This assignment relates to the Sec. 6672
Background: Son graduates dental school in 2010 and begins working in Dad’s practice. The plan is for Son to eventually take over the practice. It begins well so Dad adds Son to bank accounts but does not give Son any other administrative authority. Without Son’s knowledge, Dad put Son’s signature on Paychex payroll checks. Until then, Dad’s signature appeared on all payroll checks.
Son never knew Dad’s history of consistent underpayment or nonpayment of withheld taxes and delinquent 941’s. In 2013 the IRS begins an investigation for 2011 and 2012. Dad’s accountant handles the matter. Accountant did not keep Son informed. IRS sends a notice of intent to assess 6672 penalty to Son at Dad’s home address. Son never received the IRS notice. Accountant filed something for Son but Son never knew. IRS assesses the 6672 penalty.
Son learns of the issue and assessment when it impacts his credit score. (His credit card had a monthly score report.) Son finally obtains information and learns of Accountant’s initial protest. He sees me and asks why the penalty was assessed when the IRS acknowledges his appeal is pending. Good question. We finally learn the appeal was filed 1 day late.
At this point Son’s ability to challenge liability required paying tax and filing claims for refund. The IRS denied the refund claims within 60 days. We file an appeal. The appeals officer agrees Son is not responsible and approves the refund claims.
All paperwork is in attached. The letterhead to Accountant’s protest is removed.
1. Look at Accountant’s initial appeal letter, the attachment to the claim, and the appeal of the claim denial. What differences do you notice? Identify and describe 5 differences: 2 between the initial protest and the later protest; 1 between the claim attachment and the denial appeal; the last 2 are up to you.
2. Why did the IRS deny the initial protest? Explain why you think it is or is not appropriate.
3. Share your thoughts on this situation and the documentation (2-5 paragraphs). There is no specific answer expected. Looking for honest, well-written insight.
