The IRS Can Waive the Penalty for a Substantial Understatement

question 37

Short Answer

The IRS can waive the penalty for a substantial understatement of a tax liability if the taxpayer shows
for the position taken on the tax return.

---

Definitions:

Cafeteria-Style Plans

Employee benefit plans that allow workers to choose from a variety of pre-tax benefits, tailoring their benefits package to their specific needs.

Unemployment Insurance Tax

A tax collected by the federal and state governments from employers to fund unemployment benefits for workers who have lost their jobs.

Administrative Costs

Expenses related to the general management and administration of an organization, as opposed to production or manufacturing costs.

Defined-Benefit Plans

Defined-benefit plans are retirement plans where an employer promises a specified monthly benefit upon retirement, which is calculated based on factors like salary history and duration of employment.