Tax News

CCH (cch.taxgroup.com) reports:

A closing agreement with the IRS entered into by a law firm was set aside because the agreement was induced by fraud or malfeasance. The IRS agents' conduct amounted to fraud and malfeasance when they left the law firm with no choice but to accept the closing agreement and pay a penalty or subject the firm's clients to evaluations of their employee benefit plans because they allegedly did not timely amend their plans to comply with new law.
However, the amended plan documents were timely submitted to the IRS within the extended remedial amendment period. Since the amended plans' initial submissions were substantially correct and were made in good faith, the IRS could not request minor corrections, then declare the plans late when the IRS-requested corrections were submitted and demand payment of a penalty. Therefore, an attorney whose clients were covered by the closing agreement was entitled to a refund of the penalty he paid for the allegedly late submissions.
B.J. Jewell, DC Ark., 2007-2 USTC ¶50,838
Other References:
Code Sec. 401
CCH Reference - 2007FED ¶17,929.67
Code Sec. 7121
CCH Reference - 2007FED ¶41,090.336
Tax Research Consultant
CCH Reference - TRC RETIRE: 51,052.20
CCH Reference - TRC IRS: 39,158