Reasons to Penalize or Debar Income Tax Return Preparer

by lawfirm on January 11, 2013

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Many people in Florida hire professionals to claim compensation or portion of tax return. Sometimes these professionals face problems as Internal Revenue Code incorporated several hazards for income tax return preparers.  These preparers are subjected to several general penalty provisions along with specific penalties aimed at them. You may have to incur penalties for overstating the deduction areas repeatedly and you can even loose the right to prepare the tax return for the same action.

What is meant by Income Tax Return Preparer?

Income tax return preparer can be a person or corporation, that claim compensation or refund for income tax return. There are certain requirements that a person or corporation has to meet in order to be the preparer. These requirements are:

  • The refund or return claim must be associated to income tax
  • The person related to it has prepared or engage someone else to prepare a substantial portion of return and refund claim
  • These return or refund aimed to recover compensation

More than one person can be involved in preparing this return or refund claim. It is important that the person who prepares income tax return must know the dangerous avenues and methods to avoid them.

What are the issues that an income tax return preparer should be aware of?

One of the common mistakes that these professionals often commit is favoring a position that results in understatement of tax liability on the return. You may take such a position when there are relevant facts and figures to justify your understatement.  The records have to be produced if interrogated by the IRS officials.

The tax-return preparer has to be careful while dispersing information to third parties. Before disclosing any information it is better to seek the consent of tax payer. There is also a permissible disclosure limit and the professional should be aware of that. The tax payers can charge penalties or take legal action for disclosing their valuable information.

There are certain rules on record keepings and reporting as imposed by Internal Revenue Code. The preparers have to pay additional penalties if they fail to comply with the set methods.

IRS may disbar for glaring activities by these income tax return preparers. You will be considered as a return preparer even if only advise a client and not sign or prepare the documents. If such situation arises you must hire one of the experienced Florida Tax Attorneys. An attorney who specializes in the field of tax and have a successful track record can save you from getting debarred.

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