IRS Practice Unit: Applying Reasonable Cause Exception to Penalties (IRC §6664)

Review of taxpayer defenses that a return position was based on reasonable cause and that such taxpayer acted in good faith, the IRS Large Business and International Concept Unit outlined in a practice unit released July 2. Taxpayers bear the burden of providing support to substantiate reasonable cause for penalty relief. The reasonable cause exception under tax code Section 6664(c) applies to: (1) accuracy related penalties under Section 6662; and (2) civil fraud under Section 6663. In addition, reasonable cause exceptions apply to: (1) Section 6651 - Failure to File and/or Failure to Pay; ...