1. Treasury department circular 230
1) Information to be furnished
2) Assistance from or to disbarred or suspended persons and former IRS employees
3) Fees: never charge an unconscionable fee
A practitioner may only charge a contingent fee in the following situations:
(1) IRS tax audit or examination
(2) Claim solely for a refund of interest and/or penalties, or
(3) A judicial proceeding arising under IRC
4) Conflict of interest
5) Advertising and fee information
6) Best practices for tax advisors
7) Reasonably likely penalties
8) Practitioner's reliance upon client-furnished information
9) Knowledge of omission by a client
10) Diligence as to accuracy
11) Return of client records
12) Tax shelter and reportable transactions
(1) Listed transactions
(2) Confidential transactions
(3) Transactions with contractual protection
(4) Loss transactions
(5) Transactions of interest
13) Requirements for written advice
14) Reliance on the advice of others
15) Compliance with circular 230
16) Sanctions for violation of the regulations
2. IRC Penalty Imposed on Tax Return Preparer
The internal revenue code penalty provisions apply to all federal tax return preparation and not to the preparation of other tax returns (such as payroll, estate, gift).
1) Understatement of taxpayer's liability due to an unreasonable position by the tax return preparer (IRC Sec. 6694 a)
2) Understatement of taxpayer's liability due to willful or reckless conduct of the tax return preparer (IRC Sec. 6694 b)
3) Failure to sign tax return or refund claim (IRC Sec. 6695)
4) Failure to furnish (indicate on return or claim) the tax identification number of the tax return preparer (IRC Sec. 6695)
5) Failure to provide a completed copy of tax return (IRC Sec. 6695, 6701)
6) Failure to properly retain records: 3 years (IRC Sec. 6695, 6107, 6060)
7) Failure to file correct information returns (IRC Sec. 6695, 6060)
8) Negotiation of IRS refund check (IRC Sec. 6695)
9) Failure to be diligent in determining a client's eligibility for the earned income credit, child tax credit, American opportunity credit (IRC Sec. 6695-2b)
10) Aiding and abetting the understatement of tax liability (IRC Sec. 6702, 6703 a)
11) Wrongful disclosure and/or use of taxpayer's information (IRC Sec. 6713, 7216)