Attorneys Have To Pay IRS Penalty

Bruce Brown and his wife Carol are both attorneys and Carol has her LL.M. in taxation as well. They terminated an insurance contract and then they did not report the $37,000 as income that they received from terminating. The IRS ordered that they pay the tax and $1,711 in penalties.

In Brown v. Commissioner, the Tax Court ruled that the penalty was an appropriate sanction by the IRS. The Court said that the Browns should have known to report the $37,000 because of their advanced knowledge and experience in taxation.

See Robert W. Wood, Even Tax Lawyers Face IRS Penalties, Forbes, Dec. 31, 2011.

Special thanks to Jim Hillhouse (WealthCounsel) for bringing this article to my attention.