IRS Faces Suit for Issuing Incorrect Penalties, Lack of Approval

Donald Rousso, a former minority member of Alta Holdings LLC and minority shareholder of Newport Re Inc., sued the US for $24,600 refund after the IRS allegedly asserted incorrect tax penalties.

The IRS imposed penalties on Rousso of almost $21,000 for tax year 2005, and $141,600 for tax year 2010, according to his complaint. But the agency’s alleged facts aren’t accurate, and don’t support the required elements for imposing a penalty under IRC Section 6700, Rousso said.

To meet its burden, Rousso says the IRS must prove all the elements under Section 6700(a)(2)(A), that he organized an entity ...