1 Doug Shulman before the AICPA 133 148I am always looking for points of leverage 150 and The Tax Preparer Risk149 The Taxpayer Accuracy Penalty 149 ID: 401649
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Preparer Penalties - Are 1 Doug Shulman before the AICPA, I am always looking for points of leverage and The Tax Preparer Risk The Taxpayer Accuracy Penalty §666220% of the understatement Negligence or disregard of rules or regulations failure to keep adequate records use ordinary and reasonable care in preparing a return3 The Tax Preparer Risk The Taxpayer Accuracy Penalty §6662Substantial understatement of income taxgenerally an understatement that is more than 10% of the correct tax and greater than $5,000.4 The Tax Preparer Risk The Taxpayer Accuracy Penalty §6662Substantial valuation misstatementgenerally a valuation that is 150% or more of the determined value and causes a tax understatement of more than $5,000. (Penalty is 40% in the case of gross valuation 5 The Tax Preparer Risk The Taxpayer Accuracy Penalty §6662Substantial estate or gift tax valuation understatement valuation that is 65% or less of the determined value and causes a tax understatement of more than $5,000.6 The Tax Preparer Risk The Taxpayer Accuracy Penalty §6662Disallowance of claimed tax benefits due to a transaction lacking economic substance7 The Tax Preparer Risk The Taxpayer Accuracy Penalty §6662Undisclosed foreign financial asset understatement (penalty increased from 20% to 40%)8 IRC §6694 §6694(a)Unreasonable PositionsSmall Business Tax Act of 2007Greater of $1,000 or 50% of income derived from preparing the return.9 IRC §6694 §6694(b)Willful or reckless conductGreater of $5,000 or 50% of income derived from preparing the return10 (a) Failure to furnish copy to (b) Failure to sign return(c) Failure to furnish identifying (d) Failure to retain copy or list(e) Failure to file correct (f) Negotiation of check(g) Diligence for eligibility of EICTreasury Reg §1.6695-2 IRC §6700 Promoting Abusive Tax Shelters$1,000 each occurrence Or 100% of income derived if less14 IRC §6701 Aiding and Abetting Understatement$1,000 per taxpayer ($10,000 for corporations) per taxable period.15 IRC §6713 Disclosure or Use of InformationAny Tax Return PreparerAny Tax ReturnCivil Penalty $250 for each disclosure or use up to $10,000 per year16 IRC §7206 Fraud and False StatementsFELONY!Not more then $100,000 $500,000 for corporationImprisonment of not more then 3 years (or both)17 $50,000 if a corporation IRC §7216 Criminal Penalty Provisions Disclosure or Use of Taxpayers Information Fine of not more $1,000 Imprisonment of not more then 1 Rev Proc 2013-14 (January 1, 2014)19 IRC §7407 Judicial ActionsSpecifically against Tax PreparersAny Conduct subject to penalty under §6694 or §6695In extreme cases could lose the 20 IRC §7408 Judicial ActionsAgainst any personConduct in violation of Circular 230Any Conduct subject to penalty under §6700, §6701, §6707 and §670821 Self Rental Tax Traps - Are For More Information National Society of AccountantsMore information is available including additional materials at:Booth in Vendor HallOr Table in Lobby800-966-6679www.nsacct.org23