TCJA Brings Risks of Accuracy-Related Penalties: Are You Prepared?

Jul 19, 2019

For years, the Section 6662 accuracy-related penalty has been one of the most frequently litigated federal tax issues in the United States. This is unlikely to change in light of the recent amendments to the Internal Revenue Code brought by the Tax Cuts and Jobs Act (TCJA).

The TCJA has not only created new situations where taxpayers and their advisers risk making mistakes while learning the new rules, but has also lowered one of the thresholds for the imposition of the penalty. The penalty can range from 20% to 40% of any underpayment of tax arising from circumstances including negligence, substantial understatement of income tax or valuation misstatements.

While the Internal Revenue Service often prevails in collecting the accuracy-related penalty, taxpayers who successfully use the ‘reasonable cause and good faith’ defense can be excepted. With the increased risk of incurring penalties as a result of recent tax reform, how can tax professionals ensure the success of their reasonable cause and good faith defense in court?

Among other things, this webinar covers:

  • Recent developments under the TCJA and Section 6662-related implications
  • An in-depth analysis of a recent accuracy-related penalty case
  • Influential factors in the success of the reasonable cause and good faith defense as uncovered by machine learning analysis of case law