Clarifying the Reasonable-reliance Defense to Penalties in an E-Filing Era; An Analysis of Boyle, Haynes, Intress, and More


Taxpayers often file their tax returns late, the IRS penalizes them, and they try to place the blame, rightly or wrongly, on their attorneys, accountants, or return preparers. In other words, taxpayers frequently attempt to shirk penalties by raising the reasonable-reliance-on-a-tax-professional defense. this is common knowledge. What is not widely understood, though, is that the Supreme Court ruled many decades ago, in 1985, that such a defense only applies in situations where a return preparer gives erroneous substantive tax or legal advice to a taxpayer, not where the preparer simply flubs the  ministerial task of meeting a filing deadline. What is even more obscure is the recent case, in 2019, extending the historic Supreme Court decision to cases where taxpayers rely on preparers to e-file their returns, and something goes awry.

This article analyzes the general rules about filing deadlines and justifications for penalty abatement, the major cases establishing the limits of the reasonable-reliance-on-a-tax-professional defense during the paper-filing era, the new cases applying the original rules to modern times, and other aspects of tax where the rules about the extent of reliance are more flexible.

Read the full article here.

About Hale E. Sheppard

HALE E. SHEPPARD, Esq. (B.S., M.A., J.D., LL.M., LL.M.T.) is a Shareholder in the Tax Controversy Section of Chamberlain Hrdlicka and Chair of the International Tax Group.

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