When Tax Preparers Need Tax Attorneys
When tax preparers have trouble with the IRS, there may be a temptation to try to handle it themselves. You no doubt already know that a violation of any of the numerous standards of professional conduct proscribed by the Internal Revenue Service can lead to massive penalties for tax preparers. Don’t take the risk. Immediately contact a tax crime attorney.
Tax crime attorneys are experienced in dealing with the IRS on just these matters. A tax attorney can educate you on how the IRS proceedings will go, and can help you anticipate the IRS’s next move. The sooner you call a tax crime attorney to help handle your IRS investigation, the sooner the penalties, fees and interest will stop accruing on your tax bill. Hiring a tax attorney will also decrease the chances of disbarment from practice before the IRS. When your livelihood is on the line, take every advantage available to you.
Let’s review the basics.
Circular 230 gives the authority to the Secretary of the Treasury to censure, suspend, or disbar any practitioner who prepares another’s taxes if they are incompetent, disreputable, or purposefully misleading in their preparation of returns. For example, Circular 230 §10.34 states “a practitioner may not willfully, recklessly, or through gross incompetence – sign a tax return or claim for refund that the practitioner knows or reasonably should know contains a position that – lacks a reasonable basis; is an unreasonable position . . . ; or is a willful attempt by the practitioner to understate the liability for tax or a reckless or intentional disregard of rules or regulations.”
Civil Statutory Penalties
Aside from Circular 230, there are also statutes directly in the Internal Revenue Code that are designed to regulate the conduct of tax preparers. For example
- IRC § 6694 imposes monetary penalties from $1,000 up to 50% of the income derived from the return for making unreasonable understatements of tax liability on your clients’ returns.
- IRC § 6701 imposes civil penalties for aiding and abetting understatements of tax liabilities.
Tax preparers can also become criminally liable for unlawful tax preparer conduct, and the IRS has ultimate discretion to seek prison time for especially egregious and fraudulent conduct. According to IRC § 7216, any person who prepares tax returns for compensation and who discloses or misuses personal information furnished to him for, or in connection with, the preparation of a return may be imprisoned. IRC § 7206 makes it a crime punishable by imprisonment up to three years to aid or assist in the preparation of any representation to the IRS which is fraudulent or false as to any material matter, whether or not such falsity or fraud is with knowledge you or your client.
The IRS Has Stepped Up EIC Due Diligence Requirements
Tax return preparers who fail to comply with IRS due diligence requirements regarding eligibility for imposed by the Secretary by regulations with respect to determining eligibility for Earned Income Tax Credit (EIC), or the amount of the allowable credit must pay a penalty of $500 for each failure. This can quickly add up if it involves multiple clients, so if you are being investigated for this, you need the services of an attorney.
Call Ayar Law for a Free Consultation
Please contact Ayar Law for a fee consultation, or just call Ayar Law and ask to speak with Venar Ayar. He would be happy to give you some advice on the phone as a professional courtesy.
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