Tax Return Penalties Dayton OH

Tax return penalties are catgorized into two prongs: the negligence prong and the diregard of the rules and regulations prong.

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This penalty is really composed of two alternative penalties. The first is the negligence prong and the second is the disregard of the rules and regulations prong.

  • "Negligence"
  • "Disregard of rules & regulations"

"Negligence"

"Negligence" includes (but is not limited to) any failure:

  • (1) to make a reasonable attempt to comply with the internal revenue laws;
  • (2) to exercise ordinary and reasonable care in preparation of a tax return; or
  • (3) to keep adequate books and records or to substantiate items properly.

Moreover, taking a position on your return that has a reasonable basis is not negligence. The IRS will typically find negligence if a taxpayer (1) fails to include on an income tax return income reported on an information return (such as an IRS Form 1099) or (2) fails to make a reasonable attempt to ascertain the correctness of a deduction, credit, or exclusion that would seem to a reasonable person to be "too good to be true".

"Disregard of rules & regulations"

This prong may be asserted if you carelessly, recklessly or intentionally disregard IRS rules and regulations - by taking a position on your return with little or no effort to determine whether the position is correct or knowingly taking a position that is incorrect.

Adequate disclosure on your tax return is not a defense against the negligence prong of the penalty, but may be a defense against the disregard prong. However, disclosure alone is not enough - you must show that there was a reasonable basis for the position.


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