professoinal responsibilities and tax return preparer penalties

who can get a PTIN

enrolled agents, CPA, attorneys, annual filing season program participants

who is NOT a tax return prepaprer

data entry, solicit client information, copies, mailing, someone who prepares a return or claim for refund for an employer or as a fiduciary

who have unlimited representaion rights before the IRS

enrolled agents, CPA, attornyes

tax professionals with these credentials may represent their clients on any matters including ___________

audits, payment/collection issues, and appeals

PTIN holders with no credentials (no license) and do not participate in the annual filing season program are authorized only to _____

prepare tax returns and have no authority to represent clients before the IRS

signing tax return preparer

whoever has the primary responsibility for the overall accuracy of the return or claim for refund

nonsigning tax return preparer

anyone who is not a signing tax return preparer but who prepares a substantial portion of a return or offers advice to a taxpayer, they assist in the preparation of the return, but their work is not merely mechanical

primary authoritative sources to determine tax treatment of an item included:

provisions of the IRC and other statutory provisions, revenue rulings and revenue procedures, tax treaties and regulations, court cases, US treasury department and other official explanations of such treaties

a reportable transaction which is the same as or substantially similar to a transaction specifically identified by the secretary of the US treasury department as a tax avoidance transaction

listed transaction

any transaction where informtoin is required to be included with a return or statement because it is a type determined by the secretary of the US treasury deaprtment as having a potential for: _____________________

reportable transaction, tax avoidance (legally) or tax evasion (illegaly)

failure to make a reasonable attempt to comply with the provisions of the internal revenue laws. not fraud

ordinary negligence

failure to exercise ordinary and reasonable care

ordinary negligence

failure by taxpayer to keep adequate books and records

ordinary negligence

reasonable basis standard (lowest standard)

met when there is at least a 20% likelihood of a tax position being upheld by the courts, is not satisfied by a return position that is merely arguable

substantial authority standard (medium standard)

met where there is a greater than 40% but less than 50% likelihood of a tax position being upheld by the courts, objective standard

more likely than not standard (highest standard)

met when there is a greater than 50% likelihood of a tax position being upheld by the courts

_____=reasonable basis standard=greater than 20%

disclosed position

____=substantial authority standard=40-50%

undisclosed position

_____=more likely than not standard=greater than 50%

listed/reportable transaction

a position is deemed unreasonable unless:

>20% chance of winning in court, >40% in winning, it relates to a tax shelter or <50% chance

the penalty for an understatement due to unreasonable position is:

equal to the greater of $1000 or 50% of the income the preparer received for tax return preparation services

penalty for fraud not in good faith

the greater of $5k or 75% of income preparer received

the penalty for fraud is reduced by __________

any penalty assessed as a result of an unreasonable tax position by a tax return preparer

what is the penalty for unethical behavior

$65 per failure, max of $33k per year

what are examples of unethical behvaior for penalty

failure to: provide copy to taxpayer, to sign return, to furnish identification number of preparer, properly retain records, to file correct information returns

how long is the preparer required to keep a copy of the return or claim

three years following the last day of the return period

penalty for anyone who endoreses or negotiates a refund check

$665 per check

penalty for failure to comply with the IRS due diligence requirements is:

$665 per failure

the penalty for abetting understatement of tax liability is for ____

anyone

civil penalty for abetting for all taxpayers is _____

1,000

penalty for abetting for corporations is ____

$10,000

penalty for wrongful disclosure and/or use of tax return information is:

$250 per problem with maximum of $10,000 per year

exceptions to wrongful disclosure and/or use of tax return information

disclosures allowed by any provision to the IRC and enforceable subpoena, preparation of state and local tax returns and preparations of declaration of estimated tax, uses for quality and peer reviews and administrative orders, or if the client consents

role of state boards of accountancy

grant, suspend, revoke

requirements for licensure include:

CPA exam, residency, educational, experience

3 types of misconduct

while preforming accounting services, outside the scope of accounting, criminal conviction

the board must find it _______ that the accountants actions constituted professional misconduct. Proof _______ is not required

more likely than not, beyond a reasonable doubt

state board due is entitled to ____ during disciplanary power

due process or judicial review is required, can impose fines and revoke or suspend a license

when is due process generally required during disciplanry power

penalty includes loss of license, monetary fine, and/or jail

investigation from state society/AICPA

due process or judicial review is not required, cannot impose fines or revoke or suspend a license

five penalties that a state board of accountancy may impose for professional misconduct

suspension or revocation of license, a monetary fine, reprimand or censure, probation, requirement for CPE courses

membership can be suspended or terminated without a hearing for AICPA and state CPA societies:

crime and imprisonment for more than a year, proof of conviction for willful failure to file any income tax return, conviction for false or fraud income tax return, suspension or revocation of license by state board

criminal penalties by IRS

can be imposed on anyone, proof needs to be beyond a reasonable doubt and burden is on the government, if found guilty may be imprisoned for not more than 3 years and/or fined for more than $100k or $500k for a corporation