CP2000- Pay penalty w/tax due?

[Taxadvisor VA]

TP definitely owes tax on an unreported IRA distribution for 2013, which was an early distribution on top of it. Ouch!! I am going to appeal the 20% substantial tax penalty ($1,144).
Question- Should taxpayer pay penalty or not? Is it better to pay just the tax in the hopes IRS will accept your explanation? _____

Thanks for your replies.

Taxadvisor VA

[TAXNJ]

Ouch

What's the explanation besides Ouch?

[Taxadvisor VA]

TAXNJ-Ouch

What's the explanation besides Ouch?

Thank you for replying. Ouch was just a reference to have to pay the 10% penalty.

What I'm really after is a response to my question.
Question- Should taxpayer pay penalty or not? Is it better to pay just the tax in the hopes IRS will accept your explanation? _____ Since TP has an excellent past record of tax compliance including paying taxes on time, I'm hoping that IRS will waive penalty.

Thanks for your replies.

Taxadvisor VA

[TAXNJ]

Poa

Thank you for replying. Ouch was just a reference to have to pay the 10% penalty.

What I'm really after is a response to my question.
Question- Should taxpayer pay penalty or not? Is it better to pay just the tax in the hopes IRS will accept your explanation? _____ Since TP has an excellent past record of tax compliance including paying taxes on time, I'm hoping that IRS will waive penalty.

Thanks for your replies.

Taxadvisor VA

Get an POA and start communicating with IRS c/o the issue. Would not and cannot tell you what to pay, that would fall under your responsibility. Need to follow Cir 230 as you know.

[Kram BergGold]

20% Penalty

If you pay it, you will never get it back, my opinion.
My experience has been the IRS never cuts anyone a break on the accuracy penalty. You have to go to court. The only time I got a client off the 20% penalty was becasue I had his ex spouse file an amended return removing the kids and waiving them to him. This got the additional tax below $5,000.