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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.


Reprinted with the permission of Tax Analysts.

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