The statute and its exceptions
IRC 6751(b)(1): “No penalty under this title shall be assessed unless the initial determination of such assessment is personally approved (in writing) by the immediate supervisor of the individual making such determination or such higher level official as the Secretary may designate.” Section 6751(b)(2) carves out the additions to tax under IRC 6651, 6654 and 6655, the IRC 6662(b)(9) and (b)(10) additions, and “any other penalty automatically calculated through electronic means.” Treas. Reg. 301.6751(b)-1(a)(2) repeats the list and adds IRC 6673 court sanctions. The regulation defines the electronic-means exception by the notice: a penalty is automatically calculated “if an IRS computer program automatically generates a notice to the taxpayer that proposes the penalty,” and the exception ends when the taxpayer challenges the penalty or the tax it rests on “and an IRS employee considers the response prior to assessment (or the issuance of a notice of deficiency that includes the penalty).” The supervisory approval guide covers the definitions of immediate supervisor, higher level official and the form of the writing.
Penalties assessed on or after December 23, 2024
Treas. Reg. 301.6751(b)-1(f): “The rules of this section apply to penalties assessed on or after December 23, 2024.” For those penalties the deadline depends on the procedural posture, not on when the examiner first mentioned the penalty. Paragraph (b): for a penalty not subject to pre-assessment Tax Court review, the supervisor “personally approves the penalty in writing before the penalty is assessed.” Paragraph (c): for a penalty in a notice of deficiency, FPAA or FPA, the supervisor “personally approves the penalty in writing on or before the date the notice is mailed.” Paragraph (d): for a penalty raised after the petition, approval is due “no later than the date on which the Commissioner requests that the court determine the penalty.” Example 2 in the regulation makes the point that stings: a taxpayer who signs the examination report agreeing to the penalty has taken it out of pre-assessment Tax Court review, so approval after the signature but before assessment is timely. IRM 20.1.1.2.3.1 repeats the three deadlines and still tells examiners that approval should be secured as soon as practicable and before any written communication offering the taxpayer the chance to agree. The checker treats a penalty with no assessment date as governed by the regulation, since any assessment now will be after the applicability date.
Penalties assessed before December 23, 2024
For earlier assessments the deadline is the case law of the circuit to which appeal lies, applied by the Tax Court under Golsen v. Commissioner, 54 T.C. 742 (1970), which “requires us to follow a Court of Appeals decision which is squarely in point where appeal from our decision lies to that Court of Appeals and to that court alone.” In the Second Circuit, Chai v. Commissioner, 851 F.3d 190 (2d Cir. 2017), held that the statute “requires written approval of the initial penalty determination no later than the date the IRS issues the notice of deficiency (or files an answer or amended answer) asserting such penalty.” The Tax Court then went further in Clay v. Commissioner, 152 T.C. 223 (2019), concluding that “the initial determination for purposes of section 6751(b) was made no later than September 13, 2010, when respondent issued the RAR to petitioners proposing adjustments including penalties and gave them the right to protest those proposed adjustments,” so an approval initialed on October 18, 2010 was too late; Belair Woods, LLC v. Commissioner, 154 T.C. 1 (2020), located the initial determination in the 60-day letter by which Examination “had made a definite decision to assert penalties,” not in an earlier summary report inviting a conference. Two circuits rejected that timing. The Ninth Circuit in Laidlaw's Harley Davidson Sales, Inc. v. Commissioner, 29 F.4th 1066 (9th Cir. 2022), held that the statute “requires written supervisory approval before the assessment of the penalty or, if earlier, before the relevant supervisor loses discretion whether to approve the penalty assessment,” and the Eleventh Circuit in Kroner v. Commissioner, 48 F.4th 1272 (11th Cir. 2022), concluded that “the IRS satisfies Section 6751(b) so long as a supervisor approves an initial determination of a penalty assessment before it assesses those penalties.” The checker applies Chai in the Second Circuit, Laidlaw's and Kroner in the Ninth and Eleventh, and the Tax Court's Clay rule everywhere else, and shows all three results side by side so the Golsen consequence is visible.
