Reply to IRS penalty- Settle or proceed to litigation?

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[quote=Anonymous][quote=Anonymous]It sounds like you agree you screwed up but think you should get a pass because it was inadvertent and a first time mistake.

I think that would probably be fair in your case but I really wonder if the time for that is before the IRS. I don’t think it’s up to the Tax Court to say “gee this seems like a big penalty for someone’s inadvertent mistake”— it’s their job to apply the law.

So I am a little sceptical of your tax attorney’s assessment, although maybe they have more money on the line than I do or you’ve left something out. [/quote]

I momentarily thought that maybe I should just not file it but I knew it was the right thing to own up to my mistake, even given the initial penalty that the CPA told me.

I was encouraged at first when I consulted with the Tax Attorney who said I qualified for the Abatement, and they did refer to the law that covers gifts. The Office of Independent appeals asked me if the money was from a Trust, and I said no, because it is not.  Apparently, the abatement can cover gifts, but they cannot cover trusts. The Tax Attorney did say that there have been publications in tax law regarding removing the abatement for gifts but that decision has not been finalized- which is why my Tax Attorney also wants to litigate this to argue the current law.

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