Question

• Provide one specific example of guidance that should be considered by a tax professional and enforced in a tax practice. Remember to consider the responsibility of the individual taxpayer as well.
• Describe one penalty, standard, or ethical concern that an individual taxpayer or a tax professional should be aware of that you did not know previously. Remember to provide an example.

Answer 1

1. In case of assessing the taxable income of a person who is a taxpayer, tax professional shall consider all the facts and circumstances while doing the assessment. sometimes the tax professional needs to dig down the facts to know whether the proofs provided by the taxpayer is reliable or not.

e.g Tax payer is submitted huge purchase bills which consist also some fake bills which were prepared by his own hands. The tax professional needs to find the truthfulness of the bills by verifying the address mentioned in the bills or contacting the number mentioned in the bill. This will help the tax professional to stay out of illegality.

2. Penalty in case of return not filed within the due date

The penalty for Failure to Timely File Return: If a taxpayer is required to file an income or excise tax return and fails to timely do so, a late filing penalty may be assessed. The penalty is 5% of the amount of unpaid tax per month (or partial month) the return is late, up to a maximum of 25%.