Court Denies IRS Bid to Stop Claim TurboTax Caused Filing Error

The IRS didn’t properly consider a woman’s reasonable cause explanation for why she didn’t report a foreign gift, a federal court said.

Judge Richard Seeborg denied a government motion to dismiss Jiaxing Huang’s lawsuit for a tax refund. The US District Court for the Northern District of California judge said her argument that she’d reasonably relied on TurboTax can proceed.

He dismissed Huang’s other claims, though, including that the IRS didn’t explain a change to her penalty, lacks the authority to penalize her, and didn’t properly obtain approvals for her penalty.

“Considering that the Tax Court itself has ruled that ...