Battat v. Commissioner: Tax Penalties Called Into Question

Penalty Lacked Proper Approval: The Case Of Battat v. Commissioner Of The IRS

So much of tax law is in the details – and a couple recently discovered that, to their benefit. While the IRS may be able to penalize you for failing to include some bit of information, so too, the IRS can suffer the consequences if its representatives fail to tend to the details.

In the case of Battat v. Commissioner, the outcome came down to whether or not a supervisor signed a form assessing a penalty.

The case involved a Florida couple who was assessed a penalty after being audited. The IRS agent who audited their tax returns determined the amount of corrected taxes they owed, as well as a $345,143 penalty. The IRS agent sent the notice to the couple, along with a packet of information. That packet included a revenue agent report (RAR), which contained the information regarding the corrected tax due and the penalty amounts. At the bottom of the report was a signature box with a signature from the IRS agent who had prepared the report, and a signature box for the couple to sign. Language on the form indicated that when the couple signed, they were agreeing with the assessment and providing consent for the collection of the tax and penalty.

The couple was also given information regarding the appeals process if they did not agree with the assessment.

The couple did sign the form, but they later decided to appeal the penalty. Though the IRS tried to argue that the couple accepted the findings by signing the form, the judge ultimately found that the form was invalid because a supervisor never signed off on the form, indicating approval of the assessment. A supervisor only signed off on the form after the couple had begun the appeals process.

Though many people are intimidated when they receive an IRS notice – and may feel like they aren’t in a position to challenge the authority of a huge government agency – this case is an excellent example of how the bureaucracy can fail. Getting a notice from the IRS is not the end of the conversation. You have rights as a taxpayer, and the IRS is not infallible. It is important that you always talk with an experienced tax attorney about your rights and your legal options, rather than just signing the form or agreeing to the penalty.
 

Get Tax Audit Representation From Our Professional Scottsdale Attorneys

 
Call Silver Law PLC today if you have received notice from the IRS about an impending audit or an assessed penalty. Our experienced tax attorneys have over 50 years of combined experience protecting the rights of individuals and businesses, and they all have experience working for the IRS. They can help you understand your legal rights and options to fight these penalties and to minimize your tax obligation. Call our office today to schedule your free consultation and learn more.

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