In the recently decided case of Woodsum v. Commissioner, the U.S. Tax Court rejected the claim of a sophisticated individual taxpayer that his reliance upon tax professionals should constitute a defense to the imposition of a 20 percent accuracy-related penalty in connection with the failure to report $3.4 million of income.
This decision highlights the limits the IRS and the courts impose on the ability of a taxpayer to avoid penalties based upon the claim that the taxpayer relied upon tax professionals and establishes an obligation on the part of every taxpayer to review the accuracy of their own tax returns.
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