In addition, the IRS indicates that an interview with the tax preparer
should take place, and the following areas may be covered:
The Internal Revenue Service (IRS) released proposed regulations that would establish a fee for individuals who apply for a preparer
tax identification number (PTIN).
When an unlicensed tax preparer
is caught, Wagner said, all the returns they've prepared are audited and their clients can end up with a big bill for back taxes, illegal refunds, interest and penalties.
* Require that all paid tax return preparers
register with the IRS and obtain a preparer
tax identification number.
Following a six-month review of the paid tax preparer
industry, the IRS is drawing up regulatory requirements that will have paid preparers
register with the IRS and pay a user fee, and make preparer
tax identification numbers mandatory.
Originally motivated by Congress' belief in widespread abusive practices by income tax preparers
, as well as concerns that significant numbers of fraudulent returns were being prepared by income tax preparers
, the tax preparer
penalties of [section] 6694 were enacted in 1976.
This year, tax preparer
education and training is even more important, as all Illinois tax professionals, regardless of experience level, will be required to obtain a PTIN under Internal Revenue Service ("IRS") regulations.
When computing any of the specified credits, the tax return preparer
must complete the applicable worksheet in the instructions to Form 1040, U.S.
A federal district court held that the IRS has the authority to require tax return preparers
to obtain preparer
tax identification numbers (PTINs) but that it cannot charge a user fee for issuing them, lhe plaintiffs in the case, tax return preparers
, brought a class action suit against the IRS claiming that it lacks legal authority to require preparers
to obtain PTINs and to charge a fee for issuing them.
He continued by noting that tax preparers
, along with CPAs and tax attorneys, who abrogate their ethical responsibility to that system in favor of helping clients evade tax--"the most unpatriotic thing I can think of'--are coming under closer scrutiny from the IRS, which "more and more is realizing that one bad preparer
could be worse than 100 bad taxpayers." Consequently, the penalties for such behavior can be severe.
UNDER IRC [section] 6694, a tax preparer
who prepares a tax return or claim of refund that includes an understatement of liability due to an unreasonable position is liable for a penalty if he or she knew or reasonably should have known of the position.