LA TIMES: Tax penalty reprieve brings collective sigh of relief at firms

It appears that the movement to repeal or modify 6707(a) penalties has finally reached critical mass. This story from the Los Angeles Times illustrates the inherent problems with these penalties and the failure to give the IRS any discretion in imposing these penalties.

http://www.latimes.com/business/la-fi-smallbiz14-2009jul14,0,3018084.story

I recently met with a client who also illustrates this point. She was a long time employee. Her employer wanted to do something for her, and for himself. He purchased a 412(i). As the plan has collapsed, she is facing $100,000 per year in penalties for a plan she was not involved in purchasing or funding, and for which she was to receive relatively little benefit.