Second Chances Abound

Second Chances Abound

February 24, 2023 David Lipson

In Practice…..with CNA

Second Chances Abound: Opportunities for Correcting Certain Omissions and Mistakes in Tax Elections

“Ignorantia juris quod tenetur scire, neminem excusat.”

Latin, philosophy and legal scholars alike may recognize this Latin phrase which roughly translates to “Ignorance of the law, which everyone is bound to know, excuses no one.” While this principle may be unforgiving, it is important to recognize that in practice, the tax law and in particular the tax regulations can be forgiving when it comes to failing to make timely tax elections. Understanding these opportunities for forgiveness can be an important tool in avoiding legal and accounting malpractice claims which involve tax law. Specifically, when tax practitioners make certain filing errors, particularly as to making tax elections, the potential exists for significant tax liability for their clients, and thus professional liability for the law firm. Practitioners should be mindful that relief (forgiveness of a sort) may be found in Treasury Regulation (Treas. Reg.) 301.9100-2 et seq.

301.9100 Relief in General

Treas. Reg. 301.9100-2 et seq. grants the Commissioner of the Internal Revenue Service (IRS) the authority to grant taxpayers relief from certain filing errors. 9100 relief does not cure improper filings, but it does allow taxpayers an opportunity to correct missed deadlines for making tax elections. Treas. Reg. 301.9100-2 et seq. provides standards for the IRS to use in determining whether to grant extensions of time to make both statutory and regulatory elections (but no more than six months except in the case of a taxpayer who is abroad) when the taxpayer has failed to do so on a timely basis. In evaluating the property of 9100 relief for their clients, practitioners must first consider whether the extensions they seek are automatic or discretionary.

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