The IRS has prescribed one-time penalty relief for frivolous return and submission penalties in section 6702,
here.. Rev. Proc. 2012-43, 2012-49 IRB 1,
here. For refresher, here is my Tax Procedure text as revised for this new relief provision (footnotes omitted):
H. Frivolous Returns.
Section 6702(a) imposes a $5,000 fine for filing a frivolous tax return. This penalty applies in addition to any other penalty that may apply. The penalty applies where the frivolous return is based on a position identified by the IRS as frivolous or reflects a desire to delay or impeded the administration of the tax laws.
Section 6702(b) imposes a parallel $5,000 penalty for a “specified frivolous submission”. Such submissions include various forms of relief in IRS collection activity, including applications for compromise or installment agreements and requests for a collection due process hearing. The submission is subject to the penalty if based on a position the IRS “has identified as frivolous” or “reflects a desire to impede the administration of Federal tax laws.” We cover these collection activities below in Ch. 14. The penalty is $5,000. If the IRS provides notice of the frivolous position and the taxpayer withdraws the submission within 30 days of the notice, the penalty does not apply; however, the statute does not seem to require the IRS to give the notice that is the predicate for the 30 day period.
