Standard To Avoid Penalty

[erchess]

I hard today from a Professional Organization to which I belong that the recently passed Economic Stimulus Bill contained a provision that reduces the standard for avoiding preparer penalties from More Likely Than Not to Substantial Authority, which is of course the standard for taxpayers to avoid penalties. The Organization reports that the first impulse of most members of Congress and their staffers was to raise the standard for taxpayers rather than lower the standard for us. This Organization states that it and another Organization to which I do not belong were largely responsible for this provision being in the bill. My question: Would it not have been better to raise the standard for taxpayers? Seems to me that lowering the standards increased the doubt about what we and our clients can get away with. What say the rest of you?

[solomon]

We are still dealing with reasonable basis in § 1.6662-3(b)(3)

Reasonable Basis

And substantial authority is an objective standard § 1.6662-4(d)(3)

Substantial Authority