Document Type

Article

Publication Date

1-1-2013

Abstract

This Article considers the present law regarding the accuracy related penalties pursuant to I.R.C § 6662 and the reasonable reliance and good faith defense provided for in I.R.C § 6664 using Canal as a prime example of how the courts have treated and penalized taxpayers for relying on tax advisors in planning proposed transactions and in taking positions on returns and proposes a new analysis of a taxpayer's good faith and reasonable reliance. Section II of this Article discusses the current state of the law regarding the Section 6662 penalties, the function and regulations imposed on tax attorneys in advising taxpayer-clients, the Section 6664 good faith and reasonable reliance defense, and provides an overview of the facts and legal analysis underlying the Tax Court's holding in Canal. Section III analyzes the current law and presents a new analysis of a taxpayer's good faith and reasonable reliance on his attorney's advice and opinions that should be implemented by the IRS and the courts, which comports with all current law, including the Circular 230 requirements imposed on tax practitioners generally.