Pennsylvania is offering taxpayers penalty abatement at the audit level in an effort to increase efficiency and reduce the number of petitions submitted to the Board of Appeals exclusively requesting penalty abatement. Taxpayers who received audit engagement letters after December 1, 2011 might be eligible for penalty abatement through the Bureau of Audits. Taxpayers meeting eligibility requirements will receive a penalty petition at the conclusion of the audit.
In order to qualify for penalty abatement at the audit level, the taxpayer must cooperate with the Department of Revenue (“Department”)during the audit and meet the standards used by the Board of Appeals for penalty abatement. The Board of Appeals standards generally require that taxpayers establish that they acted in good faith and were not negligent or fraudulent in their actions. The Board also considers the taxpayer’s audit history and overall level of compliance with the tax law when deciding whether to abate penalties.
Taxpayers that are not eligible for penalty abatement at the audit level retain all appeal rights and should still petition for abatement of penalty with the Board of Appeals. The new procedures put in place by the Bureau of Audits do not impact the ability of the taxpayer to appeal any part of the Department’s audit.
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