Nsa Statement

[BOB W]

Although this issue has been brought up in the past NSA has deemed it important enough to bring it back to the forefront, Preparer Penalties. Here is their post:

http://www.irs.gov/pub/irs-drop/n-08-13.pdf

[erchess]

Questions

Does the NSA have opinions about these regs?

Under the Regs as they are, can one preparer be penalized for errors of another? And if not, will people who prepared K1s or Depreciation Schedules get IRS Letters proposing that they be penalized? For example, let's say I prepare a K-1 or a Depreciation schedule that is CORRECT but is USED ERRONEOUSLY by another preparer to prepare an erroneous return. Will I be penalized? (This matters very much to me because I have an S Corp that I do and I also do the personal returns for three of the four shareholders but I do not have anything to do with the return of the fourth shareholder whose honesty and rationality I question.)

Also let's say I did a client with a Sch C one year and the next year he moves and uses another preparer. That other preparer uses the Depreciable Items List from the py return. Does it matter whether the new preparer used the return copy I gave the clients the year before or had to (with proper permissions signed) get me to send another copy? Does it matter whether I charged for that copy?

Am I right in thinking that as of May 25 these proposed regulations are in effect?

And finally, I have in the past prepared returns at no charge without signing them. I have been under the impression that I was not exposing myself to preparer penalties and that I was supposed to not sign returns done at no charge. Was I wrong in any of that, and do the proposed regulations change anything.

Sorry if I missed anything that was in what Bob gave us to read.

[BOB W]

May 25th is the inception date. It also appears that the originator of a document, like a K-1, is resonsible for penalties, not the tax preparer of the final product, like a 1040. That is if there are no other problems on the return, but the K-1 stand alone to the originator of that K-1.

Many of these issues may be changed in the near future as final rulings are supposed to be issued by the end of the year.

There are many other issues that will be addresed by them and I guess the NSA is keeping this whole preparer penalties issue in everyone's mind and to be sure that you keep abreast of developing legislation throughout the rest of the year...............