Academic journal article Journal of Accountancy

Return Preparer Penalties Guidance Issued

Academic journal article Journal of Accountancy

Return Preparer Penalties Guidance Issued

Article excerpt

The IRS said it will revise regulations before the end of 2008 to incorporate provisions of the Small Business and Work Opportunity Tax Act of 2007 concerning preparer penalties under section 6694 and related sections.

In the meantime, interim guidance issued in the final hours of 2007 offered some clarification and relief. Most notably, the interim guidance provides a method for signing tax return preparers to reconcile section 6694's more-likely-than-not certainty threshold for nondisclosed items with the section 6662 "substantial authority" standard for taxpayers. In Notice 2008-13, the Service said that if a position meets section 6662's requirements for nondisclosure, the signing preparer will be deemed to have met the section 6694 requirements if he or she explains to the taxpayer the difference between the two standards and contemporaneously documents that the advice was provided.

Other provisions of Notice 200813 provide that the preparer of an information return listed in Exhibit 2 of the notice (or other document, such as a depreciation schedule or cost, expense or income allocation study) will be considered a preparer of a tax return if entries in the information return or other document constitute a substantial portion of that tax return. …

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