ETHICS AND PREPARER RESPONSIBILITY
PREPARERS <ul><li>generally defined as individuals or entities who prepare returns for compensation  </li></ul><ul><li>the...
Signature Requirements  <ul><li>a tax return preparer must sign the tax return or refund claim in the appropriate space pr...
FAILURE TO ENTER IDENTIFYING NUMBER <ul><li>There is a penalty of $50 for each failure of a preparer to place an identifyi...
Providing Copy of Return to Taxpayer  <ul><li>preparer must furnish a completed copy of the return or claim to taxpayer no...
Record-Keeping Requirements  <ul><li>a preparer must retain a copy of a return  prepared or keep a list of the name and ta...
PREPARER PENALTIES <ul><li>Aiding and abetting-  Any person who aids or assists in, or gives advice concerning, the prepar...
PREPARER PENALTIES <ul><li>Aiding and abetting-  The penalty is $10,000 with regard to a return or other document concerni...
UNDERSTATEMENT PENALTIES <ul><li>If a preparer prepares a return and an understatement is due and takes  and the preparer ...
UNREASONALBE POSITIONS ARE: <ul><li>undisclosed positions that are not based on substantial authority  </li></ul><ul><li>p...
WILLFUL UNDERSTATEMENT <ul><li>If the understatement is due to the preparer's reckless or intentional disregard of rules o...
NEGOTIATIING TAXPAYERS REFUND CHECK <ul><li>A practitioner who prepares tax returns may not endorse or otherwise negotiate...
IMPROPER DISCLOSUREOF RETURN INFORMATION <ul><li>There is a penalty of $250 for each improper disclosure of return informa...
CRIMINAL PENALTIES <ul><li>It is a misdemeanor for a preparer to disclose any information furnished to him for the prepara...
CRIMINAL PENALTIES <ul><li>Any person who willfully attempts in any manner to evade or defeat any tax or payment of any ta...
CRIMINAL PENALTIES <ul><li>Any person required by the Code or regulations to file a return, keep any records or supply any...
CRIMINAL PENALTIES <ul><li>Any person who willfully aids or assists in, or procures, counsels, or advises the preparation ...
CRIMINAL PENALTIES <ul><li>Any person who fails to comply with a summons issued under the Code that calls for testimony or...
PRACTICE BEFORE THE IRS <ul><li>Attorneys, CPAs, enrolled agents and enrolled actuaries may practice before the IRS  </li>...
PRACTICE BEFORE THE IRS <ul><ul><li>A general partner or a regular full-time employee of a partnership may represent the p...
RESPONSIBILITIESOF PERSONS PRACTICING  <ul><li>They must submit information as requested, unless it is privileged  </li></...
RESPONSIBILITIESOF PERSONS PRACTICING <ul><li>They must not engage in practice that results in a conflict of interest  </l...
REQUESTS FROM IRS <ul><li>A practitioner must, on a proper and lawful request by a duly authorized IRS officer or employee...
REQUESTS FROM IRS <ul><li>A practitioner may not interfere, or attempt to interfere, with any proper and lawful effort by ...
