Case: Letter 5153 Asserting Penalty Without Supervisor Signature Fails Statutory Requirement (T.C. Memo) (IRC §6751)

IRS revenue agent failed to secure timely written supervisory approval of 40% understatement penalty as required by tax code Section 6751, the U.S. Tax Court held in a memorandum opinion. Taxpayer-husband was the sole shareholder of a micro-captive insurance company operated as an S corporation. Taxpayers’ return was selected for audit and on November 15, 2015, the revenue agent (RA) sent Taxpayers a Letter 5153 proposing an increased in Taxpayer-husband’s share of the S corporation’s income and asserted 40% penalties under Section 6662 but left the 20% penalties blank. Taxpayers declined to agree to the adjustment nor extend the statute ...