IRS Temporarily Gives Break for Small Transactions on §6707A

In response to a letter from the chairmen and ranking minority members of the tax writing committees in each house of Congress, Commissioner Shulman wrote to the Chairman of the House Ways & Means Committee, John Lewis, stating that the IRS would suspend collection actions related to penalties imposed under §6707A for certain small transactions.

Through September 30, 2009, the IRS will suspend collection enforcement actions for transactions from which were derived were less than $100,000 (for individuals) or $200,000 (for other taxpayers) per year. The IRS is taking this action based on assurances from the Congressional representatives that they will bring forth legislation to provide relief to small taxpayers. The Commissioner noted that the mandatory penalties imposed under §6707A are in many cases wildly out of line with the tax benefits. The Commissioner emphasized, however, that the IRS still sees the need to have access to significant penalties to use against taxpayers who engage in abusive tax shelters.

At this point the next move is up to the U.S. Congress to move legislation before September 30 to address this matter.