Business Law
Business Law News 2020, Issue 4
Content
- 2018-2019 Commercial Law Developments Parts VI. U.C.C. - Sales and Personal Property Leasing, VII. Notes and Electronic Funds Transfers, and VIII. Letters of Credit, Investment Securities, and Documents of Title
- B-Law B-Law B-Law: Ethics for Business Lawyers
- Book Review: Comparative Commercial Contracts: Law, Culture, and Economic Development Second Edition
- Business Law News Editorial Team
- Business Law News Table of Contents
- Executive Committee: Message from the Chair
- Executive Committee of the Business Law Section 2020-2021
- Message from the Editor
- New California Connected Devices Law Dictates Security Features for Manufacturers
- Paul 'Chip' L. Lion III Receives Business Law Section's 2020 Lifetime Achievement Award
- Standing Committee Officers of the Business Law Section 2020-2021
- Avoid Irs Penalties—Reasonable Cause Is Surprisingly Reasonable
Avoid IRS Penalties—Reasonable Cause Is Surprisingly Reasonable
Robert W. Wood practices law with Wood LLP (www.WoodLLP.com) and is the author of Taxation of Damage Awards and Settlement Payments and other books available at www.TaxInstitute.com. This discussion is not intended as legal advice.
Robert W. Wood
Dear IRS, no penalties please! Taxpayers claim that penalties are not warranted for many reasons, but what works? One of the biggest yet most misunderstood protections for taxpayers is the defense that a tax position was based on reasonable cause, and the taxpayer acted in good faith. Those seem like pretty friendly, easy-to-under-stand words, but they are terms of art. Even if you think you comply with them as a matter of common sense, the IRS may not agree.
Among other things, how the IRS evaluates a defense depends on which penalty has been assessed, so you need to know that to see if you are, well, reasonable. In addition, on top of reasonable cause, certain penalty defenses involve other concepts, such as an absence of willful neglect. Isn’t that proving a negative? You bet.