IRS Offers Taxpayers Guidance on FAQ Use for Civil Penalty Purposes

IRS has used FAQs to a greater extent in its efforts to disseminate information more efficiently and clearly when addressing regulatory changes caused by pandemic. With an uptick in FAQ usage and modifications, taxpayer reliance on the FAQs correspondingly increased. To provide guidance and facilitate usage of FAQs, the IRS has stated that taxpayers who underpay their taxes by reasonably relying on an FAQ will have a reasonable cause defense against negligence and accuracy-related penalties. Tax practitioners should note, however, that this guidance does not constitute a release from liability, as the corresponding tax rules will still apply to assess taxpayer liability.

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