IRS Urged to Revise Penalty Proposal’s ‘Supervisor’ Definition

Tax lawyers and others are urging the IRS and Treasury Department to revise proposed regulations’ definition of an “immediate supervisor” who can provide required approval of penalties.

Federal statute generally requires tax penalties to be approved by the immediate supervisor of the individual making the initial determination that a penalty should be assessed. Proposed rules released in April state than an immediate supervisor is “any individual with responsibility to approve another individual’s proposal of penalties without the proposal being subject to an intermediary’s approval.”

Practitioners say this definition could allow non-supervisors to approve penalties.

“As written, this definition could allow ...