IRS Found to Have Backdated Tax Penalty Approvals, Undermining Compliance Confidence
The Internal Revenue Service (IRS) has been found to have backdated tax penalty approvals in at least seven cases involving syndicated conservation easements, according to a report by the Treasury Inspector General for Tax Administration (TIGTA). The report reviewed the IRS's compliance with Section 6751(b) of the Internal Revenue Code, which mandates supervisory approval before levying certain tax penalties. This section aims to ensure penalties are imposed appropriately and not used as leverage during audits. The IRS's actions came to light following a court decision in the case of LakePoint Land II, LLC v. Comm'r, where the Tax Court found that the IRS had backdated penalty approvals and misrepresented this to the court. The IRS reviewed 1,268 cases, finding 13 lacked valid supervisory approval, including seven with backdated approvals, leading to over $68 million in penalties being conceded. TIGTA identified additional documentation issues, such as multiple versions of penalty lead sheets with identica... 
