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assistance to their clients. Conducting a addition to information regarding cash the penalties and institute a refund suit
“mini” 8300 audit — targeted reviews of transactions and payment information, in a federal district court or Court of
transactions for cash payments breaching taxpayers can expect requests for infor- Federal Claims.
the $10,000 threshold — can provide mation regarding the internal control
assurance that the system is working or, processes for identifying reportable Keeping a lid on penalties
alternatively, provide critical assistance in transactions. The IRS will also likely re- Practitioners are not frequently involved
identifying any shortcomings. quest information regarding Form 8300 with the Form 8300 reporting require-
Two issues are particularly important training procedures and documents, ments, but this is one area where they
with respect to identified shortcomings. as well as ask for the names of the can provide foresight and assistance to
First, if filings or statements have been individuals who identify the reportable clients. Penalties for noncompliance start
missed, prepare and send them. Late filings transactions and those who prepare and small but can escalate dramatically for
can reduce penalties and begin tolling review the forms and annual notices. subsequent reporting failures. Helping
the statute of limitation. Further, facts clients with education, procedures, and
and circumstances considered when Vigorously contest intentional controls for cash reporting can provide
assessing whether a failure is due to disregard penalties a significant benefit and assist them in
intentional disregard include whether If, during an examination, an IRS agent avoiding potentially steep penalties. ■
a correction was made promptly after moves toward assessing penalties, par-
discovering the failure. Prompt correc- ticularly intentional disregard penalties,
tion of a failure suggests a mistake, not do not hesitate to engage counsel. The
intentional conduct.91 Second, fix the IRS has been willing to seek intentional Contributors
system. Knowledge that a system is defi- disregard penalties in situations where
cient, coupled with subsequent failure to a taxpayer has missed as few as four Susanne Holloway, CPA, MBA, is a
adopt an adequate reporting system, can reportable sales transactions out of 8,000 professor of the practice, and Michael
be considered evidence of intentional total sales.93 The IRS has not received A. Schuldt, CPA, J.D., Ph.D., is an
disregard.92 particularly strong judicial support for associate professor, both at the Perdue
imposing these penalties. However, once School of Business of Salisbury Univer-
Prepare for an audit penalties are assessed, it is an expensive sity in Salisbury, Md. For more informa-
Practitioners should advise clients to be and time-consuming process to proceed tion about this article, contact
prepared for the information the IRS with potentially unsuccessful admin- thetaxadviser@aicpa.org.
will request for a Form 8300 audit. In istrative appeals, and then have to pay

91. DeGuerin, 214 F. Supp. 2d 726 (S.D. Tex. 2002). 93. Tysinger Motor Co., Inc., 428 F. Supp. 2d 480 (E.D. Va. 2006). Addition-
92. See Bale Chevrolet Co., 620 F.3d 868 (8th Cir. 2010). ally, in Purser Truck Sales, Inc., 710 F. Supp. 2d 1334 (M.D. Ga. 2008),
the IRS pursued intentional disregard penalties in a situation involving five
transactions out of 960 sales.

AICPA RESOURCES

Articles Tax Section resources
Moore, “Information Return Penalties: How to Avoid or Contest Federal Taxpayer Penalties Guide
Them,” 51 The Tax Adviser 44 (January 2020)
IRS Penalty Abatement Templates
Abel and MacKay, “Money Laundering: Combating
a Global Threat,” 222-3 Journal of Accountancy 45 (September For more information or to make a purchase, visit
2016) aicpa.org/cpe-learning or call the Institute at 888-777-7077.

www.thetaxadviser.com May 2022 41