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Ask Lane Your Own Question
Category: Tax
Satisfied Customers: 12000
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I'm in the voluntary disclosure program. I sent in 2006 FBAR

Customer Question

I'm in the voluntary disclosure program. I sent in 2006 FBAR which the IRS said they didn't receive. Consequently they are demanding a huge payment from me. Question 1 is: do I have any legal recourse to challenge their penalty? Question 2: Should my lawyer have advised me to look over all my old FBAR's reporting and submit all FBAR's that weren't submitted to delinquent IRS FBAR filing before entering the Volintary disclosure program??
Submitted: 2 years ago.
Category: Tax
Expert:  Lane replied 2 years ago.
YOu don't have recourse to challenge the VALIDITY of the penalty, or transfer the responsibility to checking to see if return was file to IRS from you...
That being said, however, you DO have the ability to ask for abatement of the penalty for reasonable cause.
AND by far the "reasonable cause" that carries the most weight is detrimental reliance. (Relying on a tax professional or something IRS told you that cased the error, or other lack of compliance, TO YOUR DETRIMENT).
The theme here, is NOT to give up.
I would not do this first, but once you've received a rejection of a request for abatement for reasonable cause and been made aware of intent to collect, lien or levy ... you can file an appeal.
This typically stops the locomotive, if you will, and gives you time to build a case.
See this:
From here:
The two main procedures are Collection Due Process and Collection Appeals Program.
Collection Due Process (CDP) is available if you receive one of the following notices:
• Notice of Federal Tax Lien Filing and Your Right to a Hearing under IRC 6320
• Final Notice - Notice of Intent to Levy and Notice of Your Right to a Hearing
• Notice of Jeopardy Levy and Right of Appeal
• Notice of Levy on Your State Tax Refund – Notice of Your Right to a Hearing
• Post Levy Collection Due Process (CDP) Notice
Collection Appeals Program (CAP) is available for the following actions:
• Before or after the IRS files a Notice of Federal Tax Lien
• Before or after the IRS levies or seizes your property
• Termination, or proposed termination, of an installment agreement
• Rejection of an installment agreement
• Modification, or proposed modification, of an installment agreement
BUt first I would ask your attorney (demand) to write a letter asking for abatement BECAUSE he did not make you aware of the need to file ALL, if that's what you paid him to do ... as is normally the case - to do what's needed to bring you into compliance.
YOu should also take a look at this (I have no association, but this guy gets it):
Expert:  Lane replied 2 years ago.
... just checking back in to see if you had a chance to look at that site AND to see if you had any additional questions on this.
Bot***** *****ne?
Yes, your tax attorney has a professional obligation under the regulatory bar of your state to act as a fiduciary here...
Which means putting your interest above his/hers and doing a thorough job.
So, yes, not making you aware of this obligation is CERTAINLY a breach of that duty AND good reasonable cause for abatement as well.
Let me know if you have any questions at all...
If this HAS helped, I would appreciate a positive rating (using the stars or faces on your screen) That’s how I'm credited for the work here.