IRS Reviewing Tax Penalties

The commissioner of the Internal Revenue Service said today the agency is reviewing its tax penalties to try to make them fairer and less complex.

Lawrence Gibbs told the Senate Finance Committee that the number of IRS penalties had grown from 60 to 150 over the last 12 years in response to changes in tax laws and may make many taxpayers believe the system is unfair. In the last fiscal year, the IRS assessed about 27 million penalties worth $14 billion, he said. Penalties are imposed for such violations as failure to file a return, filing late, underestimating tax withholding payments and using illegal tax shelters.