Tax Dictionary – Negligence Penalty

IRS Definition

A component of the accuracy-related penalty involves a taxpayer’s negligence or disregard of rules or regulations — “negligence” is defined in tax law as any failure to make a reasonable attempt to comply with the provisions of the tax law, and the term “disregard” includes any careless, reckless or intentional disregard.

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If the IRS has reason to believe that you made a careless, reckless or intentional mistake on your tax return, the IRS may charge you the 20% accuracy-related negligence penalty.

To find out whether the penalty applies, the IRS looks at several factors. For example, the IRS will look to see whether you:

  • Made the same mistake before
  • Kept adequate records
  • Have a reasonable explanation as to why you made this mistake

The IRS expects you to make a reasonable attempt to file an accurate tax return. If you can show you made a reasonable attempt, the IRS typically doesn’t charge the negligence penalty.

Learn how to address IRS penalties.

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