Section 6700 – IRS’s Newly Found Weapon Against Professionals

Recent actions by IRS agents to invoke section 6700 ("Promoting Abusive Tax Shelters, Etc.") portends a new area of concern for professionals who render tax advice. This penalty section was added to the Internal Revenue Code in 1982, primarily to provide the Service with an additional means of pursuing promoters of abusive tax shelters who make false or fraudulent statements regarding the tax consequences of their products. Recently, however, revenue agents are applying the section to lawyers and other professionals who provide tax or taxrelated advice with which the Service disagrees or which it considers aggressive. In some cases, it appears that the Service's objective is not to win in court, but rather to create an in terrorem effect, with respect to both the professional whose advice is under examination and the profession as a whole.