Question

Explain the legal and ethical implications in relation to improper or erroneous tax filings.

Answer 1

Tax filings can be improper or erroneous.
If an error detected, then the practitioner must report it to the taxpayer although he don’t need to report such to IRS.
IRS will not assess a penalty if it owes a refund but,
if taxpayer owe IRS and fail to pay the money because of improper or erroneous tax filings, IRS may charge penalties and interest as follows-

1. Penalty for late payments:
   - If errors results owing more.
2. Negligence Penalties:
   - If error was due to not taking care to ensure accuracy and recklessly disregard tax rules which results understating of tax liability.
3. Fraud Penalties:
   - If taxpayer intentionally deceives the IRS.
4. Penalty for Tax Evasion:
   - Misrepresent of tax situation that financially benefits the taxpayer and deliberately deceives IRS.
5. Interests:
   - IRS charges interest on balanced owed which is reassessed every quarter.

It shall be noted that,
if taxpayer file tax jointly with spouse and error is done by the spouse then they are jointly liable for such improper or erroneous tax filings.