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Preparer Rules

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Preparer Rules

  1. 1. ETHICS AND PREPARER RESPONSIBILITY
  2. 2. PREPARERS <ul><li>generally defined as individuals or entities who prepare returns for compensation </li></ul><ul><li>they are required to sign the return as the preparer. </li></ul><ul><li>required to provide identification numbers on returns they prepare. </li></ul><ul><li>They are required to keep records of returns prepared </li></ul>
  3. 3. Signature Requirements <ul><li>a tax return preparer must sign the tax return or refund claim in the appropriate space provided on the return or claim after it is completed and before it is presented to the taxpayer for signature. </li></ul><ul><li>A preparer who does not do so is subject to a penalty of $50 for each failure. </li></ul><ul><li>The maximum penalty is $25,000 per person per calendar year. </li></ul>
  4. 4. FAILURE TO ENTER IDENTIFYING NUMBER <ul><li>There is a penalty of $50 for each failure of a preparer to place an identifying number on a return or refund claim that he prepares. </li></ul><ul><li>No penalty is imposed if the failure to furnish the identification number is due to reasonable cause and not due to willful neglect. </li></ul>
  5. 5. Providing Copy of Return to Taxpayer <ul><li>preparer must furnish a completed copy of the return or claim to taxpayer no later than the time the return or claim is presented to the taxpayer for signature. </li></ul><ul><li>Failure to do so results in a penalty of $50 for each failure unless reasonable cause exists. </li></ul><ul><li>The maximum penalty cannot exceed $25,000 </li></ul>
  6. 6. Record-Keeping Requirements <ul><li>a preparer must retain a copy of a return prepared or keep a list of the name and taxpayer identification number of the taxpayer. </li></ul><ul><li>For the period ending three years after the close of the return period, a preparer must retain a completed copy of a return or refund claim or keep a list of the name, taxpayer identification number, and taxable year of the taxpayer, as well as the type of return or claim for refund. </li></ul>
  7. 7. PREPARER PENALTIES <ul><li>Aiding and abetting- Any person who aids or assists in, or gives advice concerning, the preparation or presentation of any portion of a return, affidavit, claim, or other document, with the knowledge that the portion, if submitted, will create an understatement of the tax liability of another person must pay a penalty </li></ul><ul><ul><li>The penalty is $1,000 per violation with regard to a return or document concerning a taxpayer other than a corporation. </li></ul></ul>
  8. 8. PREPARER PENALTIES <ul><li>Aiding and abetting- The penalty is $10,000 with regard to a return or other document concerning the tax liability of a corporation. The penalty applies only once for assistance given to a taxpayer for a specific tax period regardless of the number of documents prepared that cause an understatement for that tax period </li></ul>
  9. 9. UNDERSTATEMENT PENALTIES <ul><li>If a preparer prepares a return and an understatement is due and takes and the preparer knew or reasonably should have known of the unreasonable position. A penalty is imposed equal to the greater of $1,000 or 50 percent of the income derived (or to be derived) by the tax return preparer from the preparation of the return or claim with respect to which the penalty is imposed. </li></ul>
  10. 10. UNREASONALBE POSITIONS ARE: <ul><li>undisclosed positions that are not based on substantial authority </li></ul><ul><li>positions that are disclosed but lack a reasonable basis </li></ul><ul><li>tax shelters and reportable transactions if it is not reasonable to believe the position would more likely than not be sustained on its merits </li></ul><ul><li>The penalty does not apply if the preparer shows reasonable cause for the understatement and that he acted in good faith. </li></ul>
  11. 11. WILLFUL UNDERSTATEMENT <ul><li>If the understatement is due to the preparer's reckless or intentional disregard of rules or regulations. The penalty for willful or reckless conduct is equal to the greater of $5,000 or 50 percent of the income derived (or to be derived) by the tax return preparer from the preparation of the return or claim with respect to which the penalty is imposed </li></ul>
  12. 12. NEGOTIATIING TAXPAYERS REFUND CHECK <ul><li>A practitioner who prepares tax returns may not endorse or otherwise negotiate any check issued to a client by the government in respect of a Federal tax liability </li></ul><ul><li>A return preparer who does so, directly or through an agent, must pay a penalty of $500 for each check so negotiated </li></ul><ul><li>There is no reasonable cause exception </li></ul>
