When the IRS takes certain action against a taxpayer, it must obtain timely managerial approval before going forward. In a recent case, the IRS proposed to assess a penalty against a Harley Davidson dealer. The Harley Davidson dealer challenged the proposed penalty administratively before the IRS, and the IRS Appeals Officer sustained the penalty against the taxpayer. The Harley Davidson dealer then filed a lawsuit against the IRS in the United States Tax Court. The Court held in favor of the Harley dealer stating that the government did not obtain timely supervisory approval of the proposed penalty. Although the supervisor granted approval three months after the Appeals Officer sustained the penalty, the Court held that the approval was too late.
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