The IRS can hit you with dozens of different penalties if you fail to follow the letter of the tax law. They’re often arcane and difficult to understand. And although many of the penalties are relatively small on their own, they can add up quickly. So, a single mistake could snowball into hundreds or thousands of dollars.

The IRS will often win out if you contest the penalties in court. But even though the tax law typically presumes that you—not your preparer—are responsible for your return, one of the best defenses against IRS penalties is to show that you relied on the advice of a competent tax professional (see box below).

This special report offers an overview of the main penalty weapons at the IRS’s disposal, and some tips on how to avoid them:

1. Substantial underpayment penalty

If you understate your tax bill by $5,000 (or at least 10 percent), the IRS can slap you with an extra penalty equal to 20 percent of the unde...(register to read more)

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