The IRC Section 6707A penalty for failure to report a "listed transaction" can subject a taxpayer to a penalty of as much as $200,000. The IRS is the judge, jury and executioner. Once the IRS has assessed the penalty, the taxpayer has no choice but to pay and sue for a refund. Since the article was published Congress has mitigated the potential penalty with a reasonableness standard. But the process - pay and then complain in court - is still difficult for taxpayers.
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