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  • Writer's pictureHoyt, Filippetti & Malaghan, LLC

IRS Issues Notice of Proposed Rulemaking for Supervisory Approval of Penalties

On April 11, 2023, the U.S. Treasury Department and the IRS issued proposed regulations under IRC Section 6751(b) (REG-121709-19; 88 F.R. 21564-21572]. Section 6751(b) requires written supervisory approval of certain penalties prior to assessment and in recent years, courts have adopted different interpretations of various aspects of this requirement. The proposed regulations are intended to address the uncertainty stemming from these judicial decisions.

The proposed regulations provide specific timing guidelines for supervisory approval in the following categories:

  • Penalties subject to pre-assessment review in the Tax Court;

  • Penalties raised in the Tax Court after a petition; and

  • Penalties not subject to pre-assessment review in the Tax Court.

For example, the proposed regulations provide that for penalties subject to pre-assessment review, written supervisory approval is required no earlier than issuance of the notice that entitles the taxpayer to review at the Tax Court (such as a notice of deficiency under Section 6212).

In addition, the proposed regulations define key terms such as “immediate supervisor” and “personally approved (in writing).” The regulations also address exceptions and clarify the exemption for penalties “automatically calculated through electronic means,” including when this exception may no longer apply due to IRS and taxpayer action. Lastly, the proposed regulations provide several examples to illustrate the rules.


The proposed regulations provide clarity for taxpayers and the IRS on the supervisory approval requirement under Section 6751(b) relating to both procedures and timing. Taxpayers and practitioners may find it helpful to become familiar not only with the proposed rules, but also the examples illustrating the application in scenarios that taxpayers may face when dealing with the IRS.

Comments on the proposed regulations must be submitted by July 10, 2023.

If you have questions, contact HFM today. Our professionals are well versed on the latest issues to provide our clients with professional, personalized services.

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