Choose between overlapping preparer penalties based on the facts

Plain-English summary

Chief Counsel advised that the IRS should consider all facts and circumstances when deciding whether the return-preparer penalty under section 6694(b), the aiding-and-abetting penalty under section 6701, or both apply to a return or other document. When both penalties apply, the IRS may choose which one to assert. The email cited legislative history for that discretion but did not state a categorical preference for either penalty.

Ruling snapshot

• Question: How should the IRS choose between penalties under sections 6694(b) and 6701 when their coverage may overlap?
• Outcome: Advice given.
• Key authorities: IRC §§ 6694(b) and 6701.

Full text (IRS public release)

ID: CCA_2015041016033046 Third Party Communication: None

UILC: 6701.00-00, 6694.00-00 Date of Communication: Not Applicable

Number: 201518017
Release Date: 5/1/2015
From:
Sent: Friday, April 10, 2015 4:03:30 PM
To:
Cc:
Bcc:
Subject: RE: 6694(b) vs. 6701

Hi -----,

As discussed, we agree with ----- that you should always look at all the facts and
circumstances to determine whether one or the other or both penalties apply with
respect to a particular return or other document, and if both apply, which one to
assert. I’ve attached the legislative history I mentioned that indicates that if both
penalties apply, the Service can choose which one to assert. See p. 577.

Thanks,

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