How can I find out about the new preparer penalties everyone is talking about?
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Penalties
Next time you represent a client at an audit, offer a bribe to the revenue officer.
You'll find out about the new penalties real fast...
LMAO
[Okay, guys, I've been up too many hours...]
Burton M. Koss
koss@usakoss.netBurton M. Koss
koss@usakoss.net
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The map is not the territory...
and the instruction book is not the process. -
IRS Circular 230
Cyanide, try IRS Circular 230. It is the governing document for preparer regulations.Comment
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Circular 230
Circular 230 tries to cover all kinds of situations, most of which are unlikely situations for most of us. The penalties relate to taking a position which has a less than 50% likelihood of prevailing, which would only apply to occasional situations.
Without even reading it, however, it is obvious that if a tax preparer enters any kind of infomation which he did not obtain from the client, he could be in trouble. Also if a client is obviously lying, you would be subject to penalties if you enter his lies on the return.
Specific areas of concern (not specifically mentioned in Circular 230) include :
Entering vehicle mileage without having the client provide odometer readings, and signing a document stating whether records are written, etc - same as the information you need to enter on page 2, Form 4652.
Failure to warn, in writing, rules regarding contributions over $ 250.
Failure to explain hobby loss rules when a client has recurring business or farm losses.
In addition to the above warnings, an engagement letter, signed by the client should be obtained for your protection. It should cover all of the above and other matters related to the engagement including other accounting services.Comment
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This link will take you to Notice 2008-13 tax return preparer penalty.
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