Compute the civil fraud penalty the irs may impose

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During the audit of Mr. and Mrs. Jessel's 2012 and 2013 tax returns, the revenue agent learned that they kept two sets of books for their sole proprietorship. A comparison of the two revealed that Mr. and Mrs. Jessel earned over $80,000 unreported income. The tax deficiency on the unreported income was $32,000.

a. Compute the civil fraud penalty the IRS may impose.

b. Describe the procedural steps the IRS must take to charge the couple with criminal fraud.

c. Why might the IRS decide to impose a civil fraud penalty on Mr. and Mrs. Jessel but not charge them with criminal fraud?

Reference no: EM13887438

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