Assignment Penalties

Assignment Penalties - 1 PENALTIES N e g l i g e n c e...

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Unformatted text preview: 1 PENALTIES N e g l i g e n c e Intentional disregard of the rules and regulations S u b s t a n t i a l n e g l i g e n c e Fraud Taxpayer Penalties Do you have authority for your position? Were you trying to cheat or were you just negligent? What penalties am I facing? 3 Taxpayer Penalties Were talking TAXPAYER penalties. There are also penalties on the TAX RETURN PREPARER. BE SURE AND MAKE THE DISTINCTION. 4 Accuracy-Related Penalties Section 6662 T hree types of accuracy related TAXPAYER penalties How bad? 5 Accuracy-Related Penalties 6662 TAXPAYER penalties 1. Negligence or negligent disregard for rules & regs 2. Substantial understatement of income tax Substantial negligence 3. Substantial valuation misstatement (over or under valuation) No stacking of penalties How much? 6 Accuracy-Related Penalties 6662 Imposed only on taxpayers Amount: 20% of the tax underpayment due to negligence or misstatement Plus interest on the penalty if not paid in a timely basis O u c h 7 O u c h Accuracy-Related Penalties 6662 So you were negligent. You owe 1) the tax 2) interest on the tax 3) a penalty & maybe 4) interest on penalty! 8 Accuracy-Related Penalties: Negligence What is negligence? Defined: Prudent man rule: fail to do what a reasonable and prudent person would do. Examples: Fail to report cash tips Fail to report income on Form 1099 Fail to substantiate T&E Protection: Not imposed if there is a reasonable basis for the position regardless of whether disclosed Arguable, but fairly unlikely to prevail in court 20% chance of succeeding 9 Hey Diaper Dandy! Ive got the 20%, Ive got REASONABLE BASIS. No negligence penalty for this guy. Dipsy-doo Dunk-a-roo! Awesome baby! 10 Accuracy-Related Penalties: Substantial Underpayment Penalty (Substantial Negligence) You really understated your tax this time!...
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This note was uploaded on 09/06/2009 for the course BUS x302 taught by Professor Susan during the Spring '09 term at IUPUI.

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Assignment Penalties - 1 PENALTIES N e g l i g e n c e...

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