C|M|LAW Professor John Plecnik was recently quoted in Tax Notes Today. The quote was in regard to two cases in U.S. Tax Court that Professor Plecnik is supporting pro bono as co-counsel with Cleveland Legal Aid. Both cases involve the so-called Earned Income Tax Credit (EITC) ban under section 32(k) of the Internal Revenue Code.
An excerpt from the article, entitled TAXPAYER ADVOCATE CRITICIZES IRS
USE OF EITC BAN, PLANS REVIEW, follows:
Plecnik said one might be left with the impression that there is no standard at all for imposing the ban on taxpayers, adding that he thinks the IRS is using the dictionary definitions of reckless or intentional disregard. However, the legislative history for section 32(k), in which the ban can be found, shows that section 6662, which does have a clear
definition of reckless or intentional disregard, was referenced in relation to section 32(k), he said.
“I think that the correct definition is best laid out in the regulations to 6662, where disregard is reckless if the taxpayer makes little or no effort to determine whether a rule or regulation exists under circumstances which demonstrate a substantial deviation from the standard of conduct that a reasonable person would observe,” Plecnik said. “There are tons of cases dealing with when it’s appropriate to apply 6662 penalties, and they typically don’t apply where someone goes to a return preparer in good faith, essentially does their best, and says, ‘Hey, I’m paying you, get it done,’ and gives them all the information as best they can.”