IRS commissioner: Penalty relief will not be ‘blanket’

The IRS’s response to the COVID-19 pandemic has included focused relief from tax penalties, but taxpayers and tax professionals should not expect a “blanket” approach, IRS Commissioner Charles Rettig told CPAs on Tuesday.

Rettig addressed penalties, among other pandemic recovery and longer-term priorities for the Service, during his address to the AICPA National Tax & Sophisticated Tax Online Conference. He was joined by other top IRS officials who described the activities and outlook of their operating divisions and offices.

“We took a look at global relief,” Rettig said, both from the viewpoint of struggling taxpayers and practitioners and the IRS’s own responsibilities under the law, and concluded that the Service rather should focus on specific procedures already available to taxpayers, including reasonable-cause defenses and the first-time abatement of penalties.

“We get it that you would like to have blanket relief,” Rettig said. “It is not going to happen, and I think if you were sitting in my chair or Chief Counsel Mike Desmond’s chair or others’ chairs, you would be able to look at it as we do.”

In a Nov. 5 letter to Rettig and David Kautter, Treasury assistant secretary for tax policy, the AICPA did not request “blanket relief” but rather advocated expedited and streamlined reasonable-cause penalty abatement processes for taxpayers affected by the coronavirus and for the IRS to provide specific examples of qualifying reasonable-cause abatement situations and a dedicated telephone line for taxpayers or their advisers to request coronavirus-related penalty relief. Edward Karl, AICPA vice president–Taxation, remarked: “This year, of all years, the IRS should provide relief for uncontrollable COVID-19 impacts. We are greatly disappointed to not have a favorable resolution at this time that could help unburden taxpayers.”