The trust fund recovery penalty
The TFRP has its own approval record. IRM 5.7.4.7 instructs revenue officers: “Do not issue Letter 1153 before GM approval of Form 4183.” If an acting group manager approved, IRM 5.7.4.6 requires that “the AGM must provide the RO with their signed Form 10247, Designation to Act, to include with the signed Form 4183 in the TFRP case file.” The checker tests the Form 4183 approval date against the Letter 1153 date and, if entered, the assessment date. See the TFRP guide and the Letter 1153 protest template.
Burden and the record to request
In Frost v. Commissioner, 154 T.C. 23 (2020), the Tax Court held that once a taxpayer challenges a penalty, “the Commissioner must come forward with evidence of penalty approval as part of his initial burden of production under section 7491(c),” and that the burden then shifts to the taxpayer to show the approval was late or defective. The record to ask for is the approval form itself. IRM 20.1.5.2.1.1 recommends a form such as Lead Sheet 300 (the Civil Penalty Approval Form), the SAIN 011 Lead Sheet, Form 4700, a signed comment on Form 5464, Form 8278 or Form 5701; IRM 4.10.6.4.4.2 adds that when an acting supervisor approved, “A copy of Form 10247 must be maintained in the case file.” The guide lists the IRM sections on documentation; the request template and FOIA page cover how to get the file.
Worked example
An IRC 6662 penalty was first proposed in an RAR dated September 13, 2023; the group manager signed the Civil Penalty Approval Form on October 18, 2023; the notice of deficiency was mailed March 11, 2024; the penalty was assessed September 16, 2024 after the Tax Court case settled. The assessment predates December 23, 2024, so the regulation does not apply. For a Fourth Circuit taxpayer the Tax Court applies Clay: the approval came 35 days after the RAR and fails. For a Second Circuit taxpayer the approval preceded the notice of deficiency and passes under Chai. For a Ninth or Eleventh Circuit taxpayer it preceded assessment and passes under Laidlaw's and Kroner. Move the assessment date to January 2025 and the regulation's paragraph (c) controls in every circuit: approval on or before the mailing of the notice of deficiency, satisfied. That is why the first fact to pin down in a pre-regulation penalty case is the assessment date, and the second is the circuit.
Questions practitioners ask
The penalty was proposed in a CP2000. Does 6751(b) apply?
Not while the notice is purely automated. Under Treas. Reg. 301.6751(b)-1(a)(3)(vi) the exception ends once the taxpayer challenges the penalty or the underlying tax and an IRS employee considers the response before assessment or the notice of deficiency; Example 6 says a response asking only for more time does not count.
Which date is the assessment date?
The date of the TC 240 (assessable penalty) or TC 300 or 290 with the penalty reference, shown on the account transcript. A penalty in a notice of deficiency is assessed only after the 90-day period runs or the Tax Court decision becomes final.
Our penalty was assessed in 2023 and approval came after the 30-day letter but before the notice of deficiency. Where does that stand?
It depends on the circuit. Outside the Second, Ninth and Eleventh Circuits the Tax Court applies Clay and Belair Woods, and approval after the first formal communication is untimely. In the Second Circuit Chai is satisfied; in the Ninth and Eleventh, Laidlaw's and Kroner are satisfied if approval preceded assessment.
Does an email count as written approval?
Treas. Reg. 301.6751(b)-1(a)(3)(v) says any writing, including electronic, made to signify assent counts, with no signature or particular words required so long as the circumstances show it was intended as approval. The checker tests only the date; whether a writing is an approval is a separate question.
Is the TFRP subject to IRC 6751(b)?
The regulation defines penalty as any penalty, addition to tax or additional amount under the Code, and the IRM's own rule requires group manager approval of Form 4183 before Letter 1153 issues. The checker applies the IRM rule to the Letter 1153 date and the regulation's before-assessment rule to the assessment date.