You are an Enrolled Agent who prepared the 2015 income tax return for the hospital where Johnny works. You approved an aggressive position on the return, claiming credits related to the hospital’s department conducting medical research. No Schedule UTP or other disclosure statement was filed with the return. The IRS is now claiming that this position lacked reasonable basis and is proposing a penalty against you under section 6694.
a. Describe two defenses you may be able to argue against this penalty.
b. If the IRS assesses the penalty against you, what options are available to you to challenge the assessment?