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[BOB W]

House Passes New Late-Filing Penalties
To Offset Tax Cuts for Military, Firefighters
The House on Nov. 6 overwhelmingly passed a $2.1 billion package of tax cuts for military personnel, veterans, and firefighters by a vote of 410-0, approving a variety of increases in penalties for businesses that fail to file their tax returns on time. The Heroes Earnings Assistance and Relief Tax Act of 2007 (H.R. 3997) is expected to pass the Senate as well.

Penalties to Rise

The tax cuts will be paid for with new penalties for failure to file S corporation or partnership returns. S corporations failing to file their tax returns or to provide the required information would be subject to a $100 per shareholder penalty for each month in which the failure continues, up to a maximum of 12 months.

Partnerships would see penalties rise from $50 per partner for each month (or fraction of a month) that the failure to file continues, up to a maximum of five months, to $100 per partner, per month, for up to 12 months.

Businesses or individuals that are required to file information returns would see late-filing penalties grow from a minimum of $15 per return to $25 per return for returns filed less than 30 days late. The maximum penalty for such "first tier" violations would grow from $75,000 per year to $200,000 per year. Penalties for the latest filers would increase to a maximum of $600,000 per year. The final increase would be an increase in the minimum penalty for failure to file an individual tax return. The minimum penalty for a failure to file a tax return within 60 days of the due date would rise to the lesser of $225 or 100 percent of the amount of tax required to be shown on the return.

The Joint Committee on Taxation estimates that the new penalties for S corporations would raise $967 million in new revenue over 10 years, and penalties against partnerships are expected to raise $654 million. The higher penalties on information returns would raise $280 million from 2008 to 2017; the increase in the minimum penalty would boost federal revenues by $296 million.

[Bees Knees]

Do they have a crystal ball, or something? How do they know how much they will collect in the next 10 years? Don't you think a $600,000 penalty might motivate some to start issuing 1099s when they are supposed to?

[BOB W]

Do they have a crystal ball, or something? How do they know how much they will collect in the next 10 years? Don't you think a $600,000 penalty might motivate some to start issuing 1099s when they are supposed to?

Not only are they penalizing taxpayers, but there is a BIG push on preparer penalties. 1040,,1065, 1120(s), 990, 709, 706, 941, 940,944, 1099 > anything that a preparer touches he becomes responsible for,,, even tax advise (written or not) he/she is considered a PREPARED now subject to BIG penalties..

The question now comes up as to whether replies on this or any other board is considered being a PREPARER????????

[DTS]

Penalites

Bob,

When are these changes supposed go into effect?

Dennis

[BOB W]

It went into effect (deleted)for Scorps and Partnership penalties. (SEE NEXT POST)

The preparer penalties basically starts Jan 15,2008 for all returns prepared.

As you can see I just got back from the first day of a 3 day seminar put on by the local CPA/EA organizations and the IRS. When I get finished with writing up the E-Services issues I will post that class as well.

[Bees Knees]

Bob

Where did you get that information?

[BOB W]

Where did you get that information?

I added info to my previous post, but I just got done with day one of my 3 day seminar put on by local CPA/EA organization in conjunction with the IRS.

Dennis> Sorry wrong date for penalties on S Corps & Partnerships >and it needs to pass Senate

House Passes New Late-Filing Penalties
To Offset Tax Cuts for Military, Firefighters
The House on Nov. 6 overwhelmingly passed a $2.1 billion package of tax cuts for military personnel, veterans, and firefighters by a vote of 410-0, approving a variety of increases in penalties for businesses that fail to file their tax returns on time. The Heroes Earnings Assistance and Relief Tax Act of 2007 (H.R. 3997) is expected to pass the Senate as well.

[Bees Knees]

Are you sure this is already law? Or is this what is in the proposed legislation to fix AMT?

According to HR 3996 passed by the House on November 9th, the S corporation late filing penalty would only be $25 per shareholder and the partnership late filing penalty only goes up by $25 to $75 per partner.

Look again at your information and see where they got it.

[Bees Knees]

OK, that makes sense. H.R. 3997 has it at $100 for S corps, not $25.

Again, thats all being debated as we speak. Nothing is law yet. The final will version will have to wait and see.

Good thing TheTaxBook says they will get all the new tax laws passed by December 1 into the book. Too bad for those "other guys" who already went to press...

[BOB W]

National Society of Accountants email

By the overwhelming vote in the House it will surely pass in the Senate for the most part.

Anyway, this is the direction that Congress is going ( get the preparer) to cover the $$ shortfalls in the US budget. They have now hired all preparers, without pay, to do IRS's work...........Super "Due Diligence" or pay.
You have to read what they expect of us.

[Bees Knees]

Thats all I will be reading in the next few weeks. Expect full coverage in TTB.

[BOB W]

Are you sure this is already law? Or is this what is in the proposed legislation to fix AMT?

AMT, as of today, is still being debated> they can't find the money to cover the loss of revenue,,,,, yet,,,,,,

Keep in mind> (P.L. 110-28) the preparer penalties has already been passed> see 6662 & 6694. They include words like> "realistic possibility" and "more likely than not" and " greater than 50%". 33% of success is no longer applicable, just to name a few.

$1,000 penalty for willful understate another persons tax liability... Intentional disregard of rules or regulations without adequate disclosure.

[thomtax]

Please tell me

Do these penalties apply to the local car lot, furniture dealer, cousin of your neighbor, etc type preparers or just to CPAs, EAs, etc - You know, the ones that are taking contuining education and attempting to do it rignt?

[BOB W]

Do these penalties apply to the local car lot, furniture dealer, cousin of your neighbor, etc type preparers or just to CPAs, EAs, etc - You know, the ones that are taking contuining education and attempting to do it rignt?

All persons that prepares of any type report or return for IRS reporting, whether office helper or an unenrolled tax preparer now falls under Circular 230 and its penalties and sactions. A preparer is no longer just the signer of the return.

[Uncle Sam]

New

Thomtax raises a very important point-the imposing of the Penalty Parade on the unlicensed, unenrolled preparer.
These folks are the curse of the profession. Obviously NOT ALL - but those that continue to prepare returns without obtaining the important skills and knowledge necessary to comply with Circular 230.
Perfect example - a local unlicensed preparer prepared a 2005 return of a last year new client of mine.
The client resided in one state, worked in an adjoining state - therefore had to prepare 2 state returns. Client was also a part time real estate agent affiliated with a national broker.
Schedule C had deductions without any rhyme or reason to them including a SCHEDULE A CHARITABLE DONATION, 100% of automobile expenses, expenses for office in home being charged on Schedule C-bypassing the Office-In-Home schedule.
The nonresident state return had a different filing status then Fed'l and resident state. Also claimed an exemption for adult child that didn't qualify. I have it written in my notes that I advised him to amend - but he refused - to him it was worth gambling.
This was the second client in 2 years where I saw the SAME scenario with a different taxpayer. In addition - that other client had itemized deductions that were inflated and completely fictitious - such as thousands of dollars for unreimbursed employee business expenses (mainly auto mileage) for a local school district bus driver.
Unless IRS clamps down on the unenrolled, unlicensed guys, they are creating an undue hardship for the rest of us honest people that have the threat of forfeiture of license over our heads.