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11 Cards in this Set
- Front
- Back
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Tax return preparers-receive compensation |
Tax position upheld: More likely than not >50% Ordinary negligence = failure Reasonable basis >20% Substantial authority >33% but < 50%
Reportable translation: info is required to be included with a return because either there is tax avoidance (legal) or tax evasion (illegal) |
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Understatement of taxpayer's liability due to an unreasonable position by the tax return preparer |
Unreasonable position UNLESS:
Position disclosed-->reasonable basis
Position undisclosed-->substantial authority
Tax shelter or reportable transaction=more likely than not (highest standard)
Penalty for understatement of taxpayer liability $1000 |
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Understatement of taxpayer's liability due to willful or reckless conduct (fraud) of the tax return preparer |
Not always required to obtain supporting documentation unless preparer suspects accuracy of info provided
Penalty for fraud $5000 |
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Tax preparer is required to... |
Provide a completed copy of tax return to taxpayer
Sign tax return or refund claim
Provide own tax ID number
Retain records for 3 years
NOT endorse or negotiate refund check issued to taxpayer
Be diligent in determining a client's eligibility for the earned income credit
Keep taxpayer's info confidential EXCEPTIONS: subpoena, allowable uses (prep of state and local tax returns), quality and peer reviews, SEC audit, GAAP/GAAS Must have client's consent unless there are any of the exceptions above |
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Tax practitioners (Circular 230) |
Attorneys, CPAs, enrolled agents, enrolled actuaries, enrolled retirement plan agents, appraisers |
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Best practices for tax advisors |
Terms of engagement
Supported by law and facts NOT whether the taxpayer will likely be audited or not
Importance of conclusions reached
Acting fairly and with integrity |
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Practitioner standards |
Practitioner may rely in good faith without verification upon client-furnished information
Knowledge of omission by a client-->consider withdrawing if client doesn't rectify error-->do not have to notify IRS
Return client records at the request of the client but maintain record copies for 3 years
Rely on advice of others OK
Ensure compliance of internal control matters (disseminate, educate, test) |
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State board of accountancy - gives and revoked license |
Disciplinary action of CPA by board- Negligence, fraud, dishonesty Intoxication, drugs Criminal conviction
After investigation, board can conduct a formal hearing-->entitled to due process of law, judicial review, no proof beyond reasonable doubt required (not a criminal case) |
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AICPA and State CPA Societies |
Can sanction their members, cannot suspend or revoke CPAs license
Can suspend or terminate membership without a hearing for conviction
Sanctions include: Expulsion from AICPA Suspension of membership Requirement that CPE courses be taken NO MONETARY OR CRIMINAL |
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IRS |
Criminal penalties for ANY person
Civil penalties: Prohibit an accountant from practicing Impose fines |
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SEC - civil, investigate criminal but not prosecute |
Civil penalties: Suspend or revoke right to practice including right to sign documents
Suspension or revocation of the right to practice can occur if the accountant lacks the qualifications, character, is unethical, willfully violates laws, Convicted of felony
Impose fines no more than $100,000 or $500,000 for a firm |
