"We have no qualms with taxpayers claiming benefits allowed by law," said Doug O'Donnell, commissioner of the  Large Business and International Division. "But a very high percentage of the claims for the now repealed Domestic Production Activities Deduction are not properly supported by those claiming it."

Examiners have been advised to consider Section 6676, Erroneous Claim for Refund or Credit, penalties, other applicable penalties, and referrals to the Office of Professional Responsibility (OPR), when appropriate. Taxpayers and their advisers should ensure that they have documentation to support their position and should expect that the IRS may impose appropriate penalties unless the taxpayers establish that they have reasonable cause. A study does not necessarily provide reasonable cause.

"Meritless claims are harmful to tax administration and voluntary compliance," said O'Donnell. "Any corporate taxpayer who is considering filing such a claim should reconsider. Taxpayers who have already filed can withdraw prior to IRS audit contact to avoid penalties."