  13. 13. IMPROPER DISCLOSUREOF RETURN INFORMATION <ul><li>There is a penalty of $250 for each improper disclosure of return information by a person whose business is preparing, or providing services for the preparation of, income tax returns or any person who for compensation prepares an income tax return for another person. </li></ul>
  14. 14. CRIMINAL PENALTIES <ul><li>It is a misdemeanor for a preparer to disclose any information furnished to him for the preparation of any income tax return or to use the information for any purpose other than to prepare, or assist in preparing, an income tax return. The penalty is a fine of up to $1,000 or imprisonment for up to one year or both, together with the costs of prosecution. </li></ul>
  15. 15. CRIMINAL PENALTIES <ul><li>Any person who willfully attempts in any manner to evade or defeat any tax or payment of any tax imposed by the Code is guilty of a felony. A person convicted of tax evasion may be fined up to $100,000 ($500,000 for a corporation) or imprisoned not more than five years or both, together with the costs of prosecution </li></ul>
  16. 16. CRIMINAL PENALTIES <ul><li>Any person required by the Code or regulations to file a return, keep any records or supply any information who willfully fails to file the return, keep the records or supply the information is guilty of a misdemeanor. A person convicted of this offense may be fined up to $25,000 ($100,000 for a corporation) or imprisoned not more than one year or both, together with the costs of prosecution </li></ul>
  17. 17. CRIMINAL PENALTIES <ul><li>Any person who willfully aids or assists in, or procures, counsels, or advises the preparation or presentation of a return, affidavit, claim, or other document under the tax laws that is fraudulent or false as to any material matter is guilty of a felony. </li></ul><ul><li>A person convicted of this offense may be fined up to $100,000 ($500,000 for a corporation) or imprisoned not more than three years or both, together with the costs of prosecution </li></ul>
  18. 18. CRIMINAL PENALTIES <ul><li>Any person who fails to comply with a summons issued under the Code that calls for testimony or for the production of books or documents and neglects to appear or to produce the books or documents has committed a crime. A person convicted of this offense may be fined not more than $1,000 or imprisoned not more than one year or both, together with costs of prosecution. </li></ul>
  19. 19. PRACTICE BEFORE THE IRS <ul><li>Attorneys, CPAs, enrolled agents and enrolled actuaries may practice before the IRS </li></ul><ul><li>Some individuals can practice before the IRS without enrollment </li></ul><ul><ul><li>An individual may represent a member of his immediate family </li></ul></ul><ul><ul><li>A regular full-time employee of an individual employer may represent the employer </li></ul></ul>
  20. 20. PRACTICE BEFORE THE IRS <ul><ul><li>A general partner or a regular full-time employee of a partnership may represent the partnership </li></ul></ul><ul><ul><li>bona fide officer or a regular full-time employee of a corporation </li></ul></ul><ul><ul><li>A regular full-time employee of a trust, receivership, guardianship, or estate </li></ul></ul>
  21. 21. RESPONSIBILITIESOF PERSONS PRACTICING <ul><li>They must submit information as requested, unless it is privileged </li></ul><ul><li>They must advise the client of errors </li></ul><ul><li>They must comply with due diligence requirements </li></ul><ul><li>They must not violate restrictions on fees </li></ul><ul><li>They must comply with rules on returning clients' records </li></ul>
  22. 22. RESPONSIBILITIESOF PERSONS PRACTICING <ul><li>They must not engage in practice that results in a conflict of interest </li></ul><ul><li>They must comply with restrictions on advertising </li></ul><ul><li>They must comply with rules concerning the positions taken on returns and advice given </li></ul><ul><li>They must comply with rules on tax shelter opinions </li></ul>
  23. 23. REQUESTS FROM IRS <ul><li>A practitioner must, on a proper and lawful request by a duly authorized IRS officer or employee, promptly submit records or information in any matter before the IRS unless the practitioner believes in good faith and on reasonable grounds that the records or information are privileged </li></ul>
  24. 24. REQUESTS FROM IRS <ul><li>A practitioner may not interfere, or attempt to interfere, with any proper and lawful effort by the IRS or the Office of Professional Responsibility to obtain any record or information unless the practitioner believes in good faith and on reasonable grounds that the record or information is privileged </li></ul>

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