Is there any hope in sight for taxpayers facing § 6707 penalties

As anyone who is currently facing 6707 penalties knows, those penalties are $100,000 per year for the individual and $200,000 per year for the corporation. These penalties are stackable, which means that S-corporations are often hit with the penalties at both the individual and corporate level simultaneously.


Under a bill passed by Congress in 2004, the IRS does not have the ability to waive the fines for listed tax shelters.


Currently, there is legislation pending both in the House and Senate which would lessen penalties and give the IRS discretion in handing down those penalties. The bill introducted last year by Sens. Nelson (D., Neb.) and Evan Bayh (D., Ind.), would allow the Treasury Secretary to waive the current mandatory penalties if the taxpayer acted in good faith. Many taxpayers, caught by these penalties, never knew they were purchasing a tax shelter, and were advised by financial planners not to file a form 8886 after the revenue ruling in 2004.

To read more on the status of the legislation, see:


http://news.morningstar.com/newsnet/ViewNews.aspx?article=/DJ/200904281511DOWJONESDJONLINE000765_univ.xml


http://online.wsj.com/article/SB123311144767422917.html

If you have any questions or comments, please free to contact Chris Hellums at Chrish@PDKHLaw.com