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.