Question

Describe the rules and penalties that apply to tax practitioners.

Answer 1

A tax practioner being a professional must comply with the rules and regulations that are set by the board that governs such professions.

The rules that are set by the board should be followed and if any negligence is made in following the rules than the penalties may apply.

When a person approaches the tax practioner to prepare the return than it is the responsibility of the tax practioner to make the return that is as per the law.

Below are the rules and penalties that apply to tax practioner.

• In case tax payer liability is understated.

If the liability is understated due to unreasonable positioning then the penalty is $1,000 or 50% of the income derived by the tax return preparer with respect to the return or claim for refund.

If the liability is understated due to wilful act then the penalty is

• Failure to furnish copy to the taxpayer

The penalty is of $50for each failure

• Failure to sign the return

The penalty is of $50 for each instance.

• Failure to retain a copy of return

In such case the penalty is for $50

• Failure to file correct information

The max penalty in this case is for $26000

• Disclosure of information

Any information that is disclosed and if this is unauthorized then the penalty is for $250for each instance. The max penalty is of $10K

• Fraud

In case if any false statement is made or fraud has been committed then the fine would be 100000, imprisonment of not more than 3years.

• Abusive tax shelter

The penalty for promoting an abusive tax shelter is of $1000 or 100% of income derived from such abuse.