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Jeff Paravano, firmwide Chair of Baker Hostetler's Tax Group, was quoted in the July 13, 2009, edition of Tax Notes Today and the July 16, 2009, edition of Federal Tax Weekly. Both articles focused on IRS Code Sec. 6707A, regarding tax penalties for small businesses.

According to the articles, the IRS announced that it is temporarily suspending collection enforcement actions of penalties under Code Sec. 6707A for failing to disclose a listed transaction. The IRS will suspend collection through September 30, 2009 in cases where the annual tax benefit from the transaction is less than the penalty imposed under Code Sec. 6707A(b)(2): $100,000 for individuals or $200,000 for other taxpayers, per year. The suspension is intended to give Congress enough time to pass legislation that would retroactively lift application of this mandatory one-size fits-all penalty to that group, according to the article.

"Inflexible rules by their nature produce hardship and unintended consequences in certain cases," said Paravano, a former Treasury official, in the Federal Tax Weekly article. "Taxpayers facing penalties in excess of their expected tax savings seem like deserving candidates for Congressional relief, especially since the listed transactions resulting in disproportionate penalties were listed by Treasury and the IRS before Congress enacted the strict liability penalties for listed transactions as part of the American Jobs Creation Act of 2004," said Paravano.

"The best solution, though unlikely to occur, would be one that provides discretion to the IRS and to the courts with respect to the imposition and abatement of all Section 6707A penalties. Absent more discretion with respect to penalties, including penalties associated with the failure to disclose listed transactions, the IRS will continue to classify most aggressive transactions as 'transactions of interest' rather than as 'listed transactions,'" said Paravano in the Federal Tax Weekly and Tax Notes Today articles.