Source: http://gswlaw.com/irsblog/2007/11/27/unreported-income-aiding-abetting-understatements-tax-preparer-penalties/
Timestamp: 2018-01-19 13:26:36
Document Index: 295938842

Matched Legal Cases: ['§ 6701', '§ 6701', '§ 6701', '§ 6701', '§ 6703', '§ 6703', '§ 6671', '§ 6703']

Unreported Income: Aiding & Abetting Understatements (Tax Preparer Penalties) | IRS Tax Audit News : IRS Tax Audit News
Unreported Income: Aiding & Abetting Understatements (Tax Preparer Penalties)
Filed under: IRS, tax preparer, unreported income
1. Aiding and Abetting Tax Understatements (Penalty)
Any person who aids or assists in, or gives advice concerning, the preparation or presentation of any portion of a return, affidavit, claim, with the knowledge that the portion, if submitted, will create an understatement of the tax liability of another person must pay a penalty for each document that the person helps in preparing. (IRC § 6701(a)).
A person who provides only mechanical assistance for a document, such as typing or photocopying, does not aid or assist in the preparation of the document. (IRC § 6701(e)).
The penalty applies regardless of whether the taxpayer was aware of, or consented to, the document that causes the understatement. (IRC § 6701(d)).
The penalty is $1,000 per violation with regard to a return or document concerning a taxpayer other than a corporation, and $10,000 with regard to a return or other document concerning the tax liability of a corporation.
The penalty applies only once for assistance given to a taxpayer for a specific tax period regardless of the number of documents prepared that case an understatement for that tax period. (IRC § 6701(b)). The penalty is generally in addition to any other penalty provided by law.
2. IRS: Burden of Proof
The burden of proof involving the issue of whether any person is liable for the penalty is on the IRS. (IRC § 6703(a)). (The government must prove its case by a preponderance of the evidence.)
3. Contest Penalty
The penalty is an assessable penalty. (IRC § 6703(b)). Accordingly, it is due after notice and demand from the IRS. (IRC § 6671(a)). It can not be challenged in the Tax Court prior to payment of the penalty because the deficiency procedures do not apply. (IRC § 6703(b)).