When IRS Penalty Assertions Are Unlawful

Highlights

• Internal Revenue Code Section 6751(b)(1) provides that "[n]o penalty ... shall be assessed unless the initial determination of such assessment is personally approved (in writing) by the immediate supervisor of the individual making such determination ... ."
• This Holland & Knight alert deals with the conditions that the IRS must satisfy in order to comply with Section 6751(b)(1) and the consequences of its failure to do so.

One of the most highly litigated issues in U.S. Tax Court is whether taxpayers are liable for certain penalties, additions to tax or additional amounts (each, a "penalty" and collectively, "penalties"). This should come as no surprise, as the IRS assessed nearly $40.5 billion in civil penalties in fiscal year 2019.¹