Proper procedure under Internal Revenue Code § 6751(b) has been hotly debated in the courts over the past few years. Of recent, the Eleventh Circuit Court of Appeals dealt taxpayers a blow in Kroner v. Commissioner by reversing the Tax Court to determine the taxpayer at issue could be assessed a penalty, despite the IRS agent’s failure to obtain managerial approval of such penalty prior to communicating the penalty determination to the taxpayer. No. 20-12902, 2022 WL 4140340 (11th Cir. Sept. 13, 2022).

Internal Revenue Code § 6751(b)(1) states that:
No penalty under this title shall be assessed unless the initial determination of such assessment is personally approved (in writing) by the immediate supervisor of the individual making such determination or such higher level official as the Secretary may designate.

While the plain language of the statute seems clear enough, the Second Circuit now disagrees with both the Ninth and Eleventh Circuits as to the meaning of the statute, furthering a split in the circuit courts of appeal, and increasing the likelihood of potential Supreme Court review of the issue.

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