I believe all three of these codes pertain to penalties in connection with tax preparers. Can anyone explain what kind of infractions goes with each code?
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6694(a): Understatement due to undisclosed unreasonable position for which the preparer knew (or should have known) of the position. Carries penalty of "the greater of 1,000.00 or 50% of income derived from preparing the return.
6694(b): Understatement due to willful or reckless conduct or intentional disregard of the rules or regulatons - Carries similiar penalty as for 6694(a) above.
6695 is broken down into nine separate preparer violations, from failure to furnish copy of return to taxpayer, failure of preparer for not signing the return ($50 per failure (maximum $25,000). Maybe this is the one IRS is going to use to get those preparers using Self-Prepared on the returns that they are getting paid for? And many others.
7216: Unauthorized disclosure or use of taxpayer info (applies only if preparer knowlngly or recklessly discloses or uses the information). Maximum $1000 fine and/or one year imprisonment and prosecution costs.
The above was taken from PPC 1040 Deskbook (Quick Reference Binder (Table T401). This table lists both Practioner and Preparer Penalties. I always attach these copies to the engagement letter and review with the client emphasizing the fact that we are both subject to penalties and therefore MUST get things correct with their tax return. It seems to impress them regarding the need for accuracy when providing data for their return. .
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