Tax Software Data Entry Errors are "Reasonable Cause" for Penalty Abatement

Add another event to the ever-expanding litany of "reasonable causes" for IRS penalty abatement/forgiveness.  

The Tax Court ruled that penalties may be excused for data entry errors a taxpayer makes while using tax software programs.  In Olsen, TC Summ. Op. 2011-131, a taxpayer incorrectly input some interest income, the IRS hit him for a 20% understatement penalty and the Court reversed it all.  The taxpayer had acted in good faith and reasonably the Court reasoned.

Remember, "reasonable cause" for penalty forgiveness is just about any legitimate reason you can convince one IRS examiner to believe.  A tax attorney can help you draft such a forgiveness request.  Call me at 405-607-1192.  We draft these requests routinely.
1 Comments
For data entry errors, tax attorney will help us to reduce the penalty?
by Arun March 2, 2012 at 02:28 AM
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