Source: http://gswlaw.com/irsblog/2007/11/28/unreported-income-understatement-of-tax-liability-tax-preparer-penalties/
Timestamp: 2017-03-30 20:34:50
Document Index: 162360953

Matched Legal Cases: ['§ 6694', '§ 6694', '§ 6694', '§ 6694', '§ 6694', '§ 6694']

Unreported Income: Understatement of Tax Liability (Tax Preparer Penalties) | IRS Tax Audit News : IRS Tax Audit News
Unreported Income: Understatement of Tax Liability (Tax Preparer Penalties)
November 28, 2007 by adminFiled under: IRS, tax preparer, unreported income 1. Tax Understatement Penalty (Pre 5/26/07)For income tax returns prepared prior to May 26, 2007, a preparer is subject to a $250 penalty (for each understatement of tax liability on a tax return or refund claim he prepared) if the understatement:a. Was caused by a position that did not have a realistic possibility of being sustained on its merits,b. The preparer knew or should have known of the position, andc. The position was not disclosed or was frivolous (IRC § 6694, prior to amendment by Pub.L. 110-28, the Small Business and Work Opportunity Act of 2007, Section 8246(b)).2. Tax Understatement Penalty (Post 5/25/07) IRC § 6694Under IRC § 6694, effective after May 25, 2007, a tax preparer may be subject to a penalty for each understatement of tax liability on a tax return (or refund claim) he prepares if the understatement results from a tax return position in which the preparer did not have a reasonable belief the tax treatment was more likely than not the proper treatment.
A court may enjoin the IRS from levying or beginning a collection proceeding during this period. (IRC § 6694(c)(1)). If the preparer does not begin a refund suit within the time allowed, the restrictions on IRS collection action expire on the day after the last day that the suit could have been filed. (IRC § 6694 (c)(2)). The running of the period of limitations for collecting the penalty is suspended for the period that the IRS is prohibited from collecting the penalty. (IRC § 6694(c)(3)). Tags: Comments