILITY DUE TO NEGLIGENCE BY THE TAXPAYER; - INTERNAL REVENUE CODE SECTION 6663 IMPOSES A 75% FRAUD PENALTY WHENEVER THE IRS DETERMINES THAT ANY PORTION OF AN UNDERPAYMENT OF TAX IS DUE TO FRAUDULENT BEHAVIOUR ON BEHALF OF THE TAXPAYER. THE ENTIRE UNDERPAYMENT IS SUBJECT TO THE 75% FRAUD PENALTY.

1. CERTAIN TAX PENALTIES CAN BE ABATED UNDER
THE INTERNAL REVENUE CODE.
6060 N Central Expressway Office: 214-599-0431
Suite 416 Fax: 469-521-8782
Dallas, Texas 75206 Email: cj@cjacksonlaw.com
Spanish: 214-599-0432
Presentation by: LAW FIRM COLEMAN JACKSON, P.C.

2. ABATEMENT OF CIVIL TAX
PENALTIES
TO BEGIN WITH; LET’S JUST SAY, CIVIL PENALTIES CAN
BE IMPOSED UNDER THE INTERNAL REVENUE CODE
FOR ALL SORTS OF REASONS! SOME OF THESE
PENALTIES CAN BE ABATED.

3. VARIOUS SECTIONS OF THE INTERNAL REVENUE
CODE IMPOSES PENALTIES
• JUST TO LIST A FEW—
– CODE SECTION 6676 IMPOSES A 20%
PENALTY FOR ERRONEOUS CLAIMS FOR
REFUNDS;
– CODE SECTION 6701 IMPOSES A $1,000
PENALTY (Individual tax returns) OR
$10,000 PENALTY (Corporate tax returns)
FOR AIDING & ABETTING UNDERSTATMENT
OF TAX LIABILITY BY OTHERS;
– CODE SECTION 6682 IMPOSES A $500
PENALTY ON ANY INDIVIDUAL WHO
DELIBERATELY AND KNOWINGLY FASIFY
THEIR FORM W-4;
– THERE ARE MANY, ,MANY MORE CODE
SECTIONS THAT IMPOSES CIVIL PENALTIES
FOR VARIOUS KINDS OF TAX VIOLATIONS.
WE SIMPLY CAN’T COVER THEM ALL HERE
FOLLOW OUR BLOGS FOR MORE LEGAL UPDATES:
GO TO OUR FIRM-SITE AT WWW.CJACKSONLAW.COM AND BOOKMARK OUR PAGE.

4. INTERNAL REVENUE CODE SECTION
6662
• IMPOSES A 20% PENALTY ON
UNDERSTATEMENTS OF TAX LIABILITY DUE
TO NEGLIGENCE BY THE TAXPAYER—
– NEGLIGENCE IS DEFINED IN TAX LAW AS --
• FAILURE TO MAKE A REASONABLE ATTEMPT
TO COMPLY WITH FEDERAL TAX LAWS;
• INACCURACIES DUE TO CARELESSNESS;
• TAX RETURN ERRORS DUE TO RECKLESS
DISREGARD OF THE TAX RULES; OR
• TAXPAYER BEHAVIOUR THAT DOES NOT ARISE
TO TAX FRAUD UNDER CODE SECTION 6663.
NEGIGENCE IS WHEN THE TAXPAYER’S
WRONG BEHAVIOUR, ACTS OR DEEDS
NEGATIVELY IMPACTS FEDERAL TAX
REPORTING BUT ITS NOT TAX FRAUD UNDER
CODE SECTION 6663.

5. INTERNAL REVENUE CODE SECTION
6663
• IMPOSES A 75% FRAUD PENALTY
WHENEVER THE IRS DETERMINES
THAT ANY PORTION OF AN
UNDERPAYMENT OF TAX IS DUE TO
FRAUDULENT BEHAVIOUR ON
BEHALF OF THE TAXPAYER. THE
ENTIRE UNDERPAYMENT IS SUBJECT
TO THE 75% FRAUD PENALTY.
• NOTE: THIS PRESENTATION DEALS
WITH CIVIL PENALTIES (MONEY); BUT,
IT SHOULD BE NOTED THAT THE IRS
CIVIL DIVISION CAN REFER CASES TO
IRS CRIMINAL INVESTIGATIONS
WHERE CRIMINAL CHARGES WHEN
CRIMINAL TAX VIOLATIONS ARE
SUSPECTED.

