The IRS is aggressively targeting high net-worth individuals and businesses. The reason is simple, there is more meat on the bone when the government catches a big fish. Technology has also made it much easier for the government to catch a big fish.
Even the most benign non-compliance can lead to unfair penalty assessments. Large penalty assessments have become the norm in cases involving foreign non-compliance. The IRS routinely assesses significant penalties in cases involving Forms 3520, 3520-A, 5471, 8938, and FinCen 114 (FBAR). Other significant penalties assessed by the IRS include: Failure-to-File (FTF), Failure-to-Pay (FTP), Accuracy-Related Penalty, and Civil Fraud.
Some of these penalties are generated automatically while others are assessed by an examiner. Regardless of the assessment process, all the penalties mentioned above may be challenged by taxpayers. The key to penalty relief is demonstrating to the IRS that the taxpayer has “reasonable cause” for their non-compliance.