TAX RETURN PREPARATION



Articles by Alvin Brown Tax Preparation Offer In Compromise State Offers in Compromise Levy IRS Tax Liens IRS Tax Liens - continued IRS Tax Liens - continued 2 Levy - continued Audit Techniques Guide Congressional Contacts Criminal Investigation D.O.J Criminal Tax Manual Tax Litigation Penalty Installment Agreements Statute of Limitations Frivolous Tax Argument Interest Abatement IRS Misconduct IRS Abuses Tax Fraud Fraud Statutes Bankruptcy Tax Reform Legislation Tax Shelters Tax Court Trust Fund Penalty Legislation Innocent Spouse Relief Important Links Tax Preparation Additional Information: About Tax Return Preparers Installment Agreement Offer in Compromise	What You Should Know About Tax Return Preparers The IRS Criminal Investigation Return Preparer Program ( RPP ) was implemented in 1996, and established procedures to foster compliance by identifying, investigating and prosecuting abusive return preparers. The program was developed to enhance compliance in the return-preparer community by engaging in enforcement actions and/or asserting appropriate civil penalties against unscrupulous or incompetent return preparers. This is a significant problem for both the IRS and our taxpayers. Abusive return preparers frequently prepare bad returns for large numbers of taxpayers who, at best, are stuck with paying additional taxes and interest and at worse, depending on culpability, are subject to penalties and maybe even criminal prosecution. A Return Preparer is defined as any person (including a partnership or corporation) who prepares for compensation all or a substantial portion of a tax return or claim for refund under the income tax provisions of the Internal Revenue Code. Return Preparer Fraud generally involves the orchestrated preparation and filing of false income tax returns (in either paper or electronic form) by unscrupulous preparers who may claim, for example: inflated personal or business expenses, false deductions, unallowable credits or excessive exemptions, and fraudulent tax credits, such as the Earned Income Tax Credit. The preparers' clients may or may not have knowledge of the false expenses, deductions, exemptions and/or credits shown on their tax returns. Dishonest return preparers use a variety of methods to formulate fraudulent and illegal deductions reducing taxable income. These include, but are not limited to, the following: preparing fraudulent Schedule C, Profit or Loss from Business, claiming deductions for expenses that have not been paid by the taxpayer to offset Form 1099, Miscellaneous Income, or income earned from outside employment; including false and inflated itemized deductions on Schedule A, Itemized Deductions, for: charitable contributions and medical and dental expenses; claiming false Schedule E, Supplemental Income and Loss, losses and claiming false dependents. Warning! Anyone who knowingly uses a the services of a Tax Return Preparer who is filing false tax returns is subject to being charged with civil and criminal fraud. Tax Evasion is a crime, a felony, punishable up to 5 years imprisonment and a $100,000 fine. Taxpayers are responsible for the accuracy of all entries made on their tax returns, which include related schedules, forms and supporting documentation. This remains true whether the return is prepared by the taxpayer or by a return preparer. Be careful in selecting the tax professional who will prepare your return. Some basic tips and guidelines to assist taxpayers in choosing a reputable tax professional are: Avoid return preparers who claim they can obtain larger refunds than other preparers. Use a reputable tax professional that signs your tax return and provides you with a copy for your records. Consider whether the tax professional offers electronic filing options and other payment options that you want. Consider whether the individual or firm will be around to answer questions about the preparation of your tax return, months, even years, after the return has been filed. Never sign a blank tax form. Review the completed return to ensure all tax information, your name, address and Social Security number(s) are correct. Make sure that none of these spaces is left blank. Review and ensure you understand the entries and are comfortable with the accuracy of the return before you sign. Never sign a blank return, and never sign in pencil. If you have provided specific authorization in a power of attorney filed with the IRS , you may have copies of notices or refund checks mailed to your preparer or representative; but only you can sign and cash your refund check. A Third Party Authorization Check Box on Form 1040 allows you to designate your Paid Preparer to speak to the IRS concerning how your return was prepared, payment and refund issues and mathematical errors. A paid preparer must sign the return as required by law. Beware of a preparer who guarantees results or who bases fees on a percentage of the amount of the refund. A practitioner may not charge a contingent fee (percentage of your refund) for preparing an original tax return. Choose a preparer you will be able to contact and one who will be responsive to your needs. Ask who will actually prepare the return before engaging services. Avoid firms where your work may be delegated down to someone with less training or some unknown worker. You should know exactly who works with your tax matters at all times and how to contact him or her; after all, you are paying for it. Determine if the preparer is exporting your return to a foreign country for preparation. Foreign countries do not have the same security and privacy laws as the United States nor is there any recourse should your information be compromised as a result of lax or nonexistent privacy procedures. Investigate whether the preparer has any questionable history with the Better Business Bureau, the state’s board of accountancy for CPAs, the state’s bar association for attorneys or the IRS Office of Professional Responsibility (OPR) for enrolled agents. Determine if the preparer’s credentials meet your needs. Find out if the preparer is affiliated with a professional organization that provides or requires its members to pursue continuing education and holds them accountable to a code of ethics. It is important for taxpayers to find qualified tax professionals if they need help preparing and filing their tax returns. Unqualified tax preparers may overlook legitimate deductions or credits that could cause clients to pay more tax than they should. Unqualified preparers may also make costly mistakes causing their clients to incur assessed deficiencies, penalties, and interest. No matter who prepares a tax return, the taxpayer is legally responsible for all of the information on that tax return. You can completely protect yourself from a charge of tax fraud if you voluntarily file your un-filed tax returns and make a good faith effort to file a complete return with data you can verify. You can still be in “good faith” if you do not have accurate records, if you need to estimate some numbers reasonably and in good faith, if you are taking an unusual position on a complex factual or legal issue provided you make full disclosure of those items with your tax return. Tax fraud includes the element of “willfulness” (i.e., the willful intent to evade tax). If you make a full disclosure of those items with your tax return, you are acting in “good faith.” “Good faith” and full disclosure is the opposite of any element of “willfulness.” The IRS has the burden of proving criminal tax fraud “beyond a reasonable doubt.” Good faith disclosures make it impossible for the IRS to meet its burden of proof. The IRS permits the filing of amended tax returns. If, for any reason, you do not have complete data, tax returns should still be filed at the earliest possible time. The filed tax returns can subsequently be amended when the unknown data becomes known or complete. It is to your advantage to file all un-filed tax returns at the earliest possible time. The tax law firm of Alvin Brown & Associates recommends the tax return preparation services provided at www.abatetax.com for the preparation of IRS and State Tax Returns for taxpayers living in all 50 States and U.S. persons living abroad.

What You Should Know About Tax Return Preparers