Category Archives: Tax Problems

What is IRS Civil Fraud Penalty?

Due to its steep rate, the civil fraud penalty is one of the most powerful tools that IRS has. It applies if any part of a tax underpayment is due to fraud, and the penalty equals 75% of that portion of the underpayment attributable to fraud. Although IRS has the burden of proving fraud by clear and convincing… Read More »

Interest on Underpayment of Tax

Interest on underpayments of tax is imposed at the federal short-term rate plus three percentage points The interest rates, which are adjusted quarterly, are determined during the first month of a calendar quarter and become effective for the following quarter. Currently, in 2015 and 2016, the interest rates remain very low and paying interest on… Read More »

IRS Penalty Case 6694(a)

For returns and claims for refunds prepared after May 2007, a tax return preparer who prepares a return or claim for refund may be liable for a penalty in the amount of $1,000 if a position is taken on the return or claim for refund and the preparer knew, or reasonably should have known, of… Read More »

Trust Fund Recovery Penalty (TFRP)

What is the Trust Fund Recovery Penalty (TFRP)? To encourage prompt payment of withheld income and employment taxes, including Social Security taxes, railroad retirement taxes, or collected excise taxes, Congress passed a law that provides for the TFRP. These taxes are called trust fund taxes because the employer holds the employee’s money in trust until making… Read More »

Appeals Judicial Approach and Culture (AJAC)

Appeals Judicial Approach and Culture (AJAC) – The AJAC Project reinforces Appeals’ quasi-judicial approach to the way it handles cases, with the goal of enhancing internal and external customer perceptions of a fair, impartial and independent Office of Appeals. AJAC policy changes include:   Appeals Judicial Approach and Culture (AJAC) AJAC clarifies the distinction between… Read More »

Innocent Spouse Relief for 2015 Taxes

Many married taxpayers choose to file a joint income tax revenues due to certain benefits this filing status of the declaration gives the taxpayer. By filing a joint return, both taxpayers are jointly and severally liable for such taxes and any tax, interest or additional penalties resulting from the joint statement, even if subsequently divorced.  … Read More »

Clearing up a couple common tax misconceptions

There are many common tax misconceptions. This article attempts to clarify several big tax misunderstandings that people have: Bonuses are taxed at the same rate as ordinary income. It is hard to convince people that this is true, because they just take out their paystub and go “See!? You’re wrong.” However, the fact is, while… Read More »