On April 8, 2020, the Internal Revenue Service (IRS) released a statement telling taxpayers that guidance would be forthcoming on refund claims related to the Coronavirus Aid, Relief and Economic Security Act, or the CARES Act. Consistent with that promise, on April 13, 2020, the IRS issued guidance describing temporary procedures permitting the submission via fax of Form 1139, Corporation Application for Tentative Refund, and Form 1045, Application for Tentative Refund. For our prior discussion of CARES Act refund guidance issued by the IRS, see here.
The IRS is using a new tool from its arsenal to enforce compliance for tax refund and credit claims: the Internal Revenue Code Section 6676 penalty. Taxpayers and their advisers need to be aware of the mechanics of this penalty and how best to avoid it being sustained.
Andrew R. Roberson, Kevin Spencer and Evan Walters authored a comprehensive article on IRC Section 6676. They discuss:
The origins of IRC Section 6676
How to contest the penalty and privilege concerns
What taxpayers who are considering filing—or have already filed—refund claims should keep in mind now that the penalty is the IRS’s favorite new compliance tool
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