April 9, 2022 - Douglas Myser

Tax Court case relying on tax preparer. Erik and Aspasia Oosterwijk filed their 2017 tax return late and now seek a refund for the IRS's late file penalties because their accountant failed to e-file for an extension and then gave them incorrect advice on how to obtain an extension and stop the penalties from accruing. CPA Ernie Paszkiewicz handled the accounting for the Oosterwijk's for over a decade. Mr. Oosterwijk emailed his CPA on April 29th to inform him that the $1.8 million remained in their account. The next day the CPA discovered and told the Oosterwijk's that he had not actually e-filed the Extension Request as he had told them. He advised them that if they filed the six month extension at that moment, they would have until October 15th, 2018 to file the tax return and the penalties for late filing would halt. The Oosterwijk's immediately mailed a paper Extension Request form and a check for $1.8 million to the IRS. Tax Court case relying on tax preparer.

The IRS assessed a "Failure to File" penalty in the amount of $8,859 and assessed a Failure to FIle Penalty of $356,916. In June of 2019 the Oosterwijk's paid the balance of the penalties and then filed for a Penalty Abatement based on reasonable cause criteria, based upon the IRS Revenue Code. The court indicated that they were sympathetic to the Oosterwijks, who were not willfully negligent but rather appear to have relied on the advice of a trusted professional intending to fulfill their obligation under the tax law. They should have contacted a Tax Resolution Services firm. But neither was the government at risk, and indeed the IRS did abate a substantial portion of the penalties assessed. For the reasons discussed the court concluded that no refund can required, the government's motion to dismiss will be granted.

For those needing competent tax filing services, you may call us, and if you are in need of Penalty Abatement assistance, we can help you determine all of your Tax Relief options under the Internal Revenue Code, including the IRS Fresh Start Program. Tax Relief should be pursued thru a competent respected Tax Resolution firm.