Procedural Requirements for Imposition of Penalties and Additions to Tax
The Internal Revenue Service Restructuring Act required that each notice imposing a penalty include the name of the penalty, the Code section imposing the penalty, and a computation of the penalty. The Act also requires the specific approval of IRS management to assess all non computer generated penalties unless excepted. This provision does not apply to failure to file penalties, failure to pay penalties, or to penalties for failure to pay estimated tax.
Robert E. McKenzie recently contributed to Forbes’ “IRS Watch” section in an article, “Afraid to File Your Return Because You Owe IRS? Here’s How IRS Collects Delinquencies.”
Mr. McKenzie explains that the IRS Collection Division attempts to collect delinquent taxes as inexpensively and rapidly as possible using automated methods. He then outlines the IRS’s four-level system of collection, the Regional Compliance Centers which process the filed tax returns, the IRS procedure for business taxpayers’, small dollar payment plans, among other key information. Mr. McKenzie’s recommendation is to be proactive when you owe the IRS: “Not filing your return on time (or with an extension) will cause even greater penalties.”
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