How to Avoid Tax Penalties By Disclosing a Return Position: The Art of the Tax Disclosure.
It cannot be denied. The IRS Form 8275, which I lovingly refer to as the Disclosure Statement. A form that keeps my clients and me out of trouble (most of the time). It can also benefit you in the same way.
A properly filled-out Form 8275 will protect taxpayers from accuracy-related penalties resulting from:
- A significant understatement of income tax.
- Remove exposure to a 40% penalty for transactions lacking economic substance, and
- Reduce return preparer penalties for tax understatements brought on by unreasonable positions or rules-related disregard.
One form used to achieve everything!!
But Form 8275 is more than just a smart penalty-defense move; it also serves as a means of cost reduction for our clients.
Generally speaking, a tax position can be supported in 2 ways: with considerable authority or with a reasonable basis and Form 8275. Considerable authority requires a significant amount of research hours.
Less labor translates into lower professional fees, which benefits my clients despite my self-interest.
Schedule Your Free Tax Consultation Here Today! See how we can help you disclose your tax position and avoid penalties!