IRS Scores Win on Appeal Over Law on Approving Penalties

The IRS only needs to get a supervisor’s approval of penalties before assessment or, if earlier, only before the relevant supervisor loses approval discretion, a federal appeals court ruled.

The Friday decision from the U.S. Court of Appeals for the Ninth Circuit marked a significant win for the tax enforcement agency, which has faced a series of lawsuits over whether its penalty practices have met a requirement under tax code Section 6751(b) to get written supervisory approval of various initial penalty determinations.

The ruling, which reversed the U.S. Tax Court’s 2020 decision, divided ...