Substantial Tax Understatement Penalty Waiver

[Big Brother]

Not having any dealings for 50+ years with the IRS other than filing
taxes each year I now find myself receiving a nice letter last Thursday
stating I owe $7559 in tax and interest plus $1453 for a "Substantial
Tax Understatement Penalty" for the tax year 2020.

BACKGROUND

Father passed away in April 2020 and I open up a brokerage account with
one of the majors to deposit proceeds from the estate.

End of year tax statements from this account were set-up to be notified
to me via email.. I don't recall setting it up this way but its neither
here nor there at this point.

Tax forms from all of my other brokerage accounts are sent to me via
U.S. Mail.

As as result, I didn't report the income from the estate proceeds.


I agree with all the numbers the IRS furnished on their letter and will
be paying the tax owed plus the interest.


QUESTION

Are the arguments as stated above stand a chance for a waiver of the
penalty ?

Is there a Form I complete or should I call the IRS ?

Any other assistance would be appreciated..

Thanks

Rich

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[Stan Brown]

On Sat, 7 May 2022 10:44:36 EDT, Big Brother wrote:
>
> Not having any dealings for 50+ years with the IRS other than filing
> taxes each year I now find myself receiving a nice letter last Thursday
> stating I owe $7559 in tax and interest plus $1453 for a "Substantial
> Tax Understatement Penalty" for the tax year 2020.
>
> BACKGROUND
>
> Father passed away in April 2020 and I open up a brokerage account with
> one of the majors to deposit proceeds from the estate.
>
> End of year tax statements from this account were set-up to be notified
> to me via email.. I don't recall setting it up this way but its neither
> here nor there at this point.
>
> Tax forms from all of my other brokerage accounts are sent to me via
> U.S. Mail.
>
> As as result, I didn't report the income from the estate proceeds.

I think the IRS would argue that it's your responsibility to get
statements for income, or at least to obtain the figures and include
them on your return. The mythical "ordinary reasonable and prudent
man" would know what accounts he has, and take steps to obtain
missing information.

> I agree with all the numbers the IRS furnished on their letter and will
> be paying the tax owed plus the interest.
>

> Are the arguments as stated above stand a chance for a waiver of the
> penalty ?

I think not, but there's no downside that I know of to requesting a
penalty waiver, and you might get lucky. Your chances are better if
you've never had a penalty waiver before.

> Is there a Form I complete or should I call the IRS ?

Unless things have changed, you do it by letter. The letter you
received should explain what to do if you disagree with the IRS's
findings.

--
Stan Brown, Tehachapi, California, USA https://BrownMath.com/
Shikata ga nai...