Federal Tax Procedures & Penalties

One-minute revision

• Individual estimated tax safe harbor: lesser of 90% current year or 100% prior year (110% if prior-year AGI > $150,000)
• §6694 standards: undisclosed → substantial authority; disclosed → reasonable basis; tax shelter → more likely than not
• §6694(a) unreasonable position: greater of $1,000 or 50% of income derived; §6694(b) willful/reckless: greater of $5,000 or 75%
• Confidence ladder: reasonable basis < substantial authority < more likely than not < should < will
• Preparer must sign, use PTIN, give the taxpayer a copy, keep records 3 years, complete Form 8867 due diligence