Taxpayers can be assessed accuracy-related penalties.

These IRS penalties can be the result of many factors, and I am not pretending to outline all posibilities. One that comes to mind is the Omission of Income. In this case maybe the taxpayer acted on the belief that the item in question was not income contrary to a specific IRS regulations and the like.  Maybe because, the taxpayer is under the belief that their is not a specific regulation that address the transaction in question. 

The general rule start from the premise that everything is income unless specifically exempt from taxes. That in itself stress the importance of having a tax professional on your side to look all transactions you had been involved. 

It can get even worst if the understament is over $5,000 or 10% of the tax required to be shown on your tax return. In this case the required accuracy-related penalty is 20% of the underpayment amount, or $400 ($5,000 x 20%).

Be careful and make sure that all items of income are included, it is the taxpayer responsibility.  They are exeptions, rules and procedures to be followed not discussed here.

For more information you may want to go to http:///www.irs.gov

Hit Counter