The Inappropriateness of the Bad Checks Penalty

7 Pages Posted: 13 Dec 2017 Last revised: 22 Mar 2018

See all articles by Douglas A. Kahn

Douglas A. Kahn

University of Michigan Law School

Jeffrey H. Kahn

Harry M. Walborsky Professor, Florida State University College of Law; Associate Dean, Business Program

Date Written: November 6, 2017

Abstract

The Internal Revenue Code of 1986 provides many penalties for actions or failures to act on matters concerning the tax law. Section 6657 applies a penalty to a person who tenders an instrument to the IRS as a payment if the instrument is not duly paid. The penalty does not apply if the person tendered the instrument in good faith and with reasonable cause to believe that it would be duly paid. In this article, the authors argue that the penalty for sending a bad check to the IRS is excessive and that the reasonable cause exception should apply to any honest factual error.

Keywords: IRS, 6657, bad check, penalty

JEL Classification: H20, H24, H29

Suggested Citation

Kahn, Douglas A. and Kahn, Jeffrey H., The Inappropriateness of the Bad Checks Penalty (November 6, 2017). Tax Notes, Vol. 157, No. 6, 2017, FSU College of Law, Public Law Research Paper No. 868, U of Michigan Public Law Research Paper No. 584, Available at SSRN: https://ssrn.com/abstract=3082508

Douglas A. Kahn

University of Michigan Law School ( email )

625 South State Street
Ann Arbor, MI 48109-1215
United States
734-647-4043 (Phone)

Jeffrey H. Kahn (Contact Author)

Harry M. Walborsky Professor, Florida State University College of Law; Associate Dean, Business Program ( email )

425 W. Jefferson Street
Tallahassee, FL 32306
United States
850.644.7474 (Phone)

HOME PAGE: http://www.law.fsu.edu/faculty/jkahn.html

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