Megan L. Brackney was quoted in an article in Tax Notes titled “IRS Appeals Training Materials on Reasonable Cause Worry Practitioners” on October 6, 2022. The article discusses the implications of recently disclosed training materials related to international information return penalties from the IRS Independent Office of Appeals. Practitioners are particularly concerned by the IRS’s internal guidance on litigation hazards.
The article reads: “The training materials note the lack of case law directly on point on the application of reasonable cause to forms 3520 and 3520-A for foreign gift and inheritance penalties. Brackney argued that without a relevant case, it’s improper to assert that hazards of litigation don’t exist.
‘That’s when you have hazards . . . when you don’t have case law,’ Brackney said. ‘There’s lots of bedrock principles that are articulated in case law for delinquency penalties and [foreign bank account reporting] penalties and other types of penalties . . . but these foreign information returns — some of them have a little bit different aspect, particularly for older years, where things weren’t maybe as widely understood as they are now, and people might not be getting great advice.'”
Brackney also commented on IRS internal guidance regarding mitigation. She elaborated, “When we’re talking to Appeals officers about penalty issues, they will often say, ‘Even if I feel very sorry for your client, unless they can establish reasonable cause, I can’t grant relief,’” Brackney said. “I was shocked to see that they’re being told in training that they actually can grant [mitigation] if they think that it’s not promoting the goals of the particular penalty, but I’m not seeing that in my practice. . . . I would love it if they followed their own materials here.”
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