Don't Trust the IRS!

BNA reported yesterday that the Internal Revenue Service failed to inform more than 1 million taxpayers who qualified in 2010 for relief from tax penalties totaling about $181 million of their right to ask for relief, the Treasury Inspector General for Tax Administration said in a report issued Oct. 17.
 
IRS penalizes those who fail to file tax returns or fail to timely pay the full tax shown on any tax return. However, it may waive the fines for taxpayers who have demonstrated full compliance over the prior three years, but only if the taxpayers request penalty relief, TIGTA said. 

The agency watchdog found that IRS does not widely publicize the opportunity to request this waiver, and that taxpayers or preparers must have knowledge of IRS processes to ask for them. 

It said the unfairness in administering penalty waivers for those who know to ask for them could jeopardize taxpayers' confidence in the tax system. 

Text of the report, Penalty Abatement Procedures Should Be Applied Consistently to All Taxpayers and Should Encourage Voluntary Compliance (2012-40-113), is at http://www.treasury.gov/tigta/auditreports/2012reports/201240113fr.pdf.