Expect More Litigation Over IRS Penalty Approval Rules

Courts are likely to continue examining a requirement that IRS employees get their boss to OK penalty decisions before they are presented to taxpayers, even after the U.S. Tax Court issued a recent string of opinions addressing the issue.

The Tax Court’s 2017 ruling in Graev v. Commissioner interpreted tax code Section 6751(b) as requiring the IRS to obtain supervisory approval in a tax deficiency case by the time it imposes related tax penalties.

Since January, the Tax Court has grappled with multiple aspects of the requirement, trying to establish the exact point in the process when the requirement must ...