Source: https://www.federalregister.gov/documents/2004/03/25/04-6621/tax-return-preparers-electronic-filing
Timestamp: 2017-09-21 04:13:20
Document Index: 517732125

Matched Legal Cases: ['§\u20091', '§\u20091', 'art 1', '§\u20091', '§\u20091', '§\u20091', '§\u2009601']

A Rule by the Internal Revenue Service on 03/25/2004
15248-15250 (3 pages)
TD 9119
https://www.federalregister.gov/d/04-6621 https://www.federalregister.gov/d/04-6621
Applicability Dates: For dates of applicability, see § 1.6107-2(b) and § 1.6695-1(b)(5).
This document amends 26 CFR part 1 under sections 6107 and 6695 of the Internal Revenue Code (Code) to facilitate electronic filing and record keeping by tax return preparers. Section 6695 imposes various penalties on tax return preparers, including a penalty for failure to sign the returns they prepare. Originally, the regulations under section 6695 contemplated only manually signed (paper) returns. Although the regulations under section 6695 were amended in 1996 to permit tax return preparers to sign and file returns electronically in the manner prescribed by the Secretary (see TD 8689 (61 FR 65319, Dec. 12, 1996)), § 1.6695-1(b) of the regulations continue to refer to manually signed returns and copies. Those references resulted in uncertainty over whether preparers must produce manually signed, paper copies of returns to satisfy their obligations under section 6107 to provide copies of returns to taxpayers and keep copies of returns in their records.
On April 24, 2003, temporary regulations (TD 9053) relating to the signing of returns and retention of copies by tax return preparers were published in the Federal Register (68 FR 20069). A notice of proposed rulemaking (REG-141659-02) cross-referencing the temporary regulations was published in the Federal Register for the same day (68 FR 20089).
The temporary regulations eliminated the references to manually signed returns in § 1.6695-1(b). In addition, they provided that the Commissioner may prescribe, in forms, instructions, or other appropriate guidance, the manner in which preparers may satisfy their obligations under section 6107 to furnish returns to taxpayers and to retain copies of returns. These changes and the applicable forms, instructions, and guidance clarified that preparers may maintain electronic (paperless) filing systems. These final regulations adopt the temporary regulations without change.
One commentator requested that the copy the preparer is required to retain be in a specific electronic format. Another commentator requested that the preparer be permitted to use any electronic format, so long as the preparer's computer can print a copy of the return.
One commentator endorsed upgrading current record-keeping requirements under section 6107(b) to allow electronic storage. The commentator requested that published guidance clarify whether certain forms must continue to be maintained on paper due to signature requirements. With the exception of these forms, the commentator requested that preparers be allowed to choose to maintain taxpayer data on electronic media, with the ability to recreate the tax return.
It has been determined that this regulation is not a significant regulatory action as defined in Executive Order Start Printed Page 1524912866. Therefore, a regulatory assessment is not required. It has also been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to this regulation and, because the regulation does not impose a collection of information on small entities, that the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Code, this regulation will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.
(a) In general. The Commissioner may prescribe the form and manner of satisfying the requirements imposed by section 6107(a) and (b) and § 1.6107-1(a) and (b) in forms, instructions, or other appropriate guidance (see § 601.601(d)(2) of this chapter).
X employs A, B, and C to prepare income tax returns for taxpayers. After A and B have collected the information from the taxpayer and applied the tax laws to the information, the return form is completed by computer service. On the day the returns prepared by A and B are ready for their signatures, A is away from the city for 1 week on another assignment and B is on detail to another office for the day. C may sign the returns prepared by A, provided that C reviews the information obtained by A relative to the taxpayer, and C reviews the preparation of each return prepared by A. C may not sign the returns prepared by B because B is available.
(4) An individual required by this paragraph (b) to sign a return or claim for refund shall be subject to a penalty Start Printed Page 15250of $50 for each failure to sign, with a maximum of $25,000 per person imposed with respect to each calendar year, unless it is shown that the failure is due to reasonable cause and not due to willful neglect. If the preparer asserts reasonable cause for failure to sign, the Internal Revenue Service will require a written statement in substantiation of the preparer's claim of reasonable cause. For purposes of this paragraph (b), reasonable cause is a cause which arises despite ordinary care and prudence exercised by the individual preparer. Thus, no penalty may be imposed under section 6695(b) and this paragraph (b) upon a person who is an income tax return preparer solely by reason of—
Section 1.6695-1T is removed.
[FR Doc. 04-6621 Filed 3-24-04; 8:45 am]