6. INTERNAL REVENUE CODE SECTION
6664
• GENERALLY SAYS THAT: “No penalty shall be
imposed under section 6662 or 6663 with
respect to any portion of an underpayment if
it is shown that there was a reasonable
cause for such portion and that the taxpayer
acted in good faith with respect to such
portion.”
• The above statement in a ‘nut shell’ defines
what abatement of penalties means in the
Internal Revenue Code. The penalties
normally applied under Code Sections 6662
or 6663 are simply not imposed when the
taxpayer is able to show reasonable cause &
good faith. In order to get penalties abated
the taxpayer must timely request this relief
from the Internal Revenue Service.

7. THE IRS USES A CASE-BY-CASE ANALYSIS WHEN
DETERMINING WHETHER TO ABATE PENALTIES
• THE IRS USES A CASE-BY-CASE BASIS
TO DETERMINE WHETHER A
TAXPAYER ACTED WITH REASONABLE
CAUSE AND IN GOOD FAITH.
• THAT SIMPLY MEANS THE IRS TAKES A
TOTALITY OF THE CIRCUMSTANCES
APPROACH THAT CONSIDERS ALL-
THE-FACTS-AND-CIRCUMSTANCES
WHEN DECIDING WHETHER TO
IMPOSE PENALTIES UNDER CODE
SECTION 6662 OR 6663.

8. ALL THE FACTS AND CIRCUMSTANCES
BASIS OF REVIEW
• TAXPAYERS EXPERIENCE,
• TAXPAYERS EDUCATIONAL ACHIEVEMENTS,
• TAXPAYERS KNOWLEDGE OF U.S. TAX LAWS AND
CUSTOMS IN GENERAL (NOTE: THIS COULD WORK
IN FAVOR OF RECENT IMMIGRANTS WHO ARE LIKELY
TO HAVE LIMITED KNOWLEDGE AND ARE GENERALLY
BECOMING ACCUMATED TO THE CULTURE AND
LAWS OF THE UNITED STATES),
• RELIANCE OF INFORMATION RETURNS, SUCH AS,
FORM 1099 AND FORM W-2 PREPARED BY OTHERSM
WHEN THE TAXPAYER DID NOT KNOW AND HAD NO
REASON TO KNOW OF THE ERRONEOUS
INFORMATION RETURNS,
• RELIANCE ON PROFESSIONAL TAX ADVISORS WITH
NO CONFLICTING INTEREST OR RELATIONSHIP WITH
THE TAXPAYER OTHERTHAN BEING COMPENSATED AS
A TAX ADVISOR OR TAX PREPARER.

9. ABATEMENT OF CIVIL PENALTIES
• TAX RETURNS MUST BE FILED IN
ORDER TO REQUEST ABATEMENT OF
CIVIL PENALTIES.
• ALL REQUEST FOR REFUNDS OR
ABATEMENT OF PENALTIES MUST BE
REQUESTED BEFORE THE STATUTE
OF LIMITATIONS EXPIRES OF THE
PARTICULAR TAX PERIOD. THIS IS
TYPICALLY 3 YEARS FROM THE DUE
DATE OF THE RETURN WHETHER THE
ACTUAL RETURN WAS TIMELY FILED
OR NOT. SUBSTITUTE RETURNS
FILED BY THE IRS ON BEHALF OF THE
TAXPAYER DOES NOT EXTEND THE
STATUTE OF LIMITATIONS FOR
PURPOSES OF REQUESTING
REFUNDS OR ABATEMENT OF CIVIL
PENALTIES.

10. THAT IS IT FOR NOW!
VISIT US AT WWW.CJACKSONLAW.COM TO LEARN
MORE ABOUT TAX, LITIGATION OR IMMIGRATION.

11. CERTAIN TAX PENALTIES CAN BE ABATED UNDER
THE INTERNAL REVENUE CODE.
6060 N Central Expressway Office: 214-599-0431
Suite 416 Fax: 469-521-8782
Dallas, Texas 75206 Email: cj@cjacksonlaw.com
Spanish: 214-599-0432
Presentation by: LAW FIRM COLEMAN JACKSON, P.C.