September 15, 2012

Reliance on tax preparation software is no defense against an IRS penalty, the Tax Court says. Although a filer used the TurboTax program to do her return, she made several mistakes, and IRS assessed a 20% penalty because the deficiency was more than $5,000. She argued that she should not be liable for the penalty because she used tax software, but the Court said no (Bartlett, TC Memo. 2012-254). The errors were caused by her faulty input, not by a mistake in the tax program. In the Court’s view, tax software is only as good as the information entered into it.


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