IRS Secrets You MUST Know - LanceWallach's Blog - Blogster

IRS Secrets You MUST Know - LanceWallach's Blog - Blogster

IRSform8886.com

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The New Law Guarantees A       Substantial FineOctober 2010by Robert Sherman 8886 form expert preparerThe bill reducing fines for improperly or not filing under "6707A'  has  passed. That sigh of relief you heard last week might have come  from people participating in the plans named above, or anything  seeking tax relief that is similar to them – what the IRS calls a listed  transaction  People think that Congress bailed them out of trouble  for participation in such transactions, and that the excessive fines  that were being imposed are now a thing of the past. While the  situation is certainly better than it was for some people, and while I  do not want to rain on anyone’s parade, you are still in Disasterville,  and the next to last bus out just left. Consider this: The new legislation buried in the Jobs Act of 2010  calls for MINIMUM penalties of $5,000 per person per year, and  $10,000 for a business. That is $15,000 per year if you are  incorporated. So, if you have been in a plan since, say, 2003, you  are looking at fines in excess of $100,000 before you even start to  talk about how much of a tax benefit there has been. Further fines would be seventy-five percent of the tax benefit derived  from participation in the transaction. These are also applied each  year. The point is that you are looking at fines, in all likelihood, to  some degree in the six-figure range. You can possibly still avoid all this by properly filing "form 8886"  IMMEDIATELY with the IRS. Time is especially of the essence now.  You MUST file before you are assessed the penalty. For months the  Service has been holding off on actually collecting from people that  they assessed because they did not know what Congress was  going to come up with. But now they do know, so they are going to  move aggressively to collection with people they have already  assessed. There is no reason not to now. This is especially true  because the new legislation still does not provide for a right of  appeal or judicial review. The Service is still judge, jury, and  executioner. Its word is absolute as far as determining what is a  listed transaction.So you have to file form "8886" FAST; like NOW.  But you also have  to file it RIGHT. The Service treats forms that are incorrectly filed as if  they were never filed. You get this fine for filing incorrectly or for  not filing at all. The Statute of Limitations does not begin unless you  properly file. That means IRS can come back to get you any time in the future  unless you